The phrase “NFT games” has become a bogeyman in the gaming world. Any mention of it causes reactions like disgust, disdain and ridicule from gamers. NFTs themselves have fallen out of favor and you hear news about certain NFTs -especially the Bored Ape ones – losing 95-99% of their value. In the current atmosphere, you would think NFTs are dead, but just like cryptocurrencies themselves, Nft Arts represents ideas and needs that have been developing for decades, and such ideas and needs don’t disappear. So in this article, we want to go through some of the precursors to NFT games and find out what their success, failure or general performance means for the current state of this controversial phenomenon.
NFT | A Misunderstood Concept
The way NFT has been used and introduced to the public has been catastrophic. People knew absolutely nothing about NFTs. They suddenly saw headlines about the picture of the first tweet and the picture of ugly apes with different accessories – that seemed to belong to the cheapest mobile games – being sold for millions of dollars. If you saw these headlines, you couldn’t help but conclude that this whole NFT business is an ugly scam, riding on the crypto bull run of the early 2020s. The general sentiment of people towards NFTs was crystalized in a meme format, in which people would save and post the jPEG version of NFTs and claim they have stolen the million-dollar NFT that some sucker paid for.
This meme is quite ironic because, technologically speaking, NFTs were trying to solve the problem for which this meme is mocking them. We live in a digital copy-paste world, and people have been buying digital assets for years. People would pay for skins for video game characters, skins for guns, collectible cards in card games, spaceships in EVE online, crafting resources in MMOs, etc. These were all pixels on the screen too. In the case of skins, they didn’t even have functional value and were purely cosmetic. So why hate NFTs, but not those things?
If we move beyond the bad presentation and bad marketing by the crypto bros, the technology behind NFTs can actually be useful. NFTs were made based on two concerns: 1. The Issue of true ownership in a digital world 2. Verifiable scarcity of virtual assets.
Let’s go by an example. Recently, it was announced the most expensive gun skin in Counter Strike: Global Offensive was sold for 400,000 dollars. When you think about it, that is not any less ridiculous than a Bored Ape NFT being sold for 3 million dollars. In other words, for all intents and purposes, in both cases, if a person decides to invest money, they can buy a house with pixels on the screen. So what’s the difference?
The difference is the issue of centralization and scarcity. In the case of the gun skin, the ownership of the gun is verified through Steam/Valve, and it’s Steam/Valve that decides how many copies of the skin can exist. Because theoretically, they could produce infinite numbers of those skins and bring their price down to zero.
If Steam were run by NFT technology, the ownership of the gun would be verified by its listing on the blockchain, and its scarcity would also be guaranteed through its representation as a unique digital token on the blockchain that everyone can see and verify. That’s what the name NFT (Non-Fungible Token) means; it cannot be exchanged on a one-to-one basis with another token because it’s unique. Technically, you can make the same skin appearance-wise, but it wouldn’t be the same because its identity on the blockchain is different. It would be like saying a replica of the Mona Lisa is the same as the original by Da Vinci. (We just compared a CS GO gun skin with the Mona Lisa. This is what the world has come to).
Now we know and trust Valve, and no one is worried about their transparency and stability, but can the same thing be said about every other developer? You might start buying digital assets on an MMO game, but if the servers shuts down, everything you bought turns into nothing. But anything you buy as an NFT can be transferred anywhere and sold outside of the game you got it from. Of course, this is all theoretical, and right now, considering how badly the prices of NFTs fluctuate, they are less reliable than centralized assets. But that’s the dream of crypto-currency and decentralization, and for all of these ideas to work, it requires universal adoption. And that’s something we have yet to see happen. But as explained here, the technology is sound, based on needs and behaviors expressed in the past few decades.
Precursors to NFT games
This might be speculation, but I would say one of the reasons NFT games were hated so severely was because they existed outside of the video game canon. None of the most popular NFT/Crypto games (like CryptoKitties, Decentraland, Axie Infinity) have anything to do with established franchises or prominent game developers and are completely new, doing their own thing. Like all new things, they inspire a certain hostility. However, what these games represent has been tried out and replicated many times before, just not with the crypto/blockchain spin. In this section, we go through some of them.
Collectible Card Games
Collectible card games could be considered as a prototype for NFT games. And I’m not just talking about digital collectible card games, but the physical ones too. The grandfather of this genre is Magic: The Gathering, published in 1993. You might be asking, what do physical collectible cards have to do with NFTs? And my answer is, they created the desire to own nerdy assets with subjective value for the first time. A whole generation of people were raised on collecting cards from Magic the Gathering, Yu-Gi-Oh, Pokemon, Digimon, etc, buying booster packs just to be surprised by unique unexpected cards and then watching some of those cards becoming extremely pricy as time passed due to their scarcity. Isn’t this the exact same experience that NFT games want to replicate?
Both collectible card games and NFT games share a common principle: the allure of owning rare and valuable items, with the gaming context adding an extra layer of significance to the act of collecting. Two decades ago, possessing a unique Pokemon card held genuine meaning among elementary school classmates. The NFT enthusiasts sought to replicate that experience, in the most famous case envisioning ownership of a Bored Ape NFT and participating in the corresponding video game as a symbol of prestige, akin to owning a prized Pokemon card. However, the desired impact didn’t materialize fully. Perhaps the apes lacked the aesthetic charm of Pokemon creatures, or maybe excessive greed played a role. Nonetheless, what matters is that both collectible card games and NFT games stimulate the same pleasure centers in the brain, catering to the innate desire for ownership and distinction.
Another similarity is that the scarcity behind both collectible cards and NFTs is artificial and man-made. There is nothing special about the material used in creating unique cards, or there is no more artistry spent on creating NFT models (if anything, it’s less); this scarcity is not comparable to the scarcity of gold and diamond and oil. So it’s all based on perception and the value that the fandom gives to certain assets. This is why Yuga Labs only created 10,000 Bored Ape NFTs. Nothing was stopping them from making 11,000 or 20,000. But this scarcity is meant to make the ownership of a Bored Ape NFT seem more special. The same logic applies to collectible card games.
Second Life
This game has quite the ambitious name, doesn’t it? Second Life, first published in 2003, was presented as a virtual world in which you could exist as an avatar of yourself and interact with others. In many ways, it was reminiscent of an MMORPG, but Linden Lab, its developer, rejects that label, because in Second Life, “there is no manufactured conflict, no set objective”.
Second Life was the first ga… *ahem*… “online multimedia platform” that made it desirable to buy, sell or manage land in a virtual space with real money. Second Life has an exclusive currency called Linden Dollar which is transferable to real dollars and with it, you can buy pretty much anything you can imagine: virtual objects, avatar accessories, furniture, buildings, vehicles, tools and even dance moves. You can even buy real estate and then rent it to people to make income. The way it works is very similar to what Metaverse spaces like Decentraland try to do, which is making virtual space that you would want to pay real money for, in an environment that is not a fantasy/sci-fi setting, but is clearly meant to be a stand-in for real life.
MMORPG Crafting System
Crafting is a major feature in many MMORPGs. It involves gathering resources from the game world and using them to create cool items that you can sell to other players for in-game gold. For example, if you learn blacksmithing, you can craft weapons using resources like iron or obsidian and make money by selling them. MMORPG crafting is a big deal, and in some free-to-play MMOs, it’s the main incentive for players to buy monthly subscriptions, as they limit the resources free players can hold in their inventory.
The crafting system has always been used to cultivate a player-driven economy system in MMOs, with supply and demand by the players determining the price of each commodity, which is always fluctuating. This illusion of a real economy – fuelled by tasks like mining resources that feel like genuine jobs – has always been one of the main attractions of MMOs. It has generated a lot of income for MMO developers, but this has always been a one-sided kind of deal, meaning that players spend a lot of real money to buy valuable stuff in the MMO. Still, they can’t sell that valuable stuff for real money, at least not officially. For example, even though many third-party websites buy and sell World of Warcraft gold, if Blizzard finds out that you have bought or sold in-game items with real money, they will punish you.
The way many NFT game developers design their game is highly reminiscent of how crafting system in MMO games function, as evidenced by this legendary LinkedIn post that should be a wake up call for you if you’re addicted to MMOs:
As we have explained in one of our previous articles, Metaverse Race: Winners or Losers?, the problem is that people are willing to spend time and money on MMOs because they have an attractive world that players feel good to exist in, even though the game-play sometimes becomes a borderline chore to get through. The Metaverse/NFT games lack that quality because they are not made by people who have a deep knowledge about how games work. So most people who play NFT games do it for money rather than pure enjoyment and earning money as a positive by-product.
Online Games with Persistent Worlds
Persistent worlds, by definition, are online worlds that “continue to exist and develop internally even when there are no people interacting with it”. So if you’re the kind of player that suddenly feels the rush to play a game and then leave it and come back 3 months later, these games are not for you.
Online games with persistent worlds have a lot of variety, including image-based browser games like eRepublik and Travian, Facebook games like FarmVille and full-blown video games with complicated economy systems like EVE Online. These games demand their players to constantly check up on the game and keep themselves up to date about all the little changes made by the developer and all the things other players have done.
Online games with persistent worlds always had one downside: they were not compatible with the schedule of the people who have to survive in the modern world. Many people, even hardcore gamers, cannot afford to constantly check up on a virtual world and worry about getting attacked or getting juicy offers when they are not online. That’s too much mental dedication. So the only way to make these games work is to turn them into a real job with sustainable, reliable income, and this is something that games like EVE Online have managed to do for some REALLY dedicated people, but that’s about it.
NFT games promise that you can ultimately make money by playing them. Even now, some people from countries that have a weak currencies against the dollar (like the Philippines) are making good money by playing NFT games. The idea of turning games into a job is one of the dreams (or nightmares) of NFT gaming, and we still can’t say if it can become a reality, but it’s undeniable that games with persistent online worlds set the foundation for such an idea.
Diablo 3 Auction House
We said something about Blizzard prohibiting WOW players from trading in-game items for real money, right? Well, with Diablo 3, Blizzard did something unprecedented: they created a store in which you could buy and sell gear and loot for your character using real money, through official means, and it was called Auction House. This decision became possible thanks to the game’s controversial and strict online-only nature.
However, after only 2 years, the Auction House was closed because it was a disaster for the game itself. As long as Auction House existed, you, as a player, didn’t have incentive to actually play the game to get good loot, as long as you knew with some money, you could buy the best loot possible. On the other hand, since real money was involved, the rate drop for the kind of loot players would want to pay money for was extremely low, which made grinding in the game more tortuous than usual.
Auction House’s failure is the biggest warning sign for NFT games because it showed that it’s very hard to make a fun, well-designed game when real money is involved. The existence of money will always compel players to take short-cuts and not really engage with the game. This was not a purely pay-2-win system because you were paying money to other players like yourself; who knew, maybe you could make a few bucks by playing a game you enjoy. But ultimately, it didn’t work that way. It remains to be seen how NFTs can solve the problem of “game design being ruined by the involvement of real money,” as shown by Diablo 3’s Auction House system.
Steam Marketplace
If you are a Steam user, you are probably familiar with its highly gamified profile system. You can level up your account by buying games or buying Steam Trade Cards of the games you own and making a badge when you collect all, a badge that shows on your profile (among other things) as a sign of prestige. In that ecosystem, Steam also has a very vibrant trading community that functions on the real money you have on your account.
What makes Steam Marketplace seem like a precursor for NFT games is that many games on Steam actually feature digital assets that are similar to NFTs, with the only difference being that they are not on the blockchain.
For example, some Steam games occupy a separate page on your inventory; on that page, you can find some of the items you have gotten in the game. And you can sell them for variable prices.
One of these games is “Battleblock Theater”, a unique platformer/puzzle game in which you can buy many cute characters categorized based on their head shape (square, triangle, etc.). The price you can buy or sell these characters with is extremely low in terms of real money. Finding someone to buy them from you would probably take a while because the demand is low. Still, the spirit is very similar to NFT games: unlocking characters inside the game, setting a price, and selling them on the market outside of the game, or buying the characters you can’t buy with in-game money on the marketplace, with real money.
Technically, the money you earn by selling collectible cards from Steam and in-game items can be transferred to anything. For example, you can sell a bunch of “Battleblock Theater” characters and buy a collectible card for Skyrim with their money. You can sell a bunch of cards (that you get for free each time you start the game) and then buy a very cheap game with them.
The seamless adaptability of digital assets on Steam shares similarities with the goals of NFT games, where players can sell their NFTs beyond the confines of the game. Steam Marketplace has served as a centralized model for digital asset trading that NFT technology aims to decentralize. Now, the crucial question we should ask is: can a decentralized model rival the scale of Steam? A similar question applies to cryptocurrency itself: can it ever match the significance of fiat money? Only time will reveal the answers to these uncertainties.
Conclusion
NFT has received a lot of criticism, and most of it was valid because it couldn’t be presented worse. Apart from that, there are general environmental concerns about NFTs and cryptos, which no one can answer easily. But one thing is clear: NFTs were not an attempt to give value to something valueless. Before NFTs, people were still paying money to buy digital assets, as evidenced by the examples in this article; the point of NFTs was just to decentralize something that was centralized before. Now the fact that a lot of people used this new technology/phenomenon as a way to scam people and give value to valueless things was unfortunate, but crypto itself experienced the same thing.
In the beginning, no one could see why they should use crypto when fiat money exists, and crypto was mostly used on the dark web for illegal drug transactions, weapons trading, hacking services, and other criminal activities. It took a decade for people to realize the value of a decentralized system of transactions and start using it for more legitimate purposes. Judging by this pattern, the initial setback against NFTs doesn’t mean they will remain dead because the technology behind NFTs is not going anywhere. All it takes for NFTs to revive is to be used in a cool or useful manner. This is not a question of if but when.
