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What is the difference between NFT gaming vs. Web2 gaming?

What is the difference between NFT gaming vs. Web2 gaming?

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Written by Alchemy

Brady Werkheiser headshot

Reviewed by Brady Werkheiser

Published on 2023-03-293 min read

NFT gaming is a popular use case for blockchain technology because it offers players more ownership over their in-game assets, and enables game developers to incorporate more interesting mechanics and economics into their game.

Before choosing a web3 game to play, explore the benefits and tradeoffs of playing NFT games.

5 Benefits of NFT Gaming

NFT games have introduced unrivaled benefits to gaming which is evident by their explosive growth in recent years. Here are some benefits NFT games have introduced or improved to the gaming industry: ownership, scarcity, trading, earning potential, and composability. 

1. Ownership of NFTs

NFTs allow players to truly own in-game assets, such as characters, weapons, and collectibles, rather than simply having a license to use them. Players of NFT games now get to store their in-game assets in their web3 wallets rather than having them locked in the game itself.

2. Scarcity of NFTs

NFTs can be used to create limited edition items, adding value and rarity to in-game assets. Players can enjoy a higher valuation for obtaining in-game assets, or incentive deeper levels of engagement from players.

3. Trading of NFTs

NFTs enable players to trade and sell in-game assets on various gaming marketplaces, potentially creating new revenue streams for game developers through gaming NFT royalties and enabling players to earn money from their in-game achievements.

While trading in-game assets and gamer accounts has been done throughout gaming’s history, most trading has been done without controls or player protections.

Having a marketplace built on the blockchain gives players a safe and trusted venue for trading in-game assets.

4. Earning potential

Unlike traditional gaming rewards which can be exchanged for in-game assets, NFT games create pathways to convert in-game assets into legal tender.

For example, an NFT can be sold in the game’s marketplace for the game’s native currency.

Then, that currency can be swapped for a stablecoin on a decentralized exchange like Uniswap.

5. Game Composability

The composability of NFT games allows gaming developers to adapt or build on top of the existing blockchain games, aiding them to unlock the best use cases efficiently.

Unlike traditional games, in-game NFTs can be used across multiple games or metaverse environments because they share the same standards (e.g. ERC721).

5 Tradeoffs of NFT Gaming

With NFT gaming’s newness, there are some trade-offs including scalability, regulation, interoperability, volatility, and complexity.

1. Scalability

As NFT games gain popularity, the blockchain infrastructure that supports them may struggle to keep up with the increased demand for transactions, leading to slower performance and higher fees.

One solution to scalability is using an appchain, or a blockchain that is exclusively designed for the use of a single application. Appchains offer games scalability while removing congestion from public blockchains like Ethereum.

One example of a web3 game that uses an appchain is Axie Infinity which uses Ronin Network, an application-specific blockchain created specifically for Axie Infinity.

2. Lack of Regulation

As NFTs and blockchain technology are relatively new, there is currently a lack of regulation in the NFT gaming space, which can create uncertainty and risk for investors and gamers.

Before playing a web3 game, make sure you are following your local rules and regulations.

3. Lack of Interoperability Across Blockchains

NFTs are typically specific to a particular blockchain, which can limit the ability of players to use their assets across different games or platforms of different blockchains.

While bridges and cross-chain messaging protocols exist, they are still relatively young, and we have not seen extensive cross-chain gaming solutions.

4. High Volatility

As the NFT gaming space evolves, the games players choose to play, and the relative value of the NFTs acquired in each game will change. Like cryptocurrency, the value of NFTs can be highly volatile, making it difficult for players to predict the value of their assets over time. 

5. Complexity

Understanding the underlying blockchain technology and navigating the various aspects of an NFT game such as creating a wallet, depositing cryptocurrency, buying NFTs, managing in-game assets, and securing your wallet can be daunting for those unfamiliar with the NFT gaming space.

The complexity of starting to play an NFT game is a steep learning curve and is often cited as a major obstacle that hinders the growth and widespread adoption of blockchain-based games.

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