Gamers VS NFTs - Web3 Still Lacks Fundamentals

Self-ownership of in-game digital items and tokenization of digital assets in gaming platforms will herald the beginning of the gaming aspect of the Metaverse.

However, top firms in the gaming industry have lately lost interest in NFTs, Web3, and cryptocurrency.

“Although we continue to believe there is long-term potential for digital assets in the gaming world, we have not and will not risk meaningful stockholder capital in this space.” — GameStop

Gaming companies evaluate and research NFTs regarding how they can incorporate this technology in their products, but the field (like most services stemming from the crypto space) is still row and unfriendly for mass adoption.

The concept of self-ownership of NFTs can radicalize platforms and gaming universes, although some drawbacks hinder the immediate adoption of this technology by the gaming world.

Entertainment Value

(Source: Statista)

Similarly to cryptocurrency and internet platforms, the gaming industry quadrupled its profitability during the lockdowns.

Gaming corporations employ specialists and psychologists to generate maximum entertainment value for players of their games, but also to understand the behavioral process of gamers and increase profits with various techniques (loot boxes, pay-to-win, addictiveness)

User-friendly interfaces, achievements, special rewards, state-of-the-art graphics, and design are mandatory requirements today in gaming besides gameplay.

Moreover, it appears that gamers don’t like NFTs, although this sentiment derives from different reasons.

NFTs can spoil the entertainment factor and transform the gaming experience into an unsustainable speculative hype.

Gamers, though, already pay disproportionate amounts of money to fully enjoy a modern game release. Moreover, most gamers today compete with each other, increasing the cost of their entertainment.

Gamers Pay A Lot To Stay Competitive

(Picture by Victoria_Watercolor On Pixabay)
Gaming corporations and gaming hardware companies promote competitiveness and exploit it to maximize profitability.

They intentionally allow pay-to-win processes to limit the lifespan of games, but they become profitable as they will always find users that will keep paying as long as they gain an advantage.

It is not just the pay-to-win but the excessive advantage gamers that pay more than the rest receive.

However, this is not the issue for every gamer. Some gamers achieve skills that counter any pay-to-win strategy. The learning curve usually demands hundreds of hours of playing games to achieve competitive skills.

The learning curve will sustain a competitive edge, but gamers usually have to pay a lot to gain a competitive advantage.

• Pay to Win (P2W) exists in many games today, with the extra items in the in-game marketplaces that raise stats, helping users defeat other players in PvP battles.

• Low latency (ping) also gives an advantage to fiber-optics internet users, while lag hinders competition.

• Desktop composition, mouse and correct options for each game, a proper headset with correct configuration, RAM, CPU, and GPU strength, are elements that provide an edge in competitive gaming.

A gamer has to spend large sums of money to reach a competitive level, as skills usually do not suffice.

Some gamers, even for non-profit reasons, resort to exploitative techniques using cheats or bots and damage the user experience of the rest of the population. Gaming corporations often ignore this issue.

Within this environment, gamers unaware of cryptocurrency and smart contracts read about the NFTs invasion and how companies plan to integrate them into their favorite games. Some react negatively for multiple reasons.

While part of the gaming industry will probably find the idea of NFTs tokenization of their digital assets a step forward, some will mention the complications this extra marketplace will bring to the user experience.

Most games already have a market that increases profitability, but how would it be if they implement Ethereum NFTs today?

Ethereum’s fees are unreliable and even reached $200 in 2021. Transactional delays and other burdens, such as high fees, derail the gaming experience.

Gamers already paid for the game or a monthly subscription and may even purchase game skins and items or mystery boxes at the in-game shops. Listing or buying an NFT requires fees that vary depending on the blockchain. It takes an extra cost many will not be willing to take. But, it will also take time if the blockchain used for NFTs is not working properly (i.e. Solana, Polygon with constant issues, or Ethereum with high fees and congestion).

Age Distribution

(Source: Statista)

Unlike how anachronistic views may perceive gaming, it is not an activity or hobby exclusively for minors. Actually, underage gamers are the minority today.

Generations have grown up with gaming, so the average gamer’s life increases.

The gaming industry targets a growing pool of hundreds of millions of gamers, with 75% of them adults (US stats).

However, minors should be excluded from in-game financial transactions as they will be easily exploited financially by malicious persons, commonly known as internet scammers.

Until a mature individual can understand the risk and dangers of internet financial transactions, video game corporations should exclude them from monetization features.

However, financial protection for children doesn’t apply today since many companies rely on the opposite. In-game microtransactions are allowed equally for minor or adult players of a video game with (their parents) credit cards, Google cards, PayPal, and other centralized payment options.

With the self-ownership of digital assets and new in-game marketplaces, a rise in scam practices is inevitable as the in-game economies will become open to all.

A young person, uneducated in cryptocurrency and NFTs, can fall prey to scammers passing them seed phrases and access to valuable in-game assets. This is common in the crypto field, where scammers target newcomers with limited knowledge of private keys and cryptocurrency or Web3 wallets.

Still, the gaming industry is dominated by adult consumers of these products, looking for entertainment value. Very few are engaging in items or gold farming and selling, and corporations are clearly trying to prevent them by blocking accounts. Filters monitor transactions and suspend accounts dealing in suspicious in-game currency trades for real money.

Overall most users would love the option to sell digital assets and currencies for real money and cryptocurrency. A flourishing in-game economy would justify this economic freedom and even allow experienced gamers to earn a living from their in-game skills and ranks.

Gamers Are Furious At NFTs

(Source)
For multiple reasons, core gamers are enraged by corporations looking into integrating NFTs into their gaming platforms.

A gamer with knowledge of cryptocurrency will ask these questions:

• Which blockchain is each game going to use for NFTs?

• Which wallet services are available, and are they custodial or non-custodial?

• Are the blockchain fees reliable, or do users have to pay $200 on Ethereum?

• How much time does it take for the NFT transaction to perform?

• Will the game transform into a slow marketplace with monetization overshadowing gameplay and skill?

More questions can emerge, but we should begin with the basics:

Which blockchains support Web3 today?

Ethereum, Polygon, Avalanche, Solana, BSC, and more.

Yet, are all these networks stable and reliable?

The most popular blockchain smart contracts blockchains which also created the NFTs protocols is Ethereum. Yet, Ethereum is not scalable, at least not now and not for the foreseeable future.

When people rush to use Ethereum, fees increase, and transaction issues emerge.

Is Polygon or Solana a solution?

These Ethereum clones are presented as fixing the issues of Ethereum’s high fees, but they also suffer from network congestion and can’t be considered reliable.

Cardano is (perhaps) another viable solution, but it should first deliver working results.

A strong network with instant transactions and scalability that will soon boost its smart-contract capabilities is Bitcoin Cash, with its May 2023 upgrade called Cash Tokens. Perhaps Bitcoin Cash could achieve a competing position if developers and companies decide the UTXO model fits better their business models.

A robust decentralized solution with smart-contract capabilities would probably boost development and present clear solutions if gaming corporations decide to tokenize into NFTs gaming assets.

Gaming companies won’t ever consider a partnership with Binance’s BSC network, perhaps small companies will, but not Ubisoft, EA, and the rest big corporations in the video game industry.

Closing Thoughts

(Source: Twitter)

Online gaming is lucrative for corporations, but since the first online games appeared, so did gold farmers. Any game economy is exploitable and black markets facilitating trades of digital items emerged in 1990.

Yet the gaming corporations, by implementing tokenization of gaming assets in NFTs, can transform the in-game economies. Another issue is the inflation rate of the in-game currency, but that comes secondary or third in line.

The main problem is finding a scalable network with smart contracts that can sustain the transactions level of the in-game economy. Ethereum is not a functional network for this approach, and its scalability upgrade (sharding) is nowhere near.

Ethereum's current competition is networks like Solana, BSC, and Polygon, which are unreliable with several instances of downtime and centralization issues. Corporations would not want another partner but will only support fast and decentralized networks to launch NFT-related gaming items.

Taking everything into consideration, the gap between the gaming industry and NFTs might take several more years to bridge.

• Cover Picture (source, public domain)

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