By Non-Fungible Tokens (NFTs) have some exciting applications in the gaming world. The boon to an NFT based item or cosmetic is that it can exist far longer than the lifecycle of a typical game. Even after the servers are dead and the player has moved onto to something new, a rare NFT has the potential to hold its value as a collectible.
A rare sword, land deed, or popular game cosmetic stored as an NFT on the blockchain can even be ported to a new game to be used within new and emerging digital worlds. Furthermore, NFTs can enable the trading of digital goods either in a formal marketplace or a person-to-person transaction. Most game cosmetics in modern games are locked into their respective platforms and marketplaces. It is not easy to extract value out of these storefronts absent dubious third-party sellers.
NFTs have the potential to change this and to give players a degree of ownership over their goods that they currently do not have. However, absent decentralization of game servers (which introduces many other issues; latency and cost being some of the most prominent ones), NFTs are not a magic bullet protecting player ownership rights.
Non-fungible tokens give players a platform-neutral way of trading in-game items and cosmetics, but by themselves, they do not guarantee player property rights in-game. Even though the developer does not have the ability to extract the token from a player’s cryptocurrency wallet, there’s nothing stopping them from banning that specific token from interacting with the game’s servers. For a game cosmetic (in-game items that change a player’s appearance), this is a death sentence.
These factors may be the reason why developers like Gala Games have indicated that they want to head towards eventual decentralization of their game servers. I’m not certain how they deal with latency issues associated with a server architecture like this, but I am curious to see the end result. Mirandus is an MMO, so they wouldn’t need the split-second latency times that players expect from a First-Person Shooter game, but I have a lot of trouble envisioning a stable, playable, decentralized server architecture.
A game cosmetic that cannot be used in-game is valueless. Even if it’s stored as an immutable token on the blockchain, it can still be barred from participating on a centralized game server. An unscrupulous seller can try to offload the token onto an unsuspecting buyer, but that’s about it. Unless there’s some kind of aspect to the collectible that gives it value outside of the game, the token will not hold its price vs a similar item that can still interact with the game world. But why would a developer using a decentralized marketplace and non-fungible tokens do this? Wouldn’t it call into question the whole business model?
There are a number of scenarios where a game developer using NFTs to tokenize items might ban a game account and the associated NFTs from interacting with their servers. The first is cheating, exploiting, and hacking. In the traditional non-blockchain based gaming world, Valve regularly bans accounts for cheating, and when they do, they freeze the collectibles associated with the account so they cannot be traded or re-sold, and while this isn’t possible with non-fungible tokes, a developer can still blacklist NFTs associated with a cheater’s account from interacting with their servers.
Unless the game servers are also decentralized, I’m not seeing why the developers can’t do this with NFTs. If they give consumers an easy way to check if the token is still viable in-game, particularly one that integrates directly within any of the marketplaces developers use to sell items, it wouldn’t make other players hesitant to purchase items from these storefronts.
Typically, a player is forced to agree with an end-user license agreement (EULA) prior to playing a game. If that EULA bans activities like cheating, then there’s not much legal recourse for recovering banned items. And if you want to get really paranoid, the burden of proof for cheating almost always favors the developers. If they mistakenly flag you for cheating, no one is going to believe you when you say otherwise. And unless the items are very valuable it won’t be worth it to take them to court to try to reverse the ban.
Besides cheating, there is also the scenario of bad behavior on the part of a deed holder. Behavior issues are something traditional developers struggle with, and they own the games, the servers, the in-game property. Most developers have very stringent codes of conduct placed within the end-user license agreements that give them a great deal of leeway in banning problem players.
Hypothetically, if the owner of one of the Mirandus citadels or towns jumps onto a soapbox in the middle of his town square and starts frothing at the mouth with racism, misogyny, etc, how should the developers handle this? They could ban the player, but he would still own that property.
Since the NFTs are representations of properties it could be argued that the developer is no more responsible for what is said there than what is said in someone’s house. In the United States, the vitriolic speech might be protected under the first amendment. But would a European regulator feel the same way? There are some interesting cross-jurisdictional legal issues here. If you ban the player, who administrates the property? How does the player collect rents? How much of a guarantee is a tokenized property deed if it can be taken away when someone is inconvenient? Do property rights extend to digital land?
It’s clear that the deed’s NFT immutability can remain simply because of the strength of the blockchain. If a game developer starts yanking property deeds (by banning players and minting a new deed that the servers will recognize) from inconvenient players, it will make the rest of the property holders very nervous. But when a developer is staring down the barrel of a regulator’s gun, I’m not sure that they’ll be willing to go to jail, or worse, to maintain their ideals.
The advantages that NFTs offer most gaming models would be that they can be traded and sold anywhere, and they can be programmed to give the developers a cut of any future sale, which can offer some significant incentives to implement such a system. In terms of player property rights, while they are an improvement, they are not a silver bullet. And the more complex a game becomes, the more difficult it is to offer a guarantee about a player’s right to ownership within a digital world.
Header photo by Taylor Wilcox.
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