What Is An NFT & Why Are People Buying Them?

what is an NFT

An NFT is an Asset that holds a digital representation of an in-game asset, like a game card. Players can trade their digital in-game assets freely and design games that are completely unique. The value of the NFT will come from factors like rarity, demand, and scarcity. For example, there is currently a huge demand for Pokemon cards because of the new Pokemon Sun & Moon video game which was released last November; players are desperate to get their hands on these cards because they know it may not be so easy to acquire them again later on due to its limited release. The success of Pokemon cards has sparked a wave of creativity in online communities, giving rise to trading websites that are dedicated to collecting Pokemon cards.

Another example that is catching the attention of the gaming community is the CryptoKitties game. The game allows players to collect and breed one-of-a-kind digital cats with unique characteristics. The popularity of this game has led to millions of dollars being spent on purchasing, buying, and selling these digital pets in exchange for a cryptocurrency (i.e., bitcoins). Today, the most expensive CryptoKitty sold was sold on eBay for over $100,000 USD (USD value). This is one of the first major NFTs to be created, but with the value of this digital asset going up, we can expect more and more NFTs to be created.

This may seem controversial, but it is important to note that the creation of these types of digital assets violates the rules established by game developers. So, why are people buying them? Some have argued that putting NFTs into circulation will benefit the game developers by giving them access to new revenue streams and eroding their efforts in developing games without offering players a fair deal. But this argument is flawed because the revenues generated by the NFTs should be shared with the game developers. Game developers have already established their own token systems (like Steam), so they don’t need to create another one. Furthermore, we can assume that if gamers are paying for a game that has digital assets like cards, skins, and items inside it, then it will surely be fair for them to get some benefit from these digital assets.

Advantages of using NFTs

1) Increase in Number of Players: If you release another new game, players who want to get in on a new platform will be more likely to purchase your existing games if they are easy to trade.

2) More Game Designs: Players can create their own games by using these digital assets.

3) Increased Customization: NFTs allow players to customize their characters and game worlds. The more the game developers release NFT-related content, the more diverse the content will be, increasing the demand for NFTs.

4) Decentralized System: NFTs have no centralized servers that could have been shut down like in many other games (e.g., Steam). They completely rely on players from around the world to trade and keep them going. You cannot simply shut them down by deleting one or two similar sites online like you can with a centralized system.

Drawbacks of using NFTs

1) Disruptive to the Gaming Industry: NFTs are only made possible because game developers have not come up with their own systems of digital assets in their games. They will directly compete against them, hurting the sales and profits that these developers have been making from their existing token systems.

2) Not an Incentive for Game Creators: With most NFTs, the developers need to purchase funds (i.e., a cryptocurrency) just to create these digital assets.

3) Difficult to Implement: The game developers need to update the systems of their games using an NFT. This is a difficult process that can take much time and requires technical expertise from the developers.

NFTs are one of the most exciting possibilities for future gaming, but we need to remember that it is still in its early phase of development. Players have shown lots of enthusiasm for NFTs, but this doesn’t mean that it will be adopted by game developers anytime soon (if ever). What we do know is that just like in real life, people will always find ways to play games even if it involves creating or buying digital assets.

Written by Joey Miller

Author at Finance 27, A payday loan company in South Africa.

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