NFTs (Non-Fungible Tokens) are transforming digital ownership in the Web3 gaming industry

Non-Fungible Tokens (NFTs) are revolutionizing digital ownership, ensuring the uniqueness and authenticity of virtual assets on the blockchain. As this technology gradually establishes itself in the Web3 gaming industry, it is introducing new economic models and engaging players in unique ways. Unlike traditional gaming platforms where developers maintain control over virtual items, NFT games allow players to possess and exchange these items autonomously.

This shift in ownership is a key benefit of NFTs. In traditional games, publishers can modify, delete, or restrict the use of virtual items, while in NFT games, each token is guaranteed to be distinct, indivisible, and traceable throughout its lifetime thanks to the blockchain's immutable ledger. The ERC-721 and ERC-1155 standards on Ethereum define the rules for creating and trading NFTs, with ERC-721 focusing on unique NFTs and ERC-1155 enabling the management of multiple assets within the same contract.

This difference inoperability is another advantage of NFTs. While an item in one game cannot usually be used in another due to different graphics engines and game rules, some projects like Enjin and The Sandbox are testing interoperability, allowing users to create items that work in several compatible games, gradually forming a decentralized ecosystem. However, this interoperability faces technical limitations that need to be overcome for large-scale adoption.

Despite their potential, NFTs also have challenges. The high entry costs of some NFT games like Axie Infinity, which require the purchase of characters to access the game world, can be a barrier for new players, especially compared to free-to-play traditional games.

Moreover, the NFT market is volatile, with prices fluctuating based on supply and demand. During periods of high speculation, the cost of accessing certain NFT games can become enormous, further limiting accessibility and promoting wealth concentration within the game. This contrasts with traditional games where, despite having a strong economy with in-game currencies and items, the transition between players occurs at zero cost, fostering community growth.

Another criticism is the energy consumption of Proof-of-Work blockchains like Bitcoin and, previously, Ethereum. Before The Merge, which transitioned Ethereum to Proof-of-Stake, this technology required significant energy to validate transactions, especially during periods of high demand for NFT sales. This consumption sparked debate about the environmental impact of NFTs, especially in comparison to traditional games which, despite having a large user base and a long lifespan, do not directly consume energy during gameplay.

However, Proof-of-Stake drastically reduces these emissions, operating with minimal energy consumption thanks to a limited number of nodes validating transactions in a decentralized manner. Furthermore, Layer 2 solutions like Polygon and Immutable X are being developed to accelerate transactions and reduce costs, increasing the scalability of blockchains for integrating NFTs in games.

This new generation of blockchain is also more energy efficient and environmentally friendly, crucial factors for mainstream adoption.

Major publishers like Ubisoft, with its Quartz platform and planned integration in Ghost Recon Breakpoint, and Square Enix, known for Final Fantasy and its investments in Web3 projects, are gradually introducing NFTs into their games. However, the majority of players remain skeptical, especially due to the narrative of NFT projects scamming players and the association with the 2021 cryptocurrency bubble.

Platforms like Steam have also banned NFT games or games using crypto assets, preferring to focus on traditional gaming models. This decision sparked reactions from the gaming community, highlighting the divergence of opinions regarding NFTs in the video game industry.

Several games have attempted to integrate NFTs to revolutionize the industry, some achieving meteoric success before declining, while others continue to evolve in a changing market.

Axie Infinity, a game popular for its Play-to-Earn model, allows players to earn crypto by battling NFT creatures called Axie. The game experienced rapid growth, especially in the Philippines and Venezuela, where many used it as a main source of income. However, the model showed its limits as it heavily relied on new entrants to maintain the economic cycle.

With the influx of players, the price of Axie NFTs and the rewards in the game's token, AXS, decreased sharply. Those who invested large sums in the beginning of 2021 to play the game later realized they had lost most of their investment as the token's price crashed from $80 to $10 in a few months.

The game's token also experienced a significant decline, dropping from $70 to less than $15, rendering the time spent playing nearly useless.

This scenario unfolded as the game's founders announced the introduction of a new token, aiming to shift the economic burden onto early players who, despite investing time and money, will be forced to contribute to the arrival of new players in order to maintain the cycle.

Another project is The Sandbox, a decentralized virtual world where players can buy, sell, and exploit digital land in the form of NFTs. This project, inspired by the concept of the metaverse with user-owned assets, has seen land parcels sold