In blockchain games users do not earn virtual points, but real tokens. Some players manage to sell their rewards for hundreds of thousands of dollars. This became possible thanks to NFT: non-fungible tokens. In this article, we will tell you how NFTs differ from conventional cryptocurrencies and where you can earn them.
Why Blockchain Games Are Needed
Developers of online games earn money by providing entertainment services. They sell the functionality to use goods. This means that the developer always has the right to change an item or even remove it from the game. To understand how blockchain solves this problem, one must define the difference between fungible and non-fungible goods.
A product is interchangeable if it can be replaced with another one of the same kind. For example, one banknote of 1000 rubles is interchangeable with another. It is also interchangeable with two 500-ruble bills, ten of 100, or any other combination, in the amount equal to 1000 rubles. Similarly, you can exchange oil, gold, and securities.
There is only one of every non-interchangeable product. These can be artwork, real estate, or game avatars.
Most often, some goods are only partially interchangeable. They are unique, but there may be several of the same type. An equivalent exchange can only be carried out with an exact copy. For example, it would be possible to exchange a diamond only with one that has the same cut.
Cryptocurrencies are the digital equivalent of fungible goods. One bitcoin is no different from another bitcoin. And if a certain amount is transferred to a crypto wallet, it will not matter which particular miner mined this coin.
To create a digital analog of a non-fungible item, you will need a token that will be different from another similar one. Such a solution exists and is called a “non-fungible token”.
NFTs made it possible to transfer control of digital objects from developers to players. Only their owners can change or delete tokenized items. Also, players will be able to exchange their items without intermediaries.
How NFTs Work
It seems to any player that they control their own items in the game. This is not possible in regular games. Imagine that you have a rare item – a yellow scarf. This means that your account has access to the line of code that describes this scarf. In any update of the game, this code may be rewritten: the scarf may become of a different size, change color, or disappear altogether. We only have to rely on the fact that the developers will not deliberately hurt their players’ feelings.
In blockchain games, the user themselves dispose of their items. This is possible because the code describing the yellow scarf is not written to the hard drive, but using a special token. The “drop” of an item means that a transaction has occurred and the token has been sent to the player’s crypto wallet. Only the owner of this wallet will have access to the yellow scarf.
Tokens in which unique information can be written are called non-fungible or NFT.
Tokens cannot exist independently but depend on the network of another cryptocurrency. The leading positions in blockchain gaming are occupied by Ethereum, Tron, and EOS. There are standards for each type of token in blockchains. Ethereum uses three ERC standards for NFT: ERC-721, ERC-1155, and ERC-998.
Each NFT is unique. At its core, NFT is a digital product.
Cryptokitties – the first wave of popularity of NFT
The first successful project that involved NFT was the game CryptoKitties. At the peak of its popularity at the end of 2017, players overloaded the Ethereum blockchain due to high activity. In September 2018, the most expensive crypto-cat was bought for 600 ETH, which at that time amounted to 172 thousand dollars.
CryptoKitties is all about collecting, multiplying, and exchanging CryptoKitties. Each such virtual pet is unique. It has its own color, fluffiness, and even mood.
CryptoKitties are non-fungible ERC-721 tokens on the Ethereum blockchain. They can be bought for ETH in the official catalog (you need to link the browser-based MetaMask crypto wallet to the site) . NFTs will be stored there.
Buying one isn’t the only way to get a crypto kitty. Another opportunity for obtaining NFT is hard-coded in smart contracts. If you already have two crypto-cats, then you can breed them and get another one. Each crypto cat receives a combination of different traits from their parents, such as breed or color. The goal of the game is to obtain CryptKitties with rarest characteristics.
NFTs and games that work using them are created separately. Therefore, NFTs can exist outside the game as well. CryptoKitties can be brought into any other game that supports NFTs, and they will find new uses there.
Third-party developers have created many such applications:
Kotowars is a collectible card game in the style of Hearthstone and Magic: The Gathering. In KotoWars, players can fight using their crypto cats against other players, complete campaigns, and receive rewards for their cats in the form of another ERC-721 token.
KittyHelper is a professional crypto cat exchange. The exchange significantly expands the functionality of the classic game: you can analyze price changes, create orders, and even search for crypto cats by color. You can link a Dapper or MetaMask wallet to the exchange and buy tokens directly.
Wrapped Kitties is an application that allows you to split ownership of cryptocurrencies. If you can’t afford the expensive NFT, you can buy some of it. This is possible because the NFT-cat of the ERC-721 standard is tied to the usual ERC-20 fungible tokens.
CryptoKitties have become important to the entire blockchain industry. This game showed by example that blockchain can be used not only for the purpose of earning money but also for recreation and leisure. It became clear that non-fungible tokens are a promising technology. NFTs do an excellent job of digitizing property rights.
Axie Infinity: the second wave of popularity for NFT
The idea of breeding crypto animals saw a second round of development in Axie Infinity. In 2020, this game became the sales leader: 20 thousand players make transactions worth $ 2 million every month. Let’s contemplate what caused such popularity.
Virtual pets are called Axie and look more like Pokemon than real animals. Once you buy an Axie, you don’t have to sell it or keep it as a collectible. It is useful for battles with pets of other players or for completing missions. Axie Infinity has a marketplace where you can purchase three types of NFTs: Axie itself, virtual land, and cosmetic items. The entire gameplay can also be divided into three modes: Animal Breeding, PvP Arena, and PvE Adventure.
Breeding animals. The bulk of the gameplay is Axie breeding. To create a new pet, you need a Love Potion. You can earn it in the PvE Adventure and PvP Arena modes. Like CryptoKitties, an Axie has external features inherited from its parents. One Axie gives offspring no more than 7 times. This way, developers manage to avoid depreciation of NFTs due to their large numbers.
PvP Arena. The second feature of the gameplay is battling with real opponents. In order to win battles, players earn usual fungible AXS tokens. They will need them to purchase NFT in the game marketplace. At the same time, pets gain experience and develop. To start the fight, you need to find an opponent and choose 3 Axies. The fight takes place in real-time and resembles battles in Heroes of Might and Magic.
PvE Adventure. The Axie Infinity game world is divided into marked areas of land. These are also tied to NFTs, so they can be bought and sold accordingly. Plots of land are needed to build houses for pets and collect useful resources that will be needed in the game.
Most blockchain games still look raw: they have monotonous gameplay and simple graphics. Against their background, Axie Infinity stands out for its thorough elaboration of the game mechanics and the plot of the game.
The developers work with experts from Ubisoft, the largest gaming distributor. Also, Samsung has added the game to its official blockchain wallet. The attention of major market players suggests that the use of NFT in games has prospects.
Other NFT Applications
Tokenization of non-fungible in-game items has spread across genres. Cryptokitties and Axie Infinity attract a large number of users, but popularity is not always related to capitalization. The largest in terms of volume in dollar terms is the NFT real estate market in virtual worlds.
Let’s look at the most popular examples of NFT games.
- Decentraland is a virtual world where users can view, buy, sell plots of land. Property is managed by the LAND token.
- Cryptovoxels. You can build your real estate in the neighborhoods and streets of this virtual world. For example, you can create a store or a museum.
Collectible card games:
- Gods Unchained is a game in which all cards are issued in the form of NFTs. This allows you to exchange them just like in the tabletop version of collectible card games.
- My Crypto Heroes is a classic multiplayer role-playing game. In it, you have to develop your heroes through quests and battles with other players. The value of the ERC 721 token grows as you progress in the game.
- Neon District is a cyberpunk RPG in which you have to fight, complete missions, and develop characters.
- F1 Delta Time. The gameplay is focused on collecting and trading unique cars. All objects exist as non-fungible REVV tokens.
- Sorare belongs to the fantasy league genre, familiar to many football fans. You have to search for player cards, assemble a team and manage it.
Tokenization of non-fungible goods has spread mainly in games. With the growing popularity of the blockchain industry, the scope of NFTs will also expand. Already, projects such as Rarible are emerging that allow creating, trading, and receiving royalties from digital art. In the future, non-fungible tokens may represent shares of real assets: real paintings, sculptures, inventions, real estate, cars, clothes, and tickets.
There have been no breakthroughs in the gaming industry for a long time. Blockchain allows you to take the next step. Thanks to non-fungible tokens, in-game items can not only be used but also physically owned. Using NFTs gives the player more freedom of action.
The first wave of popularity of NFT technology was brought about by the game Cryptokitties. You can create crypto-cats in it and exchange them for ether.
In 2020, the game Axie Infinity became popular. This is a large game universe in which you can fight with other players, create houses, and complete missions.
NFT technology has great potential not only in the gaming industry. In the future, not only digital objects will be tokenized, but also real ones.