Recent Misstatements by a Marketplace Challenged for Alleged Misstatements about NFTs May 24, 2022 in NFT
A marketplace has been challenging the authenticity of recent statements by a few analysts and commentators about the adoption of non-fungible tokens (NFTs) and blockchain-based games. For example, on Oct 25th, 2019, Business Insider published an article stating that “The Crypto Winter Of Discontent Is Here” and we believe that this view was influenced by certain cross talk around the market. Readers may wonder why this is important to them as it might have little impact on their investment decisions and life. But when there is a plethora of information available online, it can be challenging to discern what is fact and what may be misinformation. That’s why readers need to beware of misstatements about adoption of NFTs in particular – which are also referred to as non-fungible tokens or digital assets – because they are critical for virtual goods in blockchain gaming having significant potential for growth going forward. These challenges have been amplified recently through cross talk among certain crypto stakeholders – some who appear uninformed about the history and future of NFTs in blockchain gaming, which requires a fundamental change in how individuals and organizations value digital assets: not as tradable commodities but rather as immutable virtual goods with unique characteristics that cannot be duplicated or stolen. We hope you will find these insights helpful.
The Biggest Problem with Blockchain Gaming Today is the Lack of Trusted Data, not the Lack of Non-Fungible Tokens or Blockchain Games
While it’s true that there is a lack of non-fungible tokens (NFTs) and blockchain-based games, the biggest problem hindering the adoption of blockchain in gaming today is not insufficient supply of NFTs but rather the lack of trusted data. In simple terms, trusted data is verified data that can be used to determine if a game is fair, if a character’s health is accurate, if a virtual vehicle’s speed is correct, etc. In the context of blockchain gaming, trusted data is critical for a game developer to ensure that information about a character’s health, damage of a virtual weapon, accuracy of a virtual arrow, etc., are all accurate and consistently reported in every gamer’s device. In a blockchain-based game, information about characters, items, and events is stored on a distributed ledger. This verifies the authenticity of the data, ensuring that it was not manipulated by a human or computer. But without a solution to verify the data, blockchain cannot be used for gaming as gamers cannot trust the information about the game. Thus, based on our interactions with blockchain gaming companies, we believe that the top challenge for blockchain adoption in gaming today is the lack of trusted data, not the lack of non-fungible tokens or blockchain-based games.
Understanding the Misstatements: A Brief History of NFTs and Gaming
The earliest mentions of NFTs in gaming were in 1982 with the launch of Creatures by British author and computer game developer, Steve Grand. Grand’s game was the first virtual pet, spawning a new genre of games known as artificial life, or AI. NFTs have been used in online games since the 1990s, with limited growth in the early 2000s due to a lack of trust in the authenticity of the data. In fact, the gaming industry suffered a massive security breach in 2005, when the online game company, Eve Online, suffered a major breach from hackers. At least 900,000 of Eve Online’s gamers were affected by the breach, which was caused by a bug in the game’s programming, allowing hackers to steal the gamers’ assets in the game.
Current Status of NFT Adoption in Gaming
Fast forward to 2019, blockchain gaming companies are actively building games that use NFTs, with the first being Cryptokitties in 2017. In fact, more than 80 blockchain gaming companies have been identified, with more than 35 of them actively engaged in building blockchain-based games using NFTs, and actively seeking investments. Other blockchain gaming companies have emerged since the launch of Cryptokitties, including developers of Magic items (Spells of Genesis), unique avatars (Avatar Paradise), and unique digital collectibles (0x Universe). Given the current status of NFT adoption, the recent misstatements that NFTs are not being used in blockchain games are clearly not true.
Potential Impact of Blockchain in Games Going Forward
As the adoption of NFTs in games continues to grow, we believe that the impact of blockchain in games will also increase. Some expected benefits include: – Reduced Cost for in-game Purchases: Blockchain-based games can use smart contracts to execute transactions, which can reduce the cost of each transaction and open new revenue streams from gamers eager to buy virtual goods with cryptocurrencies. – Better Recognition and Rewards for Gamers: Blockchain-based games can also use smart contracts to implement a reputation system and provide gamers with rewards, such as better access to games and in-game goods and services, based on their reputation. – Greater Transparency and Security: Blockchain-based games can also use the distributed ledger and smart contracts to provide transparency and security for all transactions, such as purchases of virtual goods, gifting, and tournaments.
The Challenges of Blockchain-Based Games Using NFTs
While we believe that there is significant potential for blockchain adoption in gaming, as evidenced by the growing number of companies building games with NFTs, there are challenges that must be overcome. These include: – Scalability: Many blockchain-based games are built on public blockchains, like Ethereum. However, scalability on the Ethereum blockchain has proven challenging for many applications, including Cryptokitties (which proved to be too much for the Ethereum blockchain at the time). As a result, most public blockchains have struggled with scalability, resulting in slower transaction times and higher transaction fees. – User Experience: The use of public blockchains also presents challenges to the user experience and user interface, as gamers must go through an exchange or use a wallet application to buy and sell NFTs. The proliferation of false information on the internet also creates challenges for the user experience, as incorrect information may be accepted on blockchain-based games.