Do NFTs Belong in Game Development?

NFTs and Crypto Currency are a dividing subject amongst game developers. In the indie community you will see uproar over a game engine accepting funding from a Crypto based studio. But at the same time there are an enormous amount of effort going in to developing games around this technology. Most recently Dr Disrespect via his new studio Midnight Society has announced that his game studio will be offering early access via the purchase of an NFT.

At this point the Metaverse has become a house hold term and reports of big money being spent by certain individuals to acquire in game items and “plots of land” are headline news. Surely, enough developers believe in this new tech to create such models. Or is capitilism to blame? Stick with me and we’ll find out.

What is the BlockChain

A blockchain is a chain of blocks that contain records and information linked together using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. The ledger is distributed amongst a peer to peer network making them incredibly difficult to alter and transparent to all the users.

NFT stands for Non-Fungible Token. Not only can a block chain be used for crypto currency but they can also hold data and track assets which can be tangible like a house or a car or intagible like a contract, patents, Digital Art or even In Game Items. So you may have seen the bored apes or gary vees… vee friends. The point is, you can use the block chain to store information about things and those things can be almost anything. In the Case of a bored ape, it’s just an image used to show off wealth. Gary Vee’s is an image but also a ticket to a conference. Which is interesting because then the market can decide the price to the conference (although I suspect that’s not the driving force for the price.) So you get idea where people are trying to use the NFTs to give people another way to access their products. In theory you could do the same thing with games. And Midnight Society is going to try and do exactly this. Other people have also tried to do this to varying degrees of success. But should this be the future?

My History With Crypto…

I should probably tell you a bit about my own relationship with all of these ideas. I am a game developer on the side but I actually work in finance. I have a degree in commerce with a Major in Accounting and Economics and when I was studying back in 2011 Crypto currency and block chain technology was only just starting to gain a spotlight. I remember in a discussion during in a Macro Economics class where the idea of a decentralised currency and blockchain technology were discussed. The idea at the time, at least at my school, was the blockchain would be really useful and had potential to be utilised but the currency side of things would be shut down in a matter of time. Since it was mostly used for illegal transactions and can’t be controlled by the government, and control of currency is fundamental for managing the economy. I would love to hear what my professors would say now, considering the use of Crypto has shifted away from a currency to an investment product.

Naturally with this frame, even though I was aware of bitcoin at an early enough stage. I never bought any, because any day now the government will seize control. And if you think that it’s primary use is as currency then holding doesn’t make much sense either.

So the economists and I were wrong in 2011 but these days crypto currency contrary to it’s name, is most often used as an investment instrument not a currency (it’s not really pratical as one) and the block chain is becoming a more useful tool with things like smart contracts. Everyone is talking about web3 the Zuck won’t stop yapping on about the meta verse and maybe I’m just some out of touch guy but I still struggle to see the point. Like we did we forget that second life was a thing? And What about Roblox? It seems to exist in a world without the blockchain and people are still spending enormous sums of money just to buy in game items and currency. Sure it could be done using a Crypto Currency and the block chain to distribute in game currency and track transactions for in game items. It could but it’s not at all necessary for a game like Roblox, The Sandbox or Horizon Worlds. Sure in game items could be an NFT. But it’s not going to change what the game is at it’s core.

And I think what a lot of people forget, when thinking about the block chain’s role in the digital space, is what gives things value? Why is a bored ape valuable. Why can’t I afford a house and what’s going on with price of Fuel? Everything that we buy has a value. Fuel and houses are expensive because I need them to live and they are becoming more and more hard to find. I have a need and they’re scarce. Or in other words demand far outweighs the supply. An NFT has no use, we don’t have any need but the demand also far outweighs the supply. The blockchain gives people away to track the quantity of a digital product like a bored ape and create an artificial scarcity. If it wasn’t for the blockchain the items would have an infinite quantity so the supply and demand model can’t be applied to it. It’s a ledger, not magic. It doesn’t inheritly make things valuable because they’re suddenly on it. It’s because the people who made the NFT found a way to get people to care about the product enough to want it and we have a way of assigning and tracking supply and ownership of it. That’s it. The value of an NFT comes from peoples desire to own something that no own else has. OOOOOR because they think other people will want it in the furture. Because there’s a lot and I mean a lot of speculation that goes on with these NFTs. Even more demand is being thown in because people think other people will want them in the future.

Over Hyped and Under Delivered…

And this where a lot of my critism comes from. NFTS, Cryptocurrency and the block chain are fine. They’re not even that revolutionary. Like I said before it’s a ledger. And ledgers are boring, trust me, I deal with them every day. They’re more like the jump from the horse and carriage to the car than the invention of the wheel. We can still get from A to B. Only it’s not really faster, and now instead of my bank and potentially my government knowing all my purchase transactions, everyone does. If regular currency suddenly died out and crypto currency was the dominate form of exchange our day to day life wouldn’t really change execpt for the way transactions happen when you swipe your card oh and jo blow from down the street could see my spending if he knew my wallet address. It’s all very under the hood and while I really like some of the ideas I fail to see the reason for the increase in value except for the speculation aspect combined with artificial scarcity. The fact that it even tries to call itself currency these days is laughable, the dollar does not and should not appreciate in value like most people want crypto to. You want the opposite in a real world economy, you want people to have an incentive to spend money. It’s what drives the economy. There’s little point to hold cash these days, either spend or invest or it’s dead money. Could you imagine if the primary goal of money was to hodl it all. Good luck eating bro.

It’s Not All Bad

Now all of this might sounds like I’m against the use of crypto or nfts in video games. And to an extent that’s mostly true. But not in the way you might think. These days crypto is awash with rug pulls and companies seem all too eager to mint their brand and sell it off to the highest bidder for a bit of quick cash. The greed has driven the consumption of these products to an unprecedented level and People have attached the idea that it’s all some get rich quick scheme. It fuels a mania of spending like capitalism have never seen before. But I think the block chain could have a place in Game Development. Just not at the Centre. So let’s look at some of the current ways that developers have tried to use the block chain in their game.

Axie Infinity is a self proclaimed play to earn pokemon styled card battler that allows players to collect Axies as pets, battle breed, collect, raise and build kindoms for their Axies.

On paper when I first read about this without going in depth it seemed fine in principle, right. The items and cards you get while can be sold on the block chain as an NFT. Those very same Axies can be used to battle. Naturally, more powerful Axies fetch a higher price, so players are incentivised to Pay more to get ahead. Which in priciple is not that different from a regular gatcha games (which are also exploitative) except you can pull your money out by selling your axsies and the currency that goes a long with it.

Play to Earn Is A Marketing Ploy…

The more I started reading about it the more it started to seem a little bit predatory that a regular gatcha game. There’s all this talk about managers and scholars that sponser new players and it’s got a very multi level marketing attitude about bringing in new players. This is mostly due to the fact that the economy of the game relies on new players purchasing Axies that are bred in game. Of course, if there were fewer players than new Axies then the price will fall. Also if the player base starts to dip then I imagine the economy will be in for a freefall. When I started to look at the buy in price some people where talking about, I was astounded. It looks like a bare minimum spend of 60 USD. Which on surface seems fine. Regular Games cost at least that much. But I also read that you can spend upwards of 1000 to get a good team. And while that set’s alarm bells off in my head that this is a trap, the obvious problem I see with this game is that it depends on new players coming in to buy more Axies. You can tell that they’re trying to attract people with the idea that they can make money, which, if that’s your main draw for your game, you’ve got a problem. From what I can tell from their reddit, the feeling amongst most players is that unless you put a lot of money in, you’re going to have a hard time competing. Makes total sense from a business perspective. So you better pony up if you want to win. You gotta spend money to make money. Which, by the way is a total lie and If someone ever tells you that to try and convince you to invest in something, it’s probably a trap.

So, Is this different from any other gatcha game? Probably not. It’s going to draw additional critism because it’s promising money to it’s players, which is wrong. Frankly I find this the most distgusting thing about these kinds of games. Fundamently they aren’t that different from a regular pay to win gatcha game, really they apply the same principles but the major draw in for this game and many others is to Make Money. The only redeming factor is that at the very least you can get your money out if you do manage to get your return on the intial investment.

All Work and No Play

Then There’s the other, less insidious kind of NFT game. One where you don’t need to spend money or anything crazy like that. This is simply the skins as NFT or cosmetic items as NFTS. We attach the idea of ownershift to those items. Not unlike steam, infact probably better because if you happen to get an item that’s worth something, you can actually turn it into real money, instead of games or items in Steam’s case.

From my perspective, if it were at all possible to tear out the idea that everything on the block chain needs to be ever appreciating in value. I think that might help the case for in game items as NFTs. An example I can think of in my own experience is that I used to be a big time world of warcraft player. I played like 5 hours a day during university. And I’ve got some pretty cool shit. Stuff you can’t even get anymore, or is incredibly rare. Then I ask myself. Would the ability to sell those items on a free market for actual cash enhance or make my experience any better. Would I have hodled those items for a long time in the hopes that they would become more valuable? I would be able to cash out when I finally kicked the habit and stopped playing. Or handed over my Raptor that I may have acidently stole from my brother in law, still feel bad about that. Although even in games like this, where it’s not really meant to be play to earn, people would still try. Hell, if WoW alloud me to sell my cosmetics for real money back in the day, I would have been running Zul’Gurub a heck of a lot more, even after I got my mount.

As long as the item generation is infinite then the supply is ever increasing, no matter how rare. So hodling would actually be detrimentle in theory. Which goes against anything the crypto bros believe in. But is quite normal in the real world.

An NFT Should just be an access token to something Real!!

Then Finally we have the third firm of Block Chain games and that is Games as NFTs. Which is were the access to the game is sold as an NFT on the block chain. The most recent and notable of this is Dr Distrespect who is selling early access to his game via the block chain. There is also a number of other percs but notably they don’t effect the actual game play at all. It’s just a way to support the game. I think out of the iterations we have looked at this is probably my favourite. Since there’s no incentive to turn playing the game into some kind of grind for money. There’s still an underlying issue that people look at NFTs as some kind of investment, which they really shouldn’t.

I’ll be watching DR Disrespect’s launch to see what happens to these access passes. If people try and make money from them. Their price after the initial hype. If they sell out and there’s still demand from other players then maybe the price will inflate or if the game is bad then obviously you’re going to expect the price to tank. It’s going to be very interesting to watch.

I think I like this idea the most, even taking it a step further and imagining what it would be like if you could re sell your games in your steam library. It’s kinda dumb, since digital games are not the same as selling your disc on craigs list or ebay. They don’t deteriorate over time. There’s no different from buying new, or in Dr Disrespect’s case the game is actually Free to play so why buy the NFT. Well, there’s early access of course. But Post laung there’s an offering to the NFT holder to be able to vote on features in the game and access to special events.

So I’ve seen a lot of backlash on this but I’m actually going to defend Dr Disrepect here and his studio Midnight Society. And What I will say is: Take the NFT out of the access pass. What’s wrong with it? Nothing it’s totally benign, in fact if any other game was offering early access to the game, plus events and voting rights on features I think the community would be over the moon. That’s a lot for 50 bucks. All the NFT does is give you a way to transfer this to someone else. I think there stand to be more passes. 10K sounds like a lot but there’s a big following on this game.

Maybe there’s a technical reason, but I doubt it. Also if you buy on launch for 50 bucks then the risk of the game never launching is pretty low. This happens all the time on early access games on steam. If the price of the NFT balloons out to crazy levels then the risk of collapse becomes infinitely greater. They have a limit of one, which is really good, this will stop people from trying to buy up all the tokens to control development or drive the price up.

There’s also a 30 day lock down period so that should slow down any whales trying to manipulate this. Personally I think this is the most valid use of NFTs there could be. There is legitimate value to be had here. It’s not being sold for unrealistic prices and there are protections in place to slow down the inflation of the price after launch. So I will be watching closley to see how it pans out.

Same Same, But Different

Like I said at the top of this video. NFT and Blockchain is not some magical, revolutionary thing. It’s a ledger. Dr Disrespect could do his game pass without putting on the block chain. People do application Betas and early access all the time off the block chain. But transfering it, would be impossible. So that’s all that changes. And what I think really needs to change is the marketing and ideology around what NFT and Crypto bring to the table. It’s a convenient way to transfer digital goods. We need to let go of this “to the moon” attitude and stop sinking rediculous amounts of money speculating on Monkeys or Axies or whatever else. If we can do that and fix the energy requirements. Then I think it’s the best case senario.

Would I ever do a block chain game? No. Not right now in the current climate. I think the market’s attitude is wrong both around people who support it and are against it. I think this digital space needs regulation. And I know that’s an incredibly contreverial thing to say. But there’s a lot of money, a lot of risk and a shit load of scammers going around that need to be held accountable.

NFTs don’t give something value. Something should give value to the NFT. I think the best use for NFT in game development is either with cosmetics as NFTs or the Game itself as an NFT. Play to earn is disgusting and might as well be gambling and It should be regulated as such.

And If you disagree with that and think that the block chain and crypto can become the dominate form of exchange without government control or oversite. Then I would suggest you get a reality check. Because there’s no way that etherium or bitcoin could ever be used that way with out. Also I find it laughable that you could think that and think the price would stay high. Because it would be economically impossible. But that’s a whole other video and it’s economics not game dev.

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