Traditional In-Game Assets
Digital assets and collectibles have been around since virtual gaming existed. When games started becoming free to download and play, developers turned to in-game content as their source of revenue, designing assets that players could purchase to unlock new features, advance storylines, or customize characters and in-game settings. Virtual gaming gained popularity, and a ‘trading’ sector was fostered within the gaming industry based on the presence of digital assets and their unique store of value.
A common dispute in virtual gaming is the ownership of assets. Despite players purchasing in-game content with fiat or earning them as rewards, game operators reserve rights to these assets and dictate how they can be used, mostly in order to prevent cheating or duplication. In other words, players do not have any control over digital assets and are restricted by game rules fabricated by the developer.
In an age of supercharged media consumption and fierce competition, developers have to constantly develop new content and utilities to maintain a steady flow of users.
Up until now however, game developers have lacked resources to build secure exchanges to manage an economy of players who want to buy, sell, and trade digital assets. Grey market sales where peer-to-peer transactions take place offline or on secondary platforms thrived, opening up a void for scammers and hackers to exploit players while providing no benefits to developers.
Digital assets are also prone to loss in the event the game operator stops developing the game or shuts down. Virtual games are based on servers that have never guaranteed permanent store of data, and there is no recourse when platforms cease. Digital assets have also been exposed to fraud and theft when operators have failed to safeguard against cyberattacks.
Who Owns the Sword?
When virtual goods are de facto forms of payment made to developers, they cannot be converted back into any form of real world value for players. Most digital gaming assets are non-refundable, non-tradable, and non-transferable. The intangibility prevents players from having any ownership, which is merely a form of license for accessing the game and borrowing in-game assets.
This poses the question then: who owns the right to these in-game assets, if they are created by developers to offset service fees, but rewarded to or purchased by players to enhance their gaming experience?
Blockchain - an open structure gaming ecosystem
Advancements in blockchain scalability and interoperability are capable of overcoming the challenges of traditional gameplay.
Blockchain games offers ownership of digital assets irrespective of the game environment itself. Open records of data including in-game history, assets and tokens will make fraudulent transactions apparent. As long as the blockchain network is running, the game and a system for trading assets safely without giving way to cyberattacks and theft, remains intact. This reduces the need for a centralized entity to administer control over gaming assets and their utilization.
Digital assets can be secured and proven on blockchain, and this transparency or “trust” bolsters transactions in the ecosystem. When players take direct ownership of their assets, they develop financial capabilities while managing their resources which will in turn grow the gaming economy.
By converting in-game assets into blockchain tokens, players can use their assets in different game environments. For example, two games built on the Ethereum network can support the same set of assets in their multiverse. Although a token may only be in one wallet, it can be applied across multiple different games or chains to give digital assets versatility and presence beyond their gaming existence.
NFTs - modern store of digital value
Non-fungible tokens (NFTs) are digital representations of real world physical items, and cannot be replicated, giving them authenticity, permanence and value - characteristics highly valued by collectors.
NFTs have properties similar to gaming assets but can exist independently of a game, as ownership is blockchain-based. Public access to NFT transaction records help validate ownership history and uniqueness (- and are a means of bragging rights for owners). Their decentralized nature means NFTs in gaming gives players full control over utilization, even if it means pulling an NFT out of the game and using it elsewhere, selling them, or gifting a friend.
For developers, NFTs allow them to sell gaming assets directly to players without incurring fees from third party intermediaries or long transaction times.
GameFi - multipurpose use of digital gaming assets
GameFi refers to the embedding of DeFi elements in gaming. Assets can be manipulated in ways other than trading or gifting. Open and flexible marketplaces will create healthier and more expansive, integrated secondary markets. Decentralized facilities gives incentivized players a platform to lend, hedge, fundraise, or exchange in-game assets for other game assets, cryptocurrency and NFTs.
Blockchain gaming will see multiple uses being introduced to digital assets which can bring increased financial value for both players and developers, and enable a more rewarding gaming ecosystem.
Traditional virtual games are currently structured so that game operators are primary beneficiaries. The unilateral flow of capital and interaction where players spend resources (time or money) to acquire in-game content they ultimately cannot control, is an order due for change.
New utilities are key to building a new gaming infrastructure. Blockchain games and dApps are poised to realize the value of digital content and asset acquisition in ways that truly benefit player-owners.