Digital Collectibles have always been an important part of video games. Since the very early ages of gaming, there seems to have always been something to collect. Pac-man collected dots and fruits, Mario collected stars, and Donkey Kong Collected Bananas. There’s even a gaming genre known as the collect-a-thon.
The reason for this is very simple. Collecting things is fun. Outside of the realm of video games, people have collected and attributed value to all manner of stuff. From stamps to baseball cards to unique rocks, shoes, hats, or anything one can think of. Because these objects are unique and desirable, their value often translates into large amounts of money.
As video games have advanced, in-game collectibles have become increasingly fun and complex. In games like Fortnite and Counter-Strike Global Offensive, collectibles come in the form of skins and decorations that players use to customize their characters and show off to other players. In games like World of Warcraft or Final Fantasy XIV, collectibles are not just cosmetic but have unique properties to make the players more powerful.
With the emergence of blockchain technology, it didn’t take much time for creators to realize the natural synergy between the world of video games and the world of cryptocurrencies and NFTs. Although video games have had their own organic in-game economies for a long time, blockchain came in as the final echelon to give gamers true ownership of their in-game collectibles.
The World of Digital Collectibles
The value of collectibles is, in most cases, something subjective. John Lennon’s guitar isn’t worth $2.4 million because it sounds particularly great or because it has any special uses or inherent properties. It’s worth that much because it has a history and that history means something to us, making it widely desirable.
In a more abstract sense, even if digital objects have no physical presence, they also have a meaning to us because of their history and our experience with them. This value did not reflect in their prices until today because digital objects can be virtually infinitely reproduced. However, this changed with the arrival of blockchain technologies.
Because blockchains are ledgers that register the transactions in a financial ecosystem, they can allow us to track the property of a digital asset which, as it’s registered within the blockchain, comes to be known as a non-fungible token (NFT).
By coining NFTs in a blockchain, the ownership of digital assets is defined and established, and so is the possibility of buying and selling said ownership. Although the digital asset itself can still, in many cases, be reproduced, it still belongs to the person to which the ownership is attributed in the blockchain.
This concept opens the door for a new world of digital collection and, as such, to an entirely new market. Anything that exists in the digital realm can be registered in a blockchain, from internet memes to intellectual property to information. As these abstract digital objects become NFTs, they’re made virtually scarce and, thus, prone to being sold, bought, and speculated on.
On comes a new set of projects based on digital collectibles: NFT collections with thousands of unique assets, like the highly valuable and well-known Bored Ape Yacht Club and Cryptopunks. Subsequently, applications dedicated to digital collectibles emerged, the most popular examples being platforms like Cryptokitties and VeVe.
The final logical step in the development of NFT collectibles comes with binding the access to said collectibles to gamified experiences, creating new incentives for users to interact with the platform and among themselves. From social platforms like Geojam, which offer rewards for sharing, to fully-fledged NFT video game experiences, which gave rise to the P2E video game genre.
The Rise of Play-to-Earn (P2E) Gaming
Play-to-earn gaming is a new field that’s still in its infancy, where blockchains allow players to have real ownership of their in-game assets. Despite massive successes like The Sandbox and Axie Infinity, this is a subgenre of gaming that still has some ground to tread before it becomes fully accepted into the mainstream.
Although making money in traditional gaming outside of high-level professional play is rare, that doesn’t necessarily mean it’s new. For years, people have used video games like MMORPGs, online shooters, and even sports games to make money by selling in-game items and currencies for real money.
The problem with the practice of selling in-game items for regular online games is that they necessarily have to be sold on grey markets, outside the realm of the games themselves. Not only does this go against the user policies of most games, but it opens the door for many types of scams.
In the past, some online games have tried to implement real money player-to-player marketplaces, such as the early version of Diablo 3, which included a real-money auction house. However, these efforts have failed due in part to the necessity for developer intermediation and the alienation of players who aren’t in it for the money.
These are some of the problems that blockchain technologies can solve. The blockchain registers every one of its transactions on a distributed ledger, making them automatically verifiable and visible to everyone who participates in it.
The property of the in-game items themselves is also registered on this ledger, and it remains regardless of what any user does without requiring direct intervention from the game developers themselves. This makes the whole process of in-game items trading for real money much safer.
The P2E video game format has emerged as the alternative for players who want to truly own the assets they earn within video games and wish for these assets to have a real monetary value, thus, allowing them to make money within those games.
The Future of Digital Collectibles and P2E Gaming
Despite the fact that blockchain adoption has been met with backlash in many mainstream gaming communities, its growth hasn’t stopped since the emergence of the first P2E experiences. Granted, a lot of the backlash comes from people who prefer traditional video game experiences; the markets are demonstrating that there’s a place for both traditional gaming and P2E.
Today, there is a common conception that most P2E games have low quality as video games due to them generally being made by small teams and focusing on the monetization model over the core gaming experience. Although this isn’t entirely untrue, this is the feedback that many P2E game developers understand and are reflecting on in their games.
Some of the most promising upcoming P2E video games, such as Big Time and Illivium, are aiming to provide high-quality experiences like those seen in traditional gaming, but with the advantages of blockchain implementation for in-game NFT collectibles.
In the future, it’s likely that in-game NFT collectibles will become a natural part of video game experiences, in the same way as payable downloadable content (DLC), originally met with backlash by players, grew to become the norm.
While this idea might sound unappealing to those who prefer traditional experiences where they don’t have to worry about money and property, that doesn’t mean traditional and P2E models cannot coexist in the gaming market. Ultimately, it’s about giving players a wider array of options to choose from, making the industry more diverse and, therefore, better for everyone.