For more than a decade, people have been hailing blockchain as the future of financial technology, and for exactly that same amount of time, others have scoffed at the idea of tokens as jumpy and unpredictable as cryptocurrencies ever replacing the precious dollar.
Unfortunately, those people have a point. The crypto market is far from stable enough in its current state to be the sole system one hosts their finances on, and too few businesses accept payment through it. Not to mention, the average crypto holder is ultimately looking to turn a profit and eventually sell back to fiat currency anyway. Is blockchain still the future of finance? Sure, though it still may be a generation or more away. On the other hand, the blockchain domination of digital asset trading is coming. Fast.
The Rise of NFTs
Over the past year, non-fungible tokens (NFTs) have erupted from a niche in the world of blockchain to a headlining topic in finance news, essentially as the technological age’s baseball card. For those unfamiliar, an NFT is a blockchain token, as are Bitcoin and Ethereum, but it differs from these cryptocurrencies in fungibility. A Bitcoin is a Bitcoin, meaning that your one Bitcoin is no more valuable than my one Bitcoin because they are fungible; they are the same. An NFT is non-fungible, meaning that two NFTs of the same collection or even two NFTs that appear identical can vary by orders of magnitude in value for any number of reasons. My CryptoPunk is not equal in value to your CryptoPunk, for example.
NFTs allow people to tokenize anything and everything, but most importantly, they provide digital proof of ownership and are secured by blockchain technology in exactly the same way that cryptocurrencies are. As such, it is impossible to replicate an NFT and make it indistinguishable from an official one. This is why NFTs have exploded into this generation’s collectible card, why online event tickets and paid media are being tokenized, and why in-game assets are the next to be adopted by it.
Consider this hypothetical. You’ve earned yourself a sick new Magnum skin in The Master Chief Collection on Xbox, and while it looks cool, it’s not a weapon you frequent. On the other hand, your friend absolutely can’t get enough of the weapon and wants the skin for himself but doesn’t really have anything in Halo that interests you. What he does have is an M4A4 skin in CS:GO for PC that you’ve been eyeing for a while, and you know that he doesn’t play that game much anymore. So how would you go about this trade?
Exchanging cosmetics in different games on different platforms would typically require an honor system. For example, you send your Magnum skin, and you hope that he doesn’t shaft you by keeping his M4A4 skin and then blocking you. This issue would be even more prevalent when trading with randoms on the internet whom you’ve never spoken to. This could all be avoided, however, if ownership was established on the blockchain. If the skin ownership was established with NFTs, you could authorize a secure trade with anyone on the planet, knowing you can’t get shafted across any two games or platforms. If both parties agree to the trade, it goes through.
Blockchain trading would also negate the need to worry about region locks and fees, developers reclaiming the rights to an NFT you own or dealing with third-party platforms like PayPal or Visa when purchasing assets in the first place. Developers could set prices with any cryptocurrency they want, including stablecoins like USDT (which is tethered in value to the US dollar), creating internationally fair prices. Those selling the cosmetic or item could also put up prices in cryptocurrencies of their choice or even trade them for NFTs outside of the gaming space entirely.
Because these NFTs are stored within your own crypto wallet, they are actually OWNED by you. In contrast, most in-game assets are just licensed to you and can be revoked by developers at any time, especially after server closures. By having ownership after a purchase, the fate of that item falls strictly into your hands and cannot be taken away by companies or players who hack the game. You would even have the ability to burn the item, deleting it from existence entirely and increasing the scarcity (and thus the value) of other items of that type.
Conclusion
It’s hard to argue against the security, traceability, openness, and true ownership capabilities that the move to the blockchain would bring to the world of in-game asset trading. While gas fees and a fear of the environmental effects of blockchain technology may scare players and developers away, these issues are being churned out of the crypto world as layer-2 options come to fruition. With Ethereum 2.0 on the way, those high gas fees may fall to almost negligible amounts, while this same upgrade could cut down on carbon emissions caused by NFT trading by 99%. It’s not perfection, but it’s close to it. Thus it’s not a matter of if in-game assets move to the blockchain but a matter of when.