Avid gamers with an online presence have no doubt started to see more and more conversations being had regarding NFTs. Like many trends which spread like wildfire, however, there is a great deal of confusion and assumptions made about them. This article will attempt to break down some of these assumptions and what these baffling conversations are all about.
What Even Are NFTs?
NFT refers to a Non-Fungible Token. In physical artwork, consider the difference between a dollar bill and the Mona Lisa. Physically, both are just painted on paper. However, one is fungible, i.e. it is commonly interchangeable, and the other is unique and irreplicable, thus it is far more valuable. NFTs are the digital equivalent of an artist’s signature, seen as a certificate of authenticity of the unique identity of digital data.
In business, if something is both notorious and rare, then it is invariably worth a considerable sum of money. This is especially the case if the data in question has either been created by or has otherwise interacted with, famous individuals.
NFTs In The Gaming Industry
When you buy NFTs for a specific digital item, you can claim ownership of it on a digital ledger or blockchain. This is a little like buying a share in a company, in that you are buying into its success on the digital market. If an NFT exchanges hands with famous people, for instance, then its value may well climb through the roof, making it a potentially very profitable investment.
In the gaming industry, data is everywhere, and this lends itself well to NFT blockchain technology. A hypothetical example could be a rare skin on a game like Fortnite, for instance, which may be sold in NFT format, and which a player can then sell at profit to the highest bidder.
A Note of Caution from Game Developers
Not all gaming developers are behind the idea, however. Epic Games, for example, whilst being open to games supporting cryptocurrencies or blockchain-based assets, have openly said that “We aren’t touching NFTs as the whole field is currently tangled up with an intractable mix of scams, interesting decentralized tech foundations, and scams.” (Tim Sweeney, Epic Games CEO, September 2021).
One of the most notable criticisms of NFTs is that they do indeed lend themselves easily to scam artists, selling otherwise worthless data purporting to be unique and/or original content. This is further exacerbated by the fact that, unlike an investment in something like a car or intellectual property, there is no legal protection or recourse should your NFT be copied and then fraudulently sold by someone else, as an NFT does not automatically grant copyright on a digital item.
What You Do With Your Crypto
Nevertheless, it is certainly not for this article to dictate what you, the reader, should do with your crypto assets. You are under no obligation to ensure many valuable physical possessions against theft, though it may be a good idea to do so, nor are you legally required to leave your car locked in a public place, insured or not.
However, if you are planning on investing in NFTs, then it stands to reason that you do so with caution, and do everything you can to ensure that the NFT in question is a) authentic b) relatively secure e.g. password protected and encrypted and c) worth your investment, something only you, the budding digital entrepreneur, can decide for yourself.