I was recently invited by Dan Violet Sagmiller to discuss the potential for using NFTs in game development. In this Q&A session, I share my insights on how blockchain technology and NFTs can be integrated into games, addressing common misconceptions and exploring exciting future possibilities for the gaming industry.
NFTs (Non-Fungible Tokens) are often misunderstood, so I started by explaining the fundamentals. At their core, NFTs are entries in a blockchain - essentially a permanent, immutable digital ledger that everyone can see but no one can alter.
Think of a blockchain as a giant journal floating in space that records ownership. Once something is written in this journal, it canât be changed - only added to through new transactions. This immutability is what gives NFTs their value.
For example, if the blockchain records that you own a particular digital asset (like an in-game item), everyone can verify your ownership by checking the blockchain. No one can fraudulently claim itâs theirs or alter the record.
One major misconception I addressed is that owning an NFT means owning the copyright to the content. This isnât the case - similar to how buying an MP3 doesnât give you rights to the song itself. When you purchase an NFT, youâre buying proof of ownership of a specific digital item, not the intellectual property rights.
I referenced a recent example where a group spent millions on a copy of the book âDune,â mistakenly believing they had purchased the copyright to the entire franchise. This highlights the importance of understanding what NFTs actually represent.
One of the most exciting applications I discussed is what I call a âliving achievement system.â Imagine if your gaming achievements werenât locked to a single platform or company but existed on a public, decentralized ledger.
For example, if you beat The Legend of Zelda 35 years ago on Nintendo, that achievement could be recorded on the blockchain. Then, decades later, when you start playing a completely different game from a different company (like Assassinâs Creed), it could check this public ledger and reward you with a special item - perhaps a Master Sword-inspired weapon - acknowledging your past achievement.
This creates a persistent gaming identity and history that transcends individual games and platforms - something like the interconnected world seen in âReady Player One.â
Another compelling use case is true ownership of in-game assets. I shared my personal experience with World of Warcraft, where I spent countless hours grinding for gold and items, even occasionally purchasing gold from third parties. When I eventually stopped playing, I had nothing to show for my investment of time and money.
With blockchain technology, in-game currencies and items could have real value outside the game. If you decide to stop playing or if the game shuts down, you could potentially trade or sell your assets, preserving the value of your time and financial investment.
I also discussed how NFTs could enable items to be used across different games. Imagine earning a special vehicle in one racing game that you could then use in any other compatible racing game. This creates an ecosystem where your digital possessions have utility beyond a single gameâs ecosystem.
One of the most common criticisms of blockchain technology is its energy consumption. I clarified that while Bitcoin does consume significant energy due to its âproof of workâ consensus mechanism, many newer blockchains that support NFTs use âproof of stakeâ instead, which requires far less energy.
I explained the difference between these approaches:
Most modern NFT platforms like Ethereum (which is transitioning to proof of stake), Polygon, and Solana are moving toward or already using these more energy-efficient methods.
We discussed whether game companies would actually embrace this technology, given that they currently benefit from keeping players locked into their ecosystems. I suggested that companies could still profit by creating their own tokens and holding reserves, potentially benefiting from the increased value if their game and token ecosystem becomes popular.
This creates an interesting alignment of incentives - if the game succeeds and its token economy thrives, both players and developers benefit.
Looking ahead, I believe weâll see more âplay-to-earnâ models where players can make real money simply by playing games. This is already happening in some economies where the income from playing certain blockchain games exceeds what people can earn in traditional jobs.
I compared the current state of blockchain gaming to the early days of MP3s, when there was controversy, resistance from established industries, and a lack of standardized platforms. Eventually, services like Spotify emerged to create user-friendly experiences that gained mainstream adoption.
Weâre still in the âWild Westâ phase of NFTs in gaming, with many competing blockchains and approaches. Over time, standards will likely emerge that balance benefits for both companies and players.
While NFTs in gaming are still in their early stages, the technology offers exciting possibilities for creating persistent player identities, enabling true digital ownership, and developing new economic models in games.
The key is finding implementations that provide genuine value to players rather than simply capitalizing on the NFT trend. As the technology matures and standards develop, weâll likely see more meaningful integrations that enhance gaming experiences rather than just serving as marketing gimmicks.
If youâre interested in the full discussion, you can watch the complete version on Twitch at Dan Violet Sagmillerâs channel.
For those interested in exploring NFT projects Iâve mentioned:
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