Let's talk today about the fault line in the gaming industry. It is one that I believe will soon be available on all platforms and app stores. This divide begins with one simple question: Will your platform allow NFTs What are crypto payments? Blockchain stuff?
The rise of non-fungible tokens has been a major story in the tech world in 2021. Blockchain has allowed for the creation of unique digital objects that can be transferred to owners. This opens up new opportunities in art, gaming, and digital trading cards. It seems that other media forms will soon follow, at least for now.
I have written recently about how NFTs are challenging current generation's assumptions about gaming. They can build a game from scratch rather than from the top, like the Loot Project is doing, or allow players to make money from their games, such as Axie Infinity. Aleksander Larsen is chief operating officer at Axies parent company. He told me that he hopes that the game will be available in mobile app stores within the next few month.
On Friday, however, it was clear that such games are not welcome in every part of the world. Here's Mitchell Clark at The Verge
According to Valves, games that allow users to exchange NFTs or cryptocurrency will not be allowed to be published on Steam. SpacePirate, a NFT-based developer, pointed out the change. He said the company does not allow items that have real-world value.
Steam is the largest global distributor of PC gaming software. It is the preferred place for PC gamers to purchase digital downloads, with more than 120 million users monthly. Steam pulled the rug out from under them last week as some blockchain-based games began to appear on the platform. Valve, the parent company, has not yet commented beyond its update of the Steam rules.
One of the titles removed was that of Age of Rust developer, an upcoming adventure game that rewards players who solve puzzles with NFTs. SpacePirate Games was unhappy about the decision.
The Steam view is that items are valuable and they don't allow items that have real-world value, as the official Twitter account of the game stated. Although I appreciate their decision, I believe NFTs are the future. That is why I began this journey with you all.
One app store can close and another one opens. Epic Games Store, which Fortnite's maker launched in 2018 as a Steam competitor, quickly stated that they are open to NFT-based games. Here's Clark again
Epic answered our questions about whether NFT-based games were allowed. However, Epic said that there would be limitations and that it was open to working with developers who are just starting to explore the field. Epic also states that developers will not be allowed to use Epic's payment service to accept cryptocurrency; they will have to use their own payment methods.
What is an NFT? You can buy and sell unique digital items, and track who is the owner using blockchain technology. NFT is an acronym for non-fungible token. It can contain any digital item, such as drawings, animated GIFs and songs. An NFT could be unique, such as a painting or trading card. The blockchain tracks who owns the file. Recent headlines have focused on NFTs, which can be sold for millions of dollars. High-profile memes such as Nyan Cat's deal with it sunglasses and Nyan Cat are both up for auction. NFTs are also making headlines due to their huge electricity consumption and negative environmental impact. You can also read our FAQ about NFTs if you have any questions.
This surprise was due to the fact that Epic CEO Tim Sweeney had just appeared to have completely abandoned blockchain just weeks before. He tweeted that we are not touching NFTs because the entire field is currently tangled with a confusing mix of scams and interesting decentralized tech foundations.
Sweeney, who worries about NFTs being scammy, is well within tech commentary's mainstream. Many of you expressed similar sentiments to me when I wrote last week about Axie in the Sidechannel Discord server as well as in your emails. These NFT projects are fundamentally pyramid schemes? You wondered: Why is all this on the blockchain? You told me that there are other ways to show digital scarcity than the blockchain.
To be fair, the idea of spending hours per day grinding to earn money as a Pokmon Clone player is not what most people would consider a good time. Can you even call it a job if it is a full-time job?
Despite these objections, however, the development is continuing. Every day brings with it a new round of funding announcements to blockchain-based projects. Hundreds of millions of dollars are allocated to crypto-focused startups or VC funds. These announcements often include games, which are one of the first crypto projects that attracts a user base that does more than just trade money back-and-forth. Here's an example of a company that rents Axie beasts to players in return for a portion of their income: $4.6 million.
All of this is going to soon put platforms in the same place that Steam was. Are we allowing these items into the store? It's easy to say no, but it creates an opportunity for anyone who is willing to say yes.
There is no doubt that the history of selling in-game items has been turbulent. A decade ago, the popular Blizzard dungeon crawler Diablo III established an in-game auction house to allow players to sell rare swords and armor they earned through virtual battle. Although these items were not unique like NFTs, they were valuable and rare. Blizzard discovered that the auction house had broken the game completely. People could pay to win the item all at once.
Here's Bo Moore, writing in Wired 2013 when the auction house was closed:
Diablo does not have more bosses or dungeons. The same level progression is followed by players, with harder and more difficult difficulty levels. Players will get better loot. The loot they get is not just a tool to help them reach their ultimate goal, better loot is their ultimate goal. Players discovered that buying it at an auction house was the best way to get it. They stop playing the game. They wouldn't play if the reward structure that would have motivated them was gone. Diablo had no promise of better things, so it was only stick and no carrot.
These games that offer a pay-to-win dynamic are some of the most hated, but they are still very popular. Many mobile games offer free downloads. This allows players to pay to gain an advantage over their freeloading competitors, but it can make the game less enjoyable for the majority of users. Fortnite is a more respectable game that sells cosmetic items. The pay-to-win economics is real.
There is no reason why in-game NFTs purchased from third parties should give players an advantage in gameplay. The unique Fortnite skin that was created by a well-known artist may have some value, but the gameplay balance would not change.
Even for platforms that are open to supporting blockchain integrations, there are still a few hurdles to overcome on the policy side and the user experience side. What happens when buying and selling takes place? Is the platform paid a percentage of the sale proceeds? How does the platform get a cut of the sale?
The choice is up to the platforms
While the questions will be most relevant to gaming, it is easy to see them appearing elsewhere in this new economy. Platforms will have to make a decision when this happens. They can either shut down the entire platform, like Steam, and then bet that crypto will one day disappear into the ocean. Or, they can be curious, just like Epic is, about how developers are motivated and find a way for them to be creative and financially successful.
It is worth noting, however, that NFT integration has been the other major prediction of the future made by tech leaders. Mark Zuckerberg, a Facebook employee, described this summer a world where people could rent NFT art to decorate parties in virtual reality. Futureists often refer to the foundational idea of NFT skins that avatars can wear to dress up and move from one place to another.
It is possible that all of this will also end up in the ocean. Digital scarcity is inevitable, but I believe platforms will be affected in some way. They'll need to rethink their strategies when that happens. NFTs are not a loss for Valve at the moment. However, it is possible that SpacePirate and other developers will soon be left behind.
