I’ve been watching videos made by Kira, a Youtube creator who produces both gaming related content and investigative pieces. A part of his output focuses on crypto-related gaming, where NFTs are used as a central part of the economy of the game. In this case, economy refers to both in-game economy, as well as the publisher’s way to make money from the game. While I don’t really care much about these types of games, I’ve been wanting to add to the general conversation of cryptocurrency and gaming, as I feel that the entire conversation has had more negativity than it deserves. So here is my attempt.
My Limited Background in the Space
I started working as a video editor for a blockchain company in December of 2021. A friend of mine called me up saying that the company he was working for needed an extra video editor and I jumped in. It was more of a financial decision than anything else, but it did open the world of web3 to me. I didn’t know much about it and had to do some research, test out DeFi systems in order to understand it better, and keep up to date with the technology developed by the company I was now working for, but also the tech growing in the space as a whole.
While 2022 happened, and we all know how that went, I am still employed by the same company, and plans are currently setup for the 5 years to come. I do understand how quickly companies fall in the space, but being part of a team that continues to endure and continues to build for a better future that includes blockchain technology, I have come to appreciate, and understand, what it can do right now, and may be able to do in the future. I have by no means an extensive knowledge on the subject, but I am quite crypto-positive.
With that in mind, let’s discuss blockchain technology in gaming.
NFTs for In-game Economy
One of Kira’s biggest gripe with the crypto-gaming space at the moment, and what is indeed a major issue, is that crypto-currency, through the use of NFTs, is used as a monetization tool by the games publishers. Potential players can buy certain assets from the game in the form of an NFT and then use those assets in the game, or resell them at a premium to other players. Then, the illusion is that the game will become successful and that those assets will become a lot more valuable. This creates the false promise of riches for early adopters (early purchasers of assets) of the game. Crypto-kitties is the most popular example, but there are plenty of other ones that have come out since. However, games go through cycles where they lose popularity, rendering all the assets purchased worthless. Also, wallets holding the funds that hold the game together get hacked and millions of dollars disappear in an instant.
It’s almost as if a young crypto-gaming company wasn’t as safe as a bank. Go figure.
What is worse for such system, is that the companies building crypto-games don’t seem to understand the strength of blockchain technology. I’m sure that many people have many different opinions, but I do believe that the strength of blockchain technology is its framework, its infrastructure. Using blockchain technology to create an in-game economy, would be like asking a construction company to run the FED.
Blockchain tech is great to build the infrastructure necessary for funds to move around, or to build apps and platforms. However, asking blockchain technology to create games at the level of AAA publishers is non-sense. Those are drastically different things. This is why the endeavor is misguided and almost a waste of time.
So the question becomes: is there no room for blockchain technology in gaming?
Why is Everything so Complicated?
Traditional finance is clearly the game of gatekeepers. If you have a lifestyle that differs from the building blocks on which traditional finance has been created, then problems tend to arise very quickly.
Buying Citizen Sleeper for Nintendo Switch
When I tried to purchase Citizen Sleeper for my Switch earlier this year, I found myself facing some impossible problem.
I come from France but I live in South Korea. The Nintendo shop I am connected to is the French one since the games listed in Europe and in South Korea are sometimes not the same. Also, my language abilities in Korean are not sufficient to use the full online shop in Korean. If I try to buy a game on the French shop, I need a French payment card, which I don’t have. I haven’t lived in France for over 15 years. I tried to connect my Korean PayPal account, but it doesn’t allow that. I tried to connect my French PayPal account, but it requires a verification with the French PayPal system that I can’t access because PayPal is also territory-locked. Even using a VPN, I can’t access my French PayPal account. No matter how hard I tried, I couldn’t buy the game based on all those restrictions.
I ended up buying the game on Steam, even though I would’ve preferred to get it on my Switch for portability. The amount of friction between the buyer and its purchase in this case is an actual deal breaker.
Missing Out On the Second-Hand Market
I had a long period of time when I didn’t game at all. I didn’t have a console and wasn’t really interested in gaming on my computer. However, Zelda Breath of the Wild absolutely changed that, as I bought a Switch especially to play that game. Between the last time I played video games, and owning a Switch, the rise of the downloadable games happened, and I can’t help but to feel bad, often going out of my way to avoid it, when I buy a game as a download. The second-hand market of video games is so important in my opinion.
So of course, I got a few games as cartridges, but smaller indie games all come in downloads, and this is a hit or miss market.
One major game that I bought as a download because I couldn’t find it in South Korea was No Man’s Sky. I played for a bit and then didn’t enjoy it so much anyone. But I’m stuck with it and I can’t resell it.
Those two specific experiences convinced me that blockchain technology could be the answer to those problems in gaming.
NFTs As a Support Infrastructure for Gaming
NFTs are greatly misunderstood. They are currently used as a rag-to-riches, a lottery where anything goes as long as you can throw some coins at the minting machine. However, trying to look at the heart of an NFT could reveal some much better uses than the soulless art of speculation.
NFT is a unique coded element that is cryptographically verifiable. This means that unlike crypto-coins, this element can only exist as itself. Other copies of the same item are also all unique in their cryptographic ID. Only the surface may look similar, just like a cartridge in the material world. There can be many cartridges with the same game on it, but any given cartridge only exists as itself.
Currently, buying a piece of NFT art, there could be one or 100,000 versions of the same piece of art, but the identifier built into the NFT makes each one of those versions unique if not visually, at least cryptographically.
So how do you apply that to the gaming industry?
NFTs as Identifiers
NFT technology can solve the secondhand market issue by assigning a copy of a game to an NFT identifier. In practice, this means that an indie publisher could mint 100,000 identifiers and connect them to 100,000 copies of their games. They could then list their games on a specific marketplace, the same way it is done now with artworks on Opensea, and then sell those copies at a fixed price. The NFT that identifies the copy’s authenticity is then sent to the new owner’s wallet, initiating a download of the game onto the buyer’s device.
Once players are done with the game, they could sell their copy, or rather the authentication NFT, on the same marketplace at any price they choose. If the sale is successful, part of the transaction process would be to ensure that the game on the seller’s device is automatically deleted before validating the sale and then getting a copy downloaded on the new owner’s device.
Minting NFTs can be costly, so an indie publisher may choose to mint only 100 copies to start with, and another 100 if the game brings in some income, etc. Another source on income can be made on each resell of the game, as the publisher can encode a percentage of royalty on resell in the NFT identifier. This would allow a publisher with a really good, but short game (like In Other Waters for ex.) to choose to limit the number of copies on the market and focus on each copy’s value.
This would be gaming second-hand market 2.0.
Crypto as a Simple Means of Payment
This one is especially close to my heart as payment is always an issue, somehow, in 2023. I work with companies all around the world, and issues with transfers happen more than they should. One specific bank in a small town in Canada refused to send a payment to South Korea for work I had done for a producer, simply because they weren’t sure how to make it work. I had, in the meantime, sent multiple transfers via cryptocurrency on the same day without any issues. The entire thing took a couple of weeks to resolve.
Having cryptocurrency as a payment system on all the gaming platforms, including the fictitious secondhand market talked about above, should be inevitable. For any remote/decentralized workforce, going through a completely digital currency would mean that locations wouldn’t matter. It would just be money going from the buyer to the seller, end of story.
The Risks of All Things Digital
Of course, anyone reading this would easily think that it would open all these games and transactions to pirates. The good news is that smart publishers can protect their funds better by being careful and making sure to distribute the funds across multiple wallets. Right now, the big hacks happen on centralized money: places where the money is gathered by a single entity. However, indie publishers with multiple wallets are safer than a bank. It would be nearly impossible to target a single publisher, find all their wallets and take all their coins. However, in a bank, or in a centralized system, it only takes a single point of entry.
As for the copies of the games themselves, there is no easy solution just yet, and probably never will be. Bootleg copies of games have always been a thing. Also, check out torrenting sites and see if you can find the game you’re looking for. Chances are that you will.
NFTs and cryptocurrency are not a bad thing for the gaming industry, they’re just being used in a way that is future-less and uninspired. Should none of this exist? I don’t believe so. While nothing should ever be built in a way that will prey on those looking for a quick way to get rich, there is value in that much code being deployed, because within those tens of thousands of lines of codes used to create all those games, maybe a dozen of them will be used to create something of greater value.
Informing people of the risks of NFT games in their current form so that they can fight greed with common sense is important. However, I do wonder if channels like KiraTV can prove detrimental to the space as a whole. While there is plenty of good information on the channel, and that a lot of what he says often makes sense, he is slowly falling into the rut laid out by channels like The Critical Drinker, Nerdrotic, and in more political terms, by Jordan B. Peterson. Those are people and channels that become the opposite caricature of what they denounce, focusing on delivering an onslaught of negativity, rather than keeping the stance of an astute observer. For some, it’s the result of having to bend to the pressure of constant content creation, and for others, it’s a full on crusade.
This, however, is the subject of another post. For now, I hope that this article offers the hint of positive vision for the future of blockchain in the gaming industry that I hope it does.
Edit Note: While editing this article and adding links to the content in the text, the crypto-kitties website turned out to be blocked by the Korean government, probably falling under the no-gambling law of the country.