NFT and video games: The controversy explained to dummies

It will not have escaped you, lately we have regularly witnessed controversy over the use of NFTs in video games. Ubisoft and STALKER 2 have recently been at the heart of heated debates, sometimes having to withdraw. But for an outside viewer, it is difficult to understand things given the divisive and biased nature of the subject. This was our case, so we dug a little to understand the ins and outs. With this article, we give you a summary of the situation to see it a little more clearly and form your own opinion.

Note that this article is intended to popularize and may contain approximations: it is primarily intended for the uninitiated.
Thanks to drloser for his wise counsel and ancient wisdom. And thanks to Dross for his explanations!

The poor writer trying to explain the concept of NFTs

What is an NFT?

NFT is an acronym for Non-Fungible Token, Jeton Non-Fongible in Christophe Maé’s language. To simplify, and in the case that interests us, it is a digital property certificate. It indicates that you own an image, a video or cosmetics for e.g. video games. To authenticate an owner, NFTs use Blockchain technology, an encrypted and decentralized database shared by users. You have to imagine Blockchain as an account book that is updated at the same time for everyone, which makes it tamper-proof in theory. It should be noted that the NFT in Blockchain is generally only a possession certificate with a link to the object and not the object itself. In other words, NFT is most often a simple line on a register that anyone can consult, e.g. User X owns the image: http://nofrag.com/drloser.jpg.

But why does the controversy swell so every time a publisher or developer announces his intention to use them in video games? Looking at everyone’s reactions, the debates seem to focus on two intersecting aspects: revenue generation in video games and the NFT technology itself.

Revenue generation in video games

When we talk about revenue generation in video games, it is about all the financial aspects that pertain to a game after its purchase. For example, the purchase of cosmetics, grades or equipment at the integrated store. In some cases, these microtransactions may give rise to markets where players buy or sell their goods at a price that depends on their rarity. This is the case with Team Fortress 2 hats or skins for CS: GO.

Stylish gamers can thus have the pleasure of personalizing their in-game avatars. Even better, they can make money by playing their favorite video games, sometimes with extravagant sums at stake. For reference, this skin was sold for $ 150,000 worth about nine years of work for the minimum wage! In addition, the system pays the creators of cosmetics as it gives them a percentage of each sale. Remember that before the advent of microtransactions, skins from modders brought them no money. For developers, who also collect a percentage of transactions, revenue generation of game elements helps maximize the profitability of a title. And thus to finance current or future developments.

Although tens of thousands of gamers participate in this system, revenue generation in video games is not well received by all. Some regret that games suffer from their revenue generation, which is the case when readability is affected by extravagant aesthetic fit elements, or when certain objects affect game mechanics. In addition, Team Fortress 2 has been polluted for a long time by the presence of inactive bots that fill servers to recycle goods and resell them in the markets. From a moral standpoint, the revenue generation system is questionable: Games specifically created around the concept of rare collectibles seem to benefit from their users’ gambling addiction. Some lawmakers have even gone so far as to consider lootboxes as gambling. In addition, we were able to detect the emergence of illegal betting sites around skins, and the scams that came with them. We can then understand the outcry when Ubisoft announces the arrival of a new unique cosmetics store.

To summarize :

Advantage

  • Game customization
  • Possible resale wins for the player
  • Remuneration for the rail and financing for the study

Disadvantages

  • Influence on game mechanics
  • Morally questionable (similar to gambling)
  • Promotes illegal behavior
hat fortress 2
Team Fortress 2 hats have become a meme

NFT technology

If microtransactions and revenue generation existed long before NFTs, the use of this new decentralized technology allows you to relate your ownership from the game itself. For example, if you own a Bathroom Warfare 2023 swimming cap skin NFT, you will remain so even after the game’s servers are shut down and you can still resell your NFT in a marketplace. We can even imagine that your hat follows you on several different games: all that is needed is for you to be designated as the owner of the NFT on Blockchain, and the game, if it is scheduled for that, will add your hat in your inventory. In addition, Blockchain allows a degree of transparency and security around transactions, as anyone can observe them at any time. It also prevents dishonest developers from sneaking around who owns which item.

That said, NFTs have their opponents. One of the first criticisms we find comes from their total lack of interest: the problems they solve are non-existent as there are already opportunities to sell and buy items outside of games without NFT. Similarly, we have never caught a developer in cheating his database. In addition, the technologies on which much of the NFT is based are extremely polluting as they force computers to work at full speed and thus consume a lot of energy. However, Ubisoft states that they use Blockchain Tezos, which they say is much less harmful to the environment. Finally, the use of cryptocurrencies is necessary to buy NFTs, some believe the system is participating in some sort of giant Ponzi pyramid, or at least in a huge and dangerous speculative bubble.

To summarize :

Advantage

  • Opportunity to resell NFT in a third party marketplace
  • NFTs are found outside the game
  • Security and transparency of transactions

Disadvantages

  • NFTs do not solve any real problems
  • Most NFTs are harmful to the environment
  • Technology based on cryptocurrencies
Ubisoft Quartz Announce Trailer
Ubisoft’s Promise With Its NFTs (Recorded From Ubisoft Quartz Advertising Video)

Of course, this article is not exhaustive and contains some approaches aimed at making a rather complex topic understandable to the uninitiated. However, we hope it has given you the opportunity to see a little more clearly in the various controversies that will no doubt arise again when a future developer announces the use of NFT technology. However, we can be sure of one thing: When Ubisoft or GSC Game World explain that they want to integrate NFT-based revenue generation into a game, it is not to meet a request or need. But to take advantage of the current fashion and the extraordinary speculation that could bring them huge profits. After all, it is up to you to see if it should be considered a good thing or not.

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