Cryptocurrency and Bitcoin have evolved and multiplied alongside cryptographic and blockchain technology. NFTs or Non-Fungible Tokens have become one of the fastest growing sectors in crypto currency.
What exactly is a Non- Fungible Token or an NFT?
An NFT is, as the name implies a ‘non-fungible’ token. Which means that each of the token retains its own unique identity that cannot be found in other tokens. For example, a $5 bank note can simply be exchanged for another $5 note as there is no difference between these two notes. They are fungible.
“Non-fungible” more or less means that it’s unique and can’t be replaced with something else. For example, the starter Pokémon who has battled for you throughout the game might hold perceived value to you. There is not going to be another Pokémon like this Pokémon who has carried you throughout the game, this is a unique Pokémon, a Non-Fungible Pokémon.
How do NFTs Work?
NFTs are part of the Ethereum blockchain. Unlike other tokens, NFTs work by giving the ability to assign or claim ownership of any unique piece of digital data, trackable by using Ethereum’s blockchain as a public ledger. An NFT is minted from digital objects as a representation of digital or non-digital assets.
The blockchain technology relies on miners to validate their transactions. These miners use computation power to process transactions and produce blocks. Due to the high computation power required to perform these transaction, a lot of electrical power is consumed by these miners. More precisely, Bitcoin consumes 152 TWh per year, which is 0.65% of the entire world’s electricity consumption. A single Ethereum transaction is equivalent to the carbon footprint of 241,914 VISA transactions or 18,192 hours of watching YouTube. If Ethereum was a country it consumes more energy per year than Belgium, Philippines and Kazakhstan.
Due to the high demand for Ethereum the energy consumption continues to skyrocket. This proof-of-work model requires an absurdly high energy expenditure and causes devastating effect to the environment, Ethereum has confirmed that they would be switching to a more energy efficient proof-of-stake algorithm called Casper. However, there is no date to when this new technology would replace the current model.
The Crypto Metaverse
The first blockchain game on Ethereum was released on November 28, 2017 titled CryptoKitties. Much like the concept of NFTs the game is centered around digital cats, unique to every user that can be traded or bred to generate more unique digital cats. According to Kitty Sales, five of the rarest digital kittens on the CryptoKitties platform were sold for over $100,000 each, with the most expensive digital kitten being sold at around $120,000.
Some analysts and researchers have questioned the value of these digital kittens, and whether the platform itself is sustainable in the long-term.
Virtual worlds where players use cryptocurrency to trade and buy virtual plots of land are also starting to make an appearance. Launched in February, 2020 Decentraland features a virtual reality platform that allows its players to monetize on content via marketplaces that deals in its own native cryptocurrency called MANA.
Due to the surge in popularity of NFTs the token has surged by over 4,000% in the last 12 months. Some other similar crypto virtual worlds include Cryptovoxels & Dark Forest.
Even dating apps are starting to integrate NFTs into their platform. Katch, a video based dating app became the first dating app to invest in NFT as part of their service offering. “Our members always want to engage with other members in a socializing way and we see NFTs as the perfect mix of entertainment and financial value,” says Paul Numan, CEO of Katch.
Enter, The AAA Gaming Industry
Ubisoft, revealed they have been working on their own NFT based platform titled Ubisoft Quartz. This live as a beta service allows players to earn NFT cosmetic items that can be used in Ghost Recon Breakpoint. Needless to say that much like most of Ubisoft’s announcements this was faced with heavy criticism from gamers calling Ubisoft to back off the idea of NFT in games. However, Ubisoft is choosing to go forward with Ubisoft Quartz, “We have received a lot of feedback since the announcement and we hear both the encouragement and the concerns,” Didier Genevois, head of Ubisoft’s blockchain technical director said. “We understand where the sentiment towards the technology comes from, and we need to keep taking it into consideration every step of the way.”
Despite Ubisoft trying their best to push out these limited edition NFT items only a handful of sales have taken place so far of roughly about $380 in value.
Developers of S.T.A.L.K.E.R.2 have also announced their plans to integrate NFTs in their title by auctioning off the chance for one player to have their face scanned onto an NPC in the game via NFTs. Due to heavy backlash from the gaming audience devs have quickly cancelled these NFT plans.
More AAA game companies are trying to make NFTs a part of the gaming experience. Square Enix also announced that they were getting into blockchain games by partnering up with Double Jump Tokyo, a blockchain tech company founded in 2018.
It is unclear what effects cryptocurrency and NFT have in store for the future of gaming and video game industry. Could this be the second coming of the Lootbox system but with the added effect of environmental disaster? Or could this decentralized token system manage to find a more sustainable solution before it is too late?