12/12/2023 Managing Risks In Gaming: Crypto And NFT Integration Resolutions


“Having a receipt of an in-game item is not the same as having that in-game item.” When I heard these words coming from Asmongold's mouth about the issue of NFTs in gaming, my mind went straight to all the warnings we have heard about it already.

“NFTs will change gaming for the worse” was the viewpoint of an article by Metro almost two years ago. However, like most controversial topics, there are people on both sides of the aisle.

On one hand, we have those who hate NFTs, likening them to the coming of Satan in gaming. They see no value in this integration and highlight the risk of adding a mechanic in gaming that only a few people can interact with.

On the other hand, there are advocates for NFTs and crypto. These crypto bros often say NFTs are the future of gaming. They believe that NFT NFT0.0%0.0% and crypto integration in gaming is the convergence of financial opportunity, ownership, and community, which can result in the merger of investment and gaming to change the face of digital entertainment. Such voices have been encouraged with the entry of DrDisrespect— one of the world's most popular streamers — into the NFT space.

However, when looked at realistically, there are inherent risks associated with cryptos and NFTs in gaming. Let's take a journey into analyzing what those risks are and whether they can be resolved. Will we ever see a time when gamers and NFT enthusiasts are on the same page? Or is it just another pipe dream?

The inherent risks of NFTs in gaming

NFTs are new technologies, and with every new technology, there are risks involved,” are the thoughts most crypto enthusiasts have when they encounter critiques banding together to count the risks of NFTs and cryptos in gaming.

However, these inherent risks are impactful and should be addressed.

Multiple NFT scams continue to damage NFT’s reputation

People's perceptions about NFTs matter. Before NFTs can be implemented in a game, they must have a good reputation, which is currently in short supply.

January 2023 saw the Cryptobatz Phishing NFT scam, which led to Azuki losing over $750k and investors losing a lot more. Other recent scams, like the X2Y2 cloning scam, created a honeypot to attract people to a fake marketplace and steal their ETH ETH0.0%0.0%.

These are just the latest incidents in the long line of NFT scams that have continued to damage NFT's reputation. The latest NFT research and statistics showed that over 60% of people still view NFTs as scams.

Gamers aren't the only ones up in arms about crypto in gaming due to scams; the gaming industry is also not fully convinced that NFTs or cryptos can bring anything of value to gaming. Steam banned NFTs from its gaming store in 2021, to which Asmongold said, “He is not banning them because he hates crypto entirely. It is just that whenever 99% of the NFT promotions are scams, then maybe we shouldn't do them.”

Development priority

The other associated risk comes from prioritization. When NFTs and cryptos are added to a game, the gameplay and the player experience shouldn't become a second thought.

“Building a game is hard enough,” says Aaron Arnold, Host and Founder of Altcoin Daily. “Incorporating crypto can be a good move but the gaming studio should make sure not to have playability, UX/UI, funness, stickiness, etc. suffer or come secondary.”

This has been the case with many NFT games. Many devs have been haphazard about implementing NFTs in their games, which have been subpar with ancient gameplay loops. Dan Indiecator once wrote an entire article highlighting his experience with an NFT game, and he concluded that the game was developed without any passion.

Gamers already understand this and are pushing back against mainstream gaming companies trying to include anything crypto-related in their games, fearing that the gameplay quality will suffer. For instance, developers of STALKER cleverly introduced an NFT-based NPC as a promotional item, but the community's reaction was so averse that the studio decided to cancel the NFT concept altogether.

Exclusion due to high barriers to entry

The cost of playing NFT games drives away most gamers because the financial barriers are high. For instance, 100% Rimp, one of the cheapest Axies in Axie infinity, costs about 0.13 ETH, equivalent to $256. For comparison, a high-tier AAA game in the Web2 space is worth $90, which is a game with fully-realized gameplay mechanics and characters.

Games like Axie Infinity created financial barriers that push exclusion: “Only the rich could play as these games shot to popularity,” Arnold said.

Volatile nature of cryptocurrency

Another inherent risk to gaming stems from the volatile nature of cryptocurrencies. The constant fluctuation of NFT and crypto prices can harm developers and gamers. Imagine a game that introduces a gun as an NFT worth 0.1 ETH. As the developers are integrating this item, what if ETH's price drops? Will the developer make a rapid change in price right then and there, risking the gaming studio's reputation? What if those who buy the NFT saw its value dipping the instant they bought the in-game item? What about their losses?

Gamers are tired of over-monetization already

Statistics show that over 20% of gaming communities have engaged with microtransactions, and 41% of players make in-game purchases at least once weekly. Diablo Immortal, one of the biggest games with microtransactions, has earned upwards of $500 million in revenue.

While Diablo Immortal is free to play, microtransaction-led monetization has found its way into AAA titles that players have already paid for. Assassin's Creed Valhalla, the latest game in Ubisoft's flagship series, is full of microtransactions and has earned Ubisoft over £780 million.

However, some gamers have grown weary of this monetization. They see NFTs as cosmetic fads that add nothing more than unnecessary monetization to their favorite games and damage their gameplay experience.

Can these risks ever be resolved?

Now, the real question is can these issues be resolved? Yes, they can be solved; and the solution to each risk ranges from quirky to practical.

Dealing with the image of NFTs

The first issue is that NFT integration into video games is less about risk and more about adoption. Gamers don't love NFTs. Most rallied around this sentiment and have essentially bullied NFTs out of mainstream gaming. However, popular Twitch Streamer Asmongold has a different solution — not calling NFTs NFTs.

“Here is what I would do if I wanted to put an NFT into a game,” said the Streamer. “I would make NFTs and I just wouldn't call them NFTs. It's simple. Yeah you make NFTs and you don't call them NFTs, people don't get mad about them and that's all there is to it.”

This approach, while quirky, could be implemented for a short while and be viable until NFT integration with games has taken time to address its shortcomings.

A long-term solution to the issue would be to have more realistic expectations about what NFTs can contribute to gaming. Extolling the virtues of P2E in a realistic, subdued fashion could help diminish some of the antagonistic attitude gamers have towards NFTs.

Addressing the exclusion issue

“This challenge can be addressed by offering free-to-play models and ensuring that NFTs are optional, not necessary for gameplay,” says Bitlord, a crypto expert and NFT enthusiast active on Twitter.

This approach will not only allow those in the Web2 arena to try their hands at blockchain games but will also enhance the image of NFTs in gaming. Furthermore, such games can potentially earn renown in Web2 while still using blockchain technology.

Dealing with the speculative aspect of crypto and gaming

One of the biggest risks and a roadblock to NFT adoption in mainstream gaming is the speculative nature of cryptocurrency. The solution is simple: Decoupling the crypto's value from the rest of the market and instead focusing on increasing its value based on merit.

Bitlord says that creating in-game assets with an intrinsic value beyond speculation could do the trick. These assets could bring new cosmetics to the player characters or give players a unique gameplay feature. Focusing on utility can potentially tie the value of a crypto asset to that utility rather than to the macroeconomic conditions.

The value crypto and NFTs could bring to the gaming industry

Despite the current risks, there are many perks that cryptos and NFTs could bring to the gaming industry. They introduce the prospect of real digital ownership through unique in-game items and player-driven economies.

These economies will lay the foundation of robust gaming communities, coming together to create new gameplay mechanics and giving players a way to earn from their gaming activities. These instances would potentially heighten engagement. In addition, integrating blockchain with gaming could ensure immutable proof of ownership, ensuring players can truly own the in-game assets they buy.

Developers would also benefit as they would be introduced to a better and a more sustainable revenue model in which they won't only earn from initial sales but also from secondary market interactions. The sustainability thus created for the ecosystem could establish a symbiotic relationship between developers and gamers, making gaming great again.

However, these positives can only be realized if everyone in the crypto space starts working on resolving the inherent risks of crypto integration with gaming. The responsibility of this undertaking falls on crypto enthusiasts, not gamers. Gamers are the ones that need to be convinced to enter a world where gaming is decentralized, in-game asset ownership is real, and everyone has a stake in the development of the gaming product.