18 Misconceptions Gamers have about NFTs

Western gamers and developers, and this is predominantly a Western issue, have come out strongly against NFTs - but there is an information gap that’s inflaming the situation. As both an experienced game developer and someone who’s been involved since the early days of NFTs in 2014, I’ve collated many of the statements from both sides to attempt to find some middle ground. Notably, the pushback that we get in Western games is not happening elsewhere and in many other sectors. The Verge speculated on possible reasons in this article.

NFTs are the future of gaming and are being forced on us

FACT CHECK: False

When you hear an advocate or investor claim NFTs are the future of gaming, they’re almost certainly wrong. This does not mean they aren’t useful, however.

It’s understandable that gamers feel like publishers are going to ram NFTs down their throats, including charging people more. None of us want that to happen and nor do I believe it would be a remotely successful strategy. Publishers could help themselves by focusing on free/low cost NFTs and experiments outside of big brands.

NFTs are a way to fleece gamers out of more money

FACT CHECK: Only if used that way

Just as free-to-play can be abused, so can NFTs. Because NFTs are still at an early stage and attracting a lot of interest and investment, some people are trying to take advantage of the situation for personal gain. If you think a game is fleecing you, make your views known and don’t buy the content.

NFTs are on Bitcoin

FACT CHECK: False

Bitcoin has nothing to do with NFTs.

Large companies are scared of NFTs eating their lunch

FACT CHECK: False

This story is often pushed by the NFT crowd. However, those large companies can purchase or invest in successful companies in the NFT space, as we’ve seen with the RTFKT (Nike) and Axie Infinity investments. Numerous big brands are already exploring what NFTs and web3 means to them. However, that doesn’t mean some crypto brands won’t compete with classic brands, just that companies are not scared of it.

NFTs are only for digital goods

FACT CHECK: False

Whilst an NFT itself is digital, it can be associated directly or indirectly with a physical item. I own several physical items, such as sneakers, clothing, paintings, prints, cassettes, and vinyl toys that were part of a digital NFT purchase, to which that purchase gave me exclusive access.

Moreover, several projects are focused on directly associating the two via physical tags. This would significantly reduce fraud and provide valuable provenance. Besides, it feels great to receive physical merch through the post and that’s never going to change.

NFTs are also being used extensively in industry and by major brands, keeping a digital ledger of the source and authenticity of real things. There are digital twin NFTs of everything from durian fruit to high-end luxury goods, and they’re also being increasingly explored for ticketing purposes.

All NFT games are play to earn

FACT CHECK: False.

Adding an NFT item does not make it pay to earn, it just means you can resell it. This is not new and many games support resale on steam. The difference here is the item is no longer bound to Steam or any other platform. This is a net positive for gamers but adds to complexity for developers with regards to economy management due to new externalities.

I want to play games for fun but Play to Earn turns it into boring work

FACT CHECK: It’s complicated

What is Play to Earn (P2E)? People hear different things when the term play to earn is used, even me. The canonical example is Axie Infinity, where playing Axie provided supplemental income in some countries in 2021. Playing the game well allows people to earn money as long as they understand the peaks and troughs of the economy. They don’t need money to start out due to scholarship schemes from the likes of YGG.

The flip side is that there are a lot of unknowns. How sustainable are the game economies? How will they fare with increased competition? Can they be fun enough? How can we stop P2E guilds from being exploitative? The peaks and troughs could catch people out, games could be used in an exploitative way, the economy managers are able to make disruptive and costly changes (and front-run them). In some cases, does fun even matter if the economy is working? Perhaps it then isn’t a game in the classic sense.

There has been a rush of investors to this kind of play earn game, but in my opinion, it’s likely almost all will fail, especially if they’re game-industry-led. If you’re a game developer and you’re being pushed in this direction, you’ll want to get out now unless your team really knows what it’s doing or is very open-minded and good at research, and that means extensive crypto finance and crypto gaming awareness. If your game is pay-to-win or hyper-competitive, even more so - though Jon Jordan and acquaintances in Korea & China tell me this is acceptable outside of the West.

If we consider play to earn instead as the possibility to earn money designed into the economy, including through re-sellable cosmetics and tournament rewards then:

Play to earn opens up gamer income and eSports potential to a wider audience.

It could be expanded further to include early adopters, whereby those early owners of NFTs for the game benefit through exclusives and potential rises in value of those NFTs. This is a true fan model. A game’s early adopters are incentivised to be your biggest marketeers, helping with marketing and discovery issues. This doesn’t need to be about being or getting rich. A $5 limited item works just as well as a $200 one.

Play to earn also includes economic games which are made possible from crypto. These look nothing like the traditional games you’re used to and are their own niche, e.g. Creepz. I believe these are much more viable than pushing play to earn into traditional games since all participants are knowingly playing an economic game, however typically these games need people to pay or perform some work to get started.

As a game developer, I’m have to put NFTs in my game

FACT CHECK: False

If anyone tells you that you have to put NFTs in your game then walk out and close the door behind you. If anyone tells you that you should consider putting NFTs in your game then only listen if it’s an area of interest. NFTs are early, unproven in-game contexts, and immature in a multitude of ways. For this and PR reasons don’t put NFTs in your game, especially existing IP, unless you’re certain it’s a direction you want to take.

NFTs will be usable across multiple games

FACT CHECK: It’s complicated

For the vast majority of games, this is neither desirable nor feasible. Every product has different technical and aesthetic requirements and gameplay balancing if utility is involved, as well as there being marketing and legal considerations. Crypto gamers who push this narrative are incorrect because they don’t understand the issues but it’s interesting that they’re excited by the idea.

Cross product NFTs do make sense in the following situations:

• Issued by a brand rather than a game developer: e.g. Nike, Marvel. The technical implementation will still often be per game for the above reasons, and this may range from playable characters or exclusive skins to priority access and limited tournaments.
• Same IP, but perhaps different developers taking the licence.
• Collaborations to bind communities, e.g. indie developers or certain genres.
• Bottom up community IP, e.g. https://www.lootproject.com.
• Open IP, allowing users/devs to create their own content from your IP, building your brand too.

NFTs are bad for the environment

FACT CHECK: False except on Ethereum, where it’s complicated

I’ll try and do justice to a hot topic in as short a space as I can.

There is nothing intrinsic to NFTs which makes them destructive to the environment.

As of February 2022 we have 20+ NFT platforms and only one of note uses energy as fuel, Ethereum. The rest have negligible environmental impact, no different from when you’re streaming, playing games, using your phone, and so on.

So why do you keep reading that they are?

The first major NFT platform to become popular was Ethereum and it’s where most of the high value NFTs exist. Ethereum uses something called Proof of Work (PoW), unlike the other platforms, because it’s an older technology. PoW requires energy as fuel and so people equate using NFTs on that platform as using energy for every mint. Irrespective of the merits of that argument, Ethereum does use a lot of energy.

Ethereum is leading the way in developing a highly decentralised non Proof of Work implementation. It’s in the final stage of migrating off Proof of Work, thus removing its reliance on energy with a 99.95% cut, but it’s taking longer than anyone would like. Part of the new network has been running for over a year but merging the two networks is behind schedule. As things stand, it’s likely to be late in 2022. The delays are tiresome but it’s an incredibly hard piece of technology to develop.

How can you trust this is true? Surely they could be lying?

Ethereum is a community-heavy project supported by a non-profit foundation. Everything is done through open-source software from paid and unpaid volunteers, researchers, and foundation staff. You can find all discussions and developments in the public domain, e.g. on Ethereum.org. People have got so used to being lied to by companies about energy saving that they struggle to believe this, but crypto is a ground-up public technology whereby its community has a significant, and often complete, say in its development. This is one of the most important and lesser-known aspects of crypto.

As things stand, PoW currencies use between 0.1 and 0.15% of the world’s energy, much of it renewable. This is unacceptable and needs to stop but it is by no means alone.. It’s arguably a similar amount to that used by gaming. Irrespective of whether one values the same as the other, it’s the same energy usage therefore if PoW crypto is burning the world, then so is gaming, and fashion, and more arts/tech sectors.

Hyperbolic rhetoric is there to make you angry and dehumanise, rather than stop and think. Newer,  non-PoW currencies use a negligible amount of power. If they became globally used by everyone they would still be unlikely to require anywhere close to the current energy used by PoW, especially as the old approach of replicating everything is being replaced through new approaches. Besides, if there was global adoption there could be no argument about utility.

How do we actually fix the climate?

Not with social media theatrics but by fixing our sources of energy, which means pressure on governments, transport, and energy companies. Reducing energy usage is incredibly difficult. We should try, but the only real solution is to fix energy sources and infrastructure.

Blaming consumers, artists, game devs, crypto, and so on is going to achieve very little except cause division in an already divided world, whilst certain sides of the political spectrum continue to deny it’s even a problem and spread misinformation. It’s the ultimate self-defeating strategy.

• https://www.theguardian.com/technology/2022/jan/30/how-do-we-solve-bitcoins-carbon-problem#:~:text=The latest calculation from Cambridge,countries of Ukraine and Norway.
• https://blog.ethereum.org/2021/05/18/country-power-no-more/
• https://ethereum.org/en/upgrades/

Everything an NFT can do can be done on a database

FACT CHECK: Only in a world without humans.

Strictly speaking this is true but only if many conditions hold, including:

• The database is perfectly secure.
• The code used to input/output from the database is perfectly secure.
• The database owner is 100% trustworthy at all times now and in the future.
• Everyone everywhere agrees to use the same precise protocol and only upgrade slowly and together.
• Everyone everywhere agrees to make it permission-less regardless of who you are and where you come from.
• The API is perfectly available and cannot be blocked for any reason by any party.
• All countries unified many of their laws, especially around finance.

Blockchains get close to meeting or sidestepping all of the above conditions but a database can’t get anywhere near because blockchains solve the problem of trust between untrusted parties. This is not the same problem databases are designed to solve.

Those claiming that databases can do everything a blockchain can have missed the very problem blockchains solve that databases can’t, their entire reason for being, the removal of the need for trusted entities.

Engineers often become very myopic and miss the big picture, in this case believing that blockchains replicate what we already do but with far less efficiency. They correctly state that a game inventory or currency does not need a blockchain; a database does it far better.

The correct question to ask is:

What opportunities does solving the trust problem reveal?

NFT usefulness is the cause of many arguments but, in the context of NFTs, could the claimed benefits be reproduced on a database? No, for all the reasons above, although the very existence of NFTs may push innovations from centralised companies such as Valve.

What if Valve added functionality to the Steam item platform that allows full permission-less programmable assets - game items, currency, memberships, etc?

Game developers would interact with the Steam pseudo-NFT API much easier than with decentralized technology. The problems include:

• Valve has the ability and the right to limit platform access to a subset of developers.

• Valve has the ability and the right to modify data, move assets, remove assets/titles, and block users.

• The API can change over time and on a whim at Valve’s discretion, breaking old projects.

• Valve is legally bound to ban or limit many financial uses and block many jurisdictions from some or all facets.

• Valve can remove ther API at any time.

• Valve can be hacked from internal or external sources.

• Valve sets all its own fees and its aim is to make as much money as possible.
  Blockchain fees aim to be the most efficient to allow the platform to be secure and without spam;there is no profit element outside of the highly competitive security model. This security is offered by multiple parties, usually being open to anyone to do.

• Non-Valve platforms will not allow Valve assets on their platform since it’s direct competition.

  
  

We’ve seen all of this played out before: old games being removed from stores; APIs constantly changing and deprecated; companies go under; databases hacked from internal or external sources; over-zealous operators banning accounts or removing people’s assets - Amazon removing purchased Kindle books from users, Sony refusing to allow cross-platform gaming, and so on. None of this can happen with NFTs unless through a very explicit design decision within the smart contract and evidenced socially.

This doesn’t mean Valve’s implementation would be without value as it would still be a significant improvement on what is currently offered, and it would avoid inefficiencies, UX, and privacy issues that might occur with blockchains. Without blockchains proving demand, however, they’d never even consider it.

The starting point for NFTs is that the item owner has all the property rights.

NFTs are sovereign property protected by an owner’s cryptographic key(s) and where there is a provable chain of ownership, signed by those keys.

No system or entity can break this chain, otherwise it isn’t an NFT.

Note that IP rights are a different topic from property rights.

Users don’t care about decentralization.

Users don’t care about features, they care about benefits. While users in the NFT space believe they’re experiencing benefits, many of them don’t know anything about decentralisation and yet they still go through the overly tricky UX and financial hurdles of using NFTs.

NFT buyers don’t own the image they’re collecting

FACT CHECK: It’s complicated.

When you buy an NFT, you do not own the associated IP but typically you’ll have a right to display it or use it just as you would with any artwork or music. NFT creators can rely on the default legal position for their IP or specify their licensing terms when issuing NFTs. Some do give their NFT owners limited or unlimited commercial usage rights.

NFTs are just jpgs. Right-click Save!

FACT CHECK: False

NFTs are not just jpgs for exactly the reason people joke about. Art/music NFTs are a freemium product. Anyone can have a copy of the art or music, but that's not where the value is. That doesn't mean the content is completely separated from the NFT as they're co-dependent, with the degree depending on the item and artist. As successful musician RAC puts it:

“a lot of people seem to miss that the entire point of NFTs is to make content FREE while making ownership scarce. nobody is forcing you to pay for an NFT, you can still enjoy it FOR FREE alongside everybody else. you like my music? you can have it for free.”

The value is in the ownership and the perceived value from the community. This is no different to owning an original print or artwork -  it's the digital equivalent. Anyone can grab a Banksy rip off for little or no money but only the certified (third party authenticated) or authorised work (Pest Control) has value. NFTs automatically have this provenance. Often ownership comes with community membership perks too, such as freebies, private channels, and exclusive or early access to more work from the same artist/dev or others. NFTs can act as access tokens to a wider network.

NFTs can represent artwork, music, be used in fundraising as Kickstarter style rewards, provide gamers with a say through governance, provide a means to share royalties (see <https://royal.io/](https://royal.io/) for a music example), be membership/brand tokens (see Adam Bomb from streetwear brand The Hundreds), and some rather crazier things that come from the crypto world of staking and airdrops. You may not believe this is utility, that it’s required, or you may consider the art is terrible, or not believe it requires decentralization, but other people disagree and the market is evidence for this.

No one is forcing others to participate. RAC continues:

“we don't need to convince you to join the revolution. just continue to enjoy the free content we make for you, except this time we're actually getting paid for it. how that is offensive, i do not know.”

NFTs are scams and grifts

FACT CHECK: You like potato and I like potato

It’s a little presumptuous to believe that all the people now using NFTs are only in it for the money, as buyers, sellers or issuers. NFTs cover the whole gamut of good and bad, creative and dull, profit-seeking and charitable. Look into the smaller artists and their communities such as SuperNfty and Trym Ruud.

PFP projects are poorly understood by the non-NFT crowd but I consider them the pop music of the NFT world. They’re about communities, reputation, and trading, while the art is frequently secondary and often poor. The top PFP projects are brand building across multiple mediums, supported by 1000s of true fans incentivized to play their part.

However, the bleeding edge of innovation does always have bad actors, even more so when money is involved. We should not tar everything with the same brush but we do also need to do much more to dissuade malevolence and to protect users.

RAC states:

“Claiming all NFTs are a scam is about as tone deaf and uninformed as it gets. It's pure ignorance. It's like saying all cheese is bad, or that all music sucks. Yeah, some are bad, but like anything, there are tasteful and smart and interesting ways to do anything.”

**
NFTs are terrible for creatives**

FACT CHECK: False

Itichio recently stated this as fact, yet came to this conclusion without speaking to us.

I’ve seen many people tell creators how bad crypto is for us, which is odd because they never asked us first. We’re the people creating, collecting, nurturing communities, being able to sell work that previously people expected for free. We’re the ones able to cut out the agents, the galleries, and expand our audience worldwide, speaking directly to our fans and making our creative work with them as well as for them.

NFTs are the ultimate true fan model. That can be abused and some of those NFT stories you hear from celebrities and brands are examples of that. These are frowned upon by most of the NFT community and are seen as a way to make quick money without providing value but there should be no pretence that they don’t exist.

If you believe social media, us creatives should be front and centre explaining how we’re being utterly ripped off but we’re not.

Instead, we’re in complete control of our own destinies, not at the whim of corporates or VCs. That’s why we love crypto - because we have the power and get the rewards, not Valve, Fiverr, Spotify, etc. Importantly, we include you, the community, the fans.

The comeback I often get to the above is - “well you would say that, you’re making money.” To which I say, “yes - did you not just hear yourself?!” I’m in control, I can sell direct to my audience, I work with them, and I am that audience for many other creators. It’s not perfect but we took (more) control of the asylum and took it away from the big corporates. New ones will appear in crypto but they can never have the power to make you all or nothing again, and you can always make your own path.

RAC’s take:

“I’ve personally taken a more fine art collector first kind of approach than mass marketing my NFTs. It's more of my speed and I can focus on a smaller subset of people. I have 3.5 million unique listeners per month on Spotify, yet I made more income from 5 collectors.”

Artificial scarcity is a horrible idea

FACT CHECK: Artificial scarcity has always existed

Artificial scarcity has always been used to create a degree of exclusivity, whether by artists, musicians, trading cards, and membership schemes. NFTs generalize that to the digital domain but even there it’s existed before, within games and Kickstarter rewards for example.

Again, to quote RAC:

When a work is priced by creating infinite digital copies, it’s no surprise that it’s priced incredibly low. It’s an old physical world concept that was embraced by web2. web3 flips this concept and provides a new model. Infinite free access for all but scarce ownership.

In web2, without any kind of scarcity pricing things per unit makes no sense given there’s zero cost to copy. itunes 1 dollar per mp3 makes no sense and it was a knee jerk reaction to piracy. Spotify continued this trend and innovated into what we have today.

Pricing anything per play/unit became a race to the bottom which got us to where we are today.

If a database offered the same generalisation, the company running it would be shut down because it’d be impossible to police or comply with an assortment of multinational legislation. It’d also struggle to find the right business model. Most blockchains solve these problems by being permission-less and not needing a business model. The most decentralized ones, such as Ethereum, are essentially run by users for users - they’re self-governed.

NFTs are bad because capitalism/monetizing everything/make the rich richer

FACT CHECK: Mostly False

NFTs are nothing more than a permission-less digital asset. People pay for things I consider daft all the time. I don’t buy digital game skins or trading cards, I don’t collect stamps or Ferraris, but I appreciate that many people do.

The issue here is NFT markets involve zero friction and the token can represent anything, therefore if person A sees value and person B doesn’t, who is right? The answer is it’s in the eye of the beholder. B doesn’t get to dismiss an entire platform because they think A is crazy. High value and crazy NFTs get headlines but look beyond that, especially to non Ethereum platforms where NFTs can be a few cents.

The accusation that NFTs make the rich richer doesn’t stack up either. Crypto didn’t come from the rich and it’s used heavily outside of the west. Crypto has made some people rich but it’s not a pyramidal structure, it’s a complex web of transactions. Similarly, in the general case, projects are not about selling to the next greater fool. Prices rise and fall based on any number of aspects, people buy, sell or hold for numerous reasons. The vast majority of NFTs will never be sold and it’s not all about trading despite what you may believe.

Note that NFTs don't need to be paid for, they can be free. They don't need to be scarce, they can be common. They don't need to be freely transferable, they can be locked or subject to transfer rules and royalties.

Try a free, no environmental impact NFT yourself with a POAP: https://poap.xyz/

What is true is that NFTs do allow anything to have a value attached with all the negatives that implies. This takes the concept of financialization to the extreme by allowing anyone to do it to almost anything and it’s understandable that this may be hard to accept for many. Despite this, the NFT crowd encompasses all sides of the political spectrum and the art bias means many lean strongly left (myself included), while in Bitcoin, the lean is to libertarianism.

The Atlantic have an excellent __article __on the history of financialisation.

NFTs only link to art which can disappear or change

FACT CHECK: Mostly true

NFTs are tokens that contain and point to additional data. External data may be on a decentralised platform, e.g. IPFS (medium persistence) or Arweave (high persistence), or a centralised server (low persistence). Some data is mutable (can be changed) and some is immutable.

Whether you want mutable data depends upon your application. For a game, levelling up of NFTs or image updates may be important. For artwork, you may want permanence.

Some platforms and projects have not done a great job ensuring persistence of data through the use of decentralised networks and there’s a considerable push to ensure only decentralised networks are used. They’re not perfect in terms of persistence but they provide a higher degree of persistence than centralized servers. They’re also a technology still in development, like all NFT technology.

What happens if the image is corrupted or a centralized server goes offline?

We’ve already seen what happens when things go wrong. The token is either wrapped or can be exchanged for another and it’s the community that takes care of this. Whether the data is correct is established by consensus and typically it’s easy enough to find a cache of it. Someone even kindly did a torrent of all nft art.

NFTs are susceptible to piracy
FACT CHECK: True

Digital piracy is something I experienced as a gamer in the 80s with tape and disc copies, as a developer in the 90s with online copies, as musicians and video creators found in the 2000s with Youtube, and so on.

Decentralized technology allows anything but the gateways we use to access it do not. These platforms have to crack down on misuse of IP but they are not doing a good enough job to protect either creators or users. The entire sector is deeply unhappy about the state of scams and rip-offs and I hope 2022/3 will see progress made.

Of note, however:

• Most examples of IP theft is listing content for sale, not actual sales. No one wants to buy fraudulent IP and few people actually do, other than when they’ve been scammed.
• Most successful IP theft in crypto is of other big crypto projects. That's almost always someone replicating a project on a new chain or trying to scam fans into thinking it’s the actual project.
• Some of the supposedly ripped off art was issued with a license allowing commercialisation. At that point it isn't IP theft and becomes about ethics. However, if you choose to have open IP you're specifically allowing commercialization by third parties. You don't get to take that back when new commercial platforms are created.
• Where the IP theft is real, centralised access points have to do a much better job.
• We’re only one year into NFTs being known by a mainstream audience and it will take time to find the best approach. This wasn’t a problem until 2021.
• A small minority of hardcore crypto users don’t believe in intellectual property, or will choose to ignore it if they can make money.

Final Comments

NFTs are a weird beast and such a fundamental base layer that all manner of good and bad can be done with them. I find that people need to adjust their viewing angle or have to participate to get that aha moment - not everyone will. Try a low-cost NFT platform or grab a POAP, join some communities, solo artists and large PFPs, and experience for yourself.

Engineers particularly struggle because they get caught up in the database argument or the state of today’s immature technology. What I’d say to them is not to overvalue their own expertise and not to undervalue the expertise in the crypto space. I’m an engineer myself and I know how technology has changed over time, its lack of maturity, that it’s incredibly complex, and that it’s intrinsically intertwined with how people use it. You can’t possibly make good engineering judgments if you don’t even believe in or understand its use cases.

Collaborations, creativity, and community are the heart and soul of NFTs, not get rich quick schemes and money. They play a role in the incentive structures binding people together and providing liquidity, but to focus on them is to miss why they’re so sticky.

NFTs are probably here to stay. You don’t need to buy them and you don’t need to use them in your games but can we stop with the mob mentality and daft statements about how you’ll never use something you don’t understand?

What am I, Sillytuna, working on?

Soulcast will provide 2d and 3d artists with a new way to issue content and for their collectors to personalize their digital gear - from skateboards and game characters to sculptures and PFPs. This gear can potentially be used across multiple applications in AR, VR and virtual worlds.

Clodhoppers is an 8 player stop-motion brawler which we’ve developed entirely in public for a few years, with all builds free. We’re now exploring the use of NFT cosmetics instead of using a Kickstarter-like platform and further cosmetics for regular gamers.

Sploot is a 100% community-managed parody sports project. All funds belong to the community who then decide how to spend them. That a bunch of anonymous people can collectively and safely manage large amounts of money is something that only crypto allows.

The Sploot community includes writers, artists, musicians, marketeers, designers, developers, and sports fans trying to make a new world of narrative-based parody sports by starting with the core assets - players, fans, and staff. Sploot have commissioned two games, one with an experienced game developer, and will issue NFTs and teams to be used across multiple games. All of this without a company, regular profit motive, and more or less done on a volunteer basis. We’re partnering with numerous other sports projects to make their NFT holders part of this too. Collaborations FTW!

I also work on multiple generative art projects, angel invest, and advise several projects and artists.

Special thanks to Rupert Loman, Pet Perisha, Kate Baucherel, Kerb, and multiple anons for feedback.