The other major category of blockchain games is those that use non-fungible tokens. NFTs have already taken the digital art world by storm, and have become so prominent social media outlets are experimenting with NFT profile pictures. In NFT games, players can earn one-of-a-kind digital assets and retain ownership of them outside of the game’s ecosystem, which sets them apart from more traditional in-game items.
It’s important to note that NFTs and cryptocurrency are intrinsically linked to the blockchain, so these types of games aren’t mutually exclusive. Some blockchain games require a cryptocurrency buy-in before players can start unlocking NFTs or use their own crypto as the in-game currency. The biggest difference is that NFT games award players with unique, indivisible, and decentralized digital assets that have the potential to rise in value based on scarcity.
Take a deeper dive into the world of NFT gaming in How NFT Games Tokenize the Digital World.
Creating real-life revenue streams using video games isn’t a new idea. Pro gamers and streamers have made successful careers out of their gaming skills, and players have been buying and selling rare in-game items for cash for years. In fact, one Second Life player actually bought the (virtual) city of Amsterdam for $50,000!
Blockchain games expand upon this concept with the “play to earn” model, which allows players to collect items with real-world fiat value — like cryptocurrency or NFTs — as they play. Unlike other digital assets that players buy, sell, and trade, blockchain rewards retain value outside of the game environment and transfer ownership to the player.
For example, one might spend a few hundred dollars for a rare weapon in an MMO like World of Warcraft, but if the game were to shut down tomorrow, that asset would be lost and the player would have no way to recoup their investment. The decentralized nature of blockchain gaming prevents this from happening because the transaction is recorded in a ledger that shows proof of ownership. Your crypto or NFT rewards won’t disappear just because the game in which you earned them does.
In addition to creating value for players, the play-to-earn model can be beneficial to developers as well. For example, Vietnamese game studio Sky Mavis requires an upfront cryptocurrency investment to play blockchain game Axie Infinity; in turn, those players can earn increasingly powerful NFTs and convert in-game tokens back into fiat. The success of this model helped earn Sky Mavis a $3B valuation, with sales of NFTs earning millions every day.
For an in-depth look at play-to-earn game economies, check out What is “Play to Earn” in Blockchain Games?