Why I am Excited for Blockchain Games
NFTs. NFTs. NFTs.
Art NFTs. Have you heard about them enough?
This post might be geared more towards the people sick of hearing about NFTs because they have only heard about art NFTs yet.
Art NFTs aren't the only type of NFTs.
I want to make that distinction first as I've seen the misconception that any mention of NFTs is referring to art NFTs.
NFTs with Utility
NFTs can be used for so many different purposes. Concert tickets could be sold as NFTs. A character's equipment in a video game could be an NFT.
The central aspect of NFTs to understand is one of ownership. This is crazy since art NFTs is the most confusing example of that!
I like to think of it as cutting out the middle man. Yeah, if you go on a quest in a video game and get some great loot, you could say you own it. But if the video game servers get shut off, it is gone. If the game doesn't let you transfer or sell it, do you own it?
NFTs are in your wallet that you have complete control of. You can buy, sell, or send to a friend how you please. You don't need to go through the game. For the concert ticket example, you don't need to go through a 3rd party website, which would take a commission. It is owned such as anything tangible you own.
NFTs and Cryptocurrency in Games
Blockchain games utilize both cryptocurrencies and NFTs.
Instead of looking first at new blockchain games, which are mostly still in development, and explaining what they are trying to do, let's look at popular games in the past and see how they could have NFTs and Cryptocurrency incorporated.
We will use Clash of Clans as an example for cryptocurrency and World of Warcraft for NFTs.
Clash of Clans: Gems as a Cryptocurrency
Most blockchain games will use a cryptocurrency as their in-game currency. This means the in-game currency has real-world value.
Let's use Clash of Clans as an example. If you aren't familiar, simply think of any free-to-play game that uses similar mechanics, or more accurately, monetization strategy.
The focus will be on the gems. Most games of the same genre have a similar currency or resource that will fast-track everything for you.
In Clash of Clans, you have to wait in real-time whenever you do things like build a new building, upgrade a building or hero, or build your army, to name a few. But of course, you can speed things along if you choose. You do that by spending Gems.
Gems are the most valuable currency in the game. You can Fastrack anything with gems, trade for other resources (gold, elixir), and some items can only be bought with gems.
Gems are valuable but rare. You find a few now and then, but it is only enough to give you a taste of their power. They want you to buy them. I don't blame the developers - it is how they make money. It is a good game and doesn't have any in-game ads or anything otherwise.
For me, I don't buy any gems. I try not to use them. I don't play the game much anymore, but I opened the app to look, and I have over 3000. If I wanted to buy 3000 gems, it would cost me over $20.
I can buy them, but I cannot sell them.
What if I could sell them?
Gems as a Cryptocurrency
Imagine Clash of Clans works the same except that Gems were an actual cryptocurrency.
Players could still buy gems like they do now. But if they accumulated gems from playing and didn't need to spend them, they could sell them.
This creates an opportunity to actually make money from playing video games.
It is honestly that simple, but I'm sure a few objections or questions might come to mind.
Pay To Win?
Would this create a pay-to-win scenario?
Well, Clash of Clans is already a pay-to-win scenario. Players can buy gems to get ahead. That isn't being changed.
The change is the ability to sell. The game would still be a pay-to-win for some players and a play-to-earn for those not spending their gems.
What would Gems cost?
Well, it would be fair market value. Based on supply and demand. Oversimplifying here, but same as any other crypto, stock, commodity, currency, etc.
I want to emphasize who you are buying the gems from: Other players.
It is a common sentiment amongst gamers is pay-to-win = greedy developers. Now, you can pay-to-win, but that cash goes into your fellow player's pockets.
The point is that I could sell my gems. Instead of pay-to-play or pay-to-win, it now becomes a play-to-earn game.
NFTs & Clash of Clans
This example focuses on cryptocurrency, but let's see how a simple NFT mechanic could be implemented in Clash to transition into the following example.
Currently, your clash of clans account is worthless. You can buy gems to get ahead and make the best base. But you stop playing, and you have nothing to show. You can't do anything with your account or get value from it in any way.
If Gems were a cryptocurrency, you could play to earn. But what if your actual base had value?
Imagine that, basically, your entire base is an NFT. Of course, different games could have every item, for example, an archer tower, as an NFT that you could buy and sell. For Clash, though, that would upset the balance of the game.
But if the game was the same, gems as a cryptocurrency or not, except that your whole base, or account, was held as an NFT, then your base could have value.
What value? Would people actually buy that?
I can't tell you with absolute certainty, but in the next game we focus on, World of Warcraft, players have been known to level up characters and sell their accounts.
This is the next stage of gaming - where the companies allow a sort of financial freedom to the players.
World of Warcraft: Owning your Inventory
For those that haven't played World of Warcraft, if you boil the game down, you are just doing the following:
- Completing Quests and such
- Leveling up character
- Finding new and better gear
The quest for the best gear is a huge focal point, in my opinion, and the central part we will focus on here.
The marketplace in the game seemed kind of revolutionary at the time. It felt like eBay inside a video game.
Imagine you were a warrior and got a rare staff. You could sell your items and gear to any NPC vendor, but it seemed like you were getting pennies on the dollar. Especially for your rare equipment. You can't use it - what do you do? Instead of selling to a vendor, you list it in the marketplace.
Set a starting bid and a duration. Optionally add a Buy NOW price. Any good gear was bound to make exponentially more money selling in the marketplace than a vendor. Selling to a vendor was like recycling. Like they were selling it for parts, ha.
I would also enjoy browsing the marketplace and looking for underpriced items at times. Kind of fun to buy stuff and just re-list. Go out questing and come back to check if it sold. Sometimes you would make more money on that than you did in the quest.
Inventory as NFTs
Now imagine if all these items were NFTs. What would that change?
Not much, actually. Except for gas fees, of course.
The marketplace could still run off of an in-game currency. That in-game currency could be an actual cryptocurrency or not. The marketplace could still be in-game, or it could just be done via OpenSea - which is the eBay of NFTs right now.
However, the point is that you could quest out, earn new gear, and then go back and sell it for real money.
Of course, a lot of times, you would probably want to keep your good gear as it would logically help you go out and find new or better equipment.
Which is also a reason for people to buy gear. It is annoying to spend real money to purchase items in a game - but what if those items helped you earn real money?
Follow The Money
I wanted to do a section almost on the economics of all of this. I'm definitely no expert here, but I have been thinking about it a lot.
I think this might help dispel some of those thoughts of "this is a scam" when seeing valuations on some NFTs.
Now I'm sure some people wonder where all this money is coming from???
That probably entails a whole other conversation about economics and an actual currency. But in short - the developers created this currency for nothing. The game is not giving you USD, Euros, etc. The game is giving you a currency that is created. If the game gives you a reward that is worth $100, that $100 did not come out of the developer's pocket. It is only worth $100 because someone else is willing to pay $100. The developers have a typical cost of developing the game, which isn't nothing.
Compare it to baseball cards, pokemon, cards, or any other trading cards. The creators had to pay for printing and such, so not free. But if you get a rare pokemon worth $1 million (just making this up, have no clue), it is not like that million dollars came out of the creator's pocket. It is only worth that because people are willing to pay that.
Same with these NFTs. Creators have to develop the game and pay gas fees to create these NFTs. They inherently have no value until people want them.
So yes, if the game is not popular, you can't pay-to-earn. And if you get in late - or don't sell your items and get your money out - and the game kind of dies down, you will probably be in the red.
Yes, if the game isn't enjoyable, I'd be concerned about putting your money in thinking of it as an investment. But think about games like World of Warcraft and Pokemon Go. Think how long they have been going on and how their ecosystem and economy have lasted. Just saying that as it isn't like a pump and dump.
Think of this possible scenario: instead of paying $5-60 for the game's retail price, you spend that money buying a starter NFT to play the game. Whether that be a hero, land, or whatever - it depends on how the game is structured. And not only could you sell that back for the same price - or way more if you got in early - but you could use that NFT to play the game and earn other NFTs or cryptocurrency.
This is the concept behind DeFi gaming that gets me excited. The developers get funding by launching their cryptocurrency and from initial investors, such as selling stock in a new company. The players get to earn NFTs and crypto as they play. It almost seems like a win-win - a win for everyone.
Upcoming Blockchain Games
Two projects that demonstrate some of this are The Sandbox and DeFi Kingdoms.
DeFi Kingdoms is relatively new but already has some great functionality. It is a pay-to-play right now, as you have to buy a hero NFT to get started.
It isn't cheap, but I bought a few, and now I'm doing the basic quests available and collecting items, which are also NFTs. They could be sold for a little, but I'm holding onto them to see what they will be used for as the game gets updated.
The Sandbox has been in the works for a while but has a quite impressive economic setup.
I bought a land, which was cheap a bit back but has exploded in value. I'm not selling, though.
Owning a land allows you to upload your own game or experience.
I can either make it free to play or charge a price. I could also give out rewards for completing the quest. And that doesn't have to be money (in the form of crypto) from my pocket. I could make an NFT as a reward for completing my experience.
The Sandbox has Voxel software, VoxEdit, where anyone can create NFTs for the Sandbox world. Game developers can purchase these assets from the marketplace to use in their games.
VoxEdit is free to download. Right now, they have a program for curated artists to upload to the marketplace to keep the quality high, but they will open up so anyone can mint and sell.
To summarize, it is an ecosystem designed so game developers, artists, and players can all thrive!
History Repeats Itself
This section was initially part of my introduction, but I decided to finish with it.
When looking at any new tech with skepticism, I hear a lot of "this is nothing new" or "we can already do that."
The Sandbox looks like Minecraft. DeFi Kingdoms looks like a Super Nintendo game. So I'm sure many people are quick to write it all off as nothing special. But history repeats itself.
Not sure if anyone else remembers when online games just initially started becoming a thing. Maybe Farmville?
Farmville seemed okay at the time, but other online games seemed a bit behind the times. Of course, making an online, multiplayer game takes on additional development challenges. Especially when it is so new that no one has experience in the field yet. Therefore, the games can seem a bit behind - similar to a game from 5 years before.
Remember Mafia Wars?
When I played this game, I felt like I was mostly reading text. Selecting missions to send people out on and reading the results were all text. No cut scenes or animations.
The novelty was that you were raiding your other friends on Facebook. It was less about the gameplay but more about the social aspect.
To prove my point, Mafia Wars came out in 2009, which you can see in the screenshot above. Meanwhile, non-social platform games looked like this:
This is how I feel about Blockchain games right now. Many new Blockchain games remind me of those early internet games and seem like they are 10-15 years old! Once again, it is because it is new, and the space is still being explored.
Those games explored the social aspect of gaming. Blockchain games explore the financial and freedom side of gaming.
Obviously, Farmville isn't the game on top of everyone's minds right now. So I'm not saying these initial blockchain games will be the top dogs for years to come.
But today's games have all kinds of social features and online gameplay that were not possible years ago. Farmville might not be relevant now, but it was a pioneer that brought social gaming aspects into the mainstream. How long do you think until Blockchain gaming aspects become mainstream?