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Wait, you are making this much too complicated. I think if you take a step back and realize that the industry of hats in games that have zero effect except being cosmetic is enormous. Don't ask me why - I think anyone who pays actual money for an in-game cosmetic item is a fool, but that's beside the point.

But now imagine if 10 different AAA game studios realize that they can create a market in which people instead of paying $5 for a hat or $1 for a loot box with 10% chance of finding a hat-they pay $100 for a hat NFT and $10 of that is a transaction fee to the studio. They pay $100 for it, because a) it will work across games and b) it might be worth $10k tomorrow. The studios can take a cut on each transfer, instead of just one fee! So these studios just scaled up their hat business a lot and all they had to do was agree to honor the hat ledger which says that only the hat's rightful owners can wear the hats.

There is obviously no problem moving the hats between different games (A purely cosmetic thing is pretty easy to implement).

The fact that the honoring of the NFTs is still voluntary from the studios, that it's just as centralized as ever, and that it might disappear the day the studios no longer make money from this is of course lost on the hat buyers. The tokens are extremely fungible.

Why would they run this as an NFT though. They're going to want control over what assets can be added, and TBH would probably much rather they could do something about theft, money laundering etc to avoid bad publicity.

> Why would they run this as an NFT though.

Imagine you had a set of digital drawings of apes you wanted to sell. What can you charge for a nice colurful drawing of an ape? $1? Now add "NFT" to the description.

Same with a hat. The studios would do this because they see a situation in which a few of their assets become $10M ape assets and they make $100k. Before this hype dies down, the studios are afraid of missing out on it. No studio wants to be the one that missed the golden rain of NFT hats of 2023 because they didn't get on the hype train.

of course this won't be a long term thing. But we'll see land grabs like these now for a while because it's a low risk/high reward kind of thing.

Here's the thing you don't understand about AAA gaming. If they make a hat that they sell for 10 mil, there is no way they are going to agree to only take 100k of that price. This discussion ignores the financial realities of the business side of AAA gaming.

You're asking the studios to give away 99% of their profit. Even in the worst case, they can all put their own platinum plated, cancer curing, blow job giving hat on the Eth blockchain and charge 10 mil for it without agreeing to share anything with anyone other than gas fees and miner bonuses. They won't. You know why? Because if they sell it in their own stores they can easily sell one thousand of them for 10 grand each and pay nothing in gas fees and miner bonuses.

No studios barely make anything in this setup (user created content) or they just make what they always did (Fortnite style cosmetic assets). This is studios using their status as "places where people see hats" and the newly invented hysteria around NFTs to set up a scheme with very little investment.

They don't make something and sell for $10M because nothing studios create and market would have that kind of value. The high price of an asset is only because end users trade it among themselves (quite literally in the case of wash trades) to inflate the value. Studios can only provide the scarcity or exposure of the assets - they don't set the prices other than perhaps initially. But the key is that every time an asset changes hands, the studio gets a cut. A hat is sold for $10 then they get $1. Then it's sold 100x over, and the studio takes $1 each time. If a hat for some mysterious reason becomes the $1M monkey picture of hats, then it earns them a bigger cut in the transaction. But the key is: this is only happening because people want to take part in the lottery/hysteria of NFTs on the eth blockchain. Not because they are ready to pay $1M for a game asset. So the studio isn't "losing" 99% of anything. They just tricked people into trading NFTs which earn studios a cut, instead of other NFTs that don't.

>But now imagine if 10 different AAA game studios realize that they can create a market in which people instead of paying $5 for a hat or $1 for a loot box with 10% chance of finding a hat-they pay $100 for a hat NFT and $10 of that is a transaction fee to the studio. They pay $100 for it, because a) it will work across games and b) it might be worth $10k tomorrow. So these studios just scaled up their hat business a lot and all they had to do was agree to honor the hat ledger which says that only the hat's rightful owners can wear the hats.

This seems like a whole huge can of worms to open for what is to the studios a mild gain. The hat market has scaled up by 10-20x in your example, but 90% of that isn't captured by the studios. What happens when two players each have NFTs that point to different URLs where the same digital hat is? Now the game studio has to adjudicate property rights? If a bunch of game studios wanted to band together and sell more expensive for 10x or 100x the current price that could interoperate, why would they give 90% of the proceeds to the hat designer?! Designing a hat is not the hard part of this thing.

Activision implements hats on the blockchain and releases the $10k GOLDEN HAT.

EA Games starts selling an exact copy of the GOLDEN HAT for $1. What now? It's data on a decentralized network. I start selling GOLDEN HAT WITH A DICK ON IT for $0.69. What now?

If Activision wants to sell cross game cosmetics, they should do so on their own servers. Which is totally normal frankly. It's common to get rewards for having content on other games. The blockchain adds nothing.

> EA Games starts selling an exact copy of the GOLDEN HAT for $1. What now?

This is how NFTs work. If you own the $10k hat on a blockchain you own the $10k hat on that blockchain. There is nothing anyone can do about the fact that the monkey bitmaps can be copied. The ownership only applies to the ownership on a ledger, not copying or usage. Same with owning a hat on the Activision blockchain and not the EA blockchain. If they both agree to store it on the ETH ledger, then obviously there is only one copy.

To prevent copying or usage, studios would obviously need to agree (which is why this is so ridiculous - and "fungible"). In your scenario EA obviously weren't in on the scheme together with Activision. There could well be different ledgers, or studios that just use a centralized store like they always have. But those studios can't use the NFT buzzword, so they'll miss out on the sweet $$ that they can make in the 15 minutes this is a thing.

> I start selling GOLDEN HAT WITH A DICK ON IT for $0.69. What now?

Whether or not "user created" items will ever be a thing is obviously up to the studios. The studios can obviously ensure only studio-created artifacts are ever allowed, regardless of if a public ledger is used. They can't prevent a studio from making a golden hat with just one bit flipped in a 100kb artifact, which looks exactly the same. This would be even more likely if there were user-created artifacts.

But there is just nothing that can be done about that. That problem exists whether or not you use a public ledger or a private one, and whether there are multiple studios or just one.

> the blockchain adds nothing.

It adds the word "Blockchain" and "NFT" to the equation. Remember that's the difference between pictures of monkeys being worth zero and being worth millions of dollars.

If your point is that transient hysteric financial trends could allow for financial gains rather than actually having some game design merit then who cares?

The question now is mostly “why, why do you need to add a blockchain” and I think that in a lot of spaces these things will pop up just because of the transient trend.

But that actually solves the short term problem of “where is the infra?” and it’s not impossible that in a few spaces, this will actually survive.

Remember how everyone and their mother had to launch “cloud” services 10 years ago, and in 9 out of 10 instances it added no value. Some of those are still things despite never actually being necessary.

> It adds the word "Blockchain" and "NFT" to the equation. Remember that's the difference between pictures of monkeys being worth zero and being worth millions of dollars.

You seriously wrote all of that out and then admitted at the bottom that it’s only valuable because gullible people will buy it.

So you agree the whole thing is a grift. Next time just say that instead of proposing some pointlessly complex system of offloading a tiny DB onto the blockchain. “It’s valuable because you can trick gullible people into buying it.”

In this case it’s a bit of a hybrid, studios can - at least in theory - create a system where they could get a cut of monkey millions through the actual use of blockchains, which they would absolutely not be able to achieve without blockchains.

But yes, the reason the money is in the blockchain tech and no one pays millions for monkeys without blockchains? That’s all hype.

This tech solves a problem that could be solved by studios just making a private store they all agree on. I don’t think anyone will argue anything else, least of all me.

But here is the thing: things like currency and trade able tokens only have value because people think they do. There is a fine line between “gullible” and “currency” here.

> studios can - at least in theory - create a system where they could get a cut of monkey millions through the actual use of blockchains, which they would absolutely not be able to achieve without blockchains.

Sorry, I missed something. What exactly can they not build without blockchains? Surely you’re not saying that the thing they can’t do without the blockchain is “use the blockchain”, because that’s vacuous.

(I’m actually not sure how they wound build this hypothetical system you described with a blockchain, though. Is there a mechanism that allows NFT transfers to accumulate “royalties” to the original seller? Or is this a hypothetical feature of a hypothetical custom blockchain that’s controlled 100% by the studio, eliminating even the distributed nature?)

> But here is the thing: things like currency and trade able tokens only have value because people think they do. There is a fine line between “gullible” and “currency” here.

I don’t entirely disagree with this, but

1) Most people investing in this stuff would have zero interest if it were actually a stable currency. They’re interested in speculation. This is in contrast with dollars (or euros or whatever) which people very commonly hoard in banks, even knowing they are actually declining in value.

2) NFTs are not intended to be currency. So even if you believe that Bitcoin or whatever cryptocurrency has long term real currency potential, NFTs are still stupid.

> Sorry, I missed something. What exactly can they not build without blockchains?

They can’t build tokens that people would speculate in to the point that they are worth millions unless they use a big ledger like eth where people might believe that the tokens have a lifespan longer than the games.

> Is there a mechanism that allows NFT transfers to accumulate “royalties” to the original seller?

That is my understanding yes, and this would be a premise for the whole thing.

So yes - the whole idea would be to set up a market for speculation and see a cut from each transaction.

And the chain isn’t necessary, technically, it’s a necessity to ensure the inflated speculation only.

And both studios and users have aligned interest: speculation, only. Not hats, not currency. They get shiny gear but it’s also a lottery.

Okay, so we’re back to it’s valuable because some people are gullible. This is not particularly compelling. Yeah, from a money grabbing, no ethics wanted standpoint, that is a compelling argument that it will make money. It is not a compelling argument that it actually provides meaningful value to anyone except the ones perpetuating the scam, though. A Ponzi scheme is also profitable.

It is interesting that NFT royalties are thing. I was not aware of that. Although I don’t see that this makes it valuable. Royalties are generally paid for reproduction. If you have to pay the creator to transfer the token, then it seems evident that you don’t even own the token, whatever that’s worth.

Yeah to be absolutely clear: I believe there is value here only in the sense that there is value at the top of any Ponzi scheme (value for early investors) or at best - a lottery or volatile instrument (value only for lucky investors). And this is the reason I think that it will happen in some spaces such as gaming.

I don’t think it’s something that has or adds any value from a technical viewpoint. At least not to the point where it would warrant investment or overhead from blockchain tech. It’s hardly worth even $1 “securing” my ownership of a hat on a public ledger unless the chance of it becoming more expensive through artificial scarcity is counted as “value”.

> There is nothing anyone can do about the fact that [IP] can be copied.

Disney's lawyers seem to be doing just fine.

> create a market... cut on each transfer

This would almost certainly result in KYC requirements, and I'm skeptical that the delta in profit is big enough to justify that lift.

Perhaps, but the tx fee is part of the crypto transaction, and happens entirely on-network. If standard crypto rules apply, the only people that need to KYC are the ones cashing in/cashing out USD.

Someone is doing the KYC either way. It gets paid for one way or the other, and that cut comes out of the price the consumer is willing to bear for the underlying item.

The cost of KYC might not even be the biggest issue. The friction will be a non-negligible drag on sales.

This ignores the effort each studio would need to do, in perpetuity, to render hat tokens in their game's engine and art style. Eventually there would be so many years of hat tokens that game studios would either have to draw a thousand hats just to launch, or abandon older hats. Which would devalue them and scare off future hat token prospectors.

Imagine the outrage when a gamer learns his $1,000 silly hat won't render in the latest horror game.

You grab the hats of the players that are actually in the game (i.e. only the ones you need to render). Custom graphics like decals have been a thing for decades. It's not much harder for clients to download a hat model as e.g. an fbx, than it was to download a sprayed decal in counter strike 20 years ago. The actual buying and selling of hats doesn't need to take place in the game.

You misunderstand my use of render. I don't mean render during gameplay; I mean turn an abstract idea, like an NFT for a bull horn hat, into a 3d or 2d asset that aligns with the art direction of the game.

There's no chance for asset reuse across games. Not only do the asset file formats differ from game engine to game engine (or platform to platform) they also differ perspectively, aesthetically, and thematically. Madden 2023 has incentive to sell NFT assets for sports jerseys. And Elder Scrolls 6, NFTs for wizard robes. But render those assets in the other game and they will look out of place. Even two games with wizards in them will have different aesthetics, mostly to differentiate in the marketplace!

No I mean that games that do this would literally allow frog-hats and butterfly hats regardless of genre and art direction. They’d then obviously need to be able to import the asset and render it on player’s heads and that’s it. If it doesn’t fit the renderer exactly then it’ll look out of place, badly lit etc. But that’s exactly like hats already are in these game. They are out-of-place, ugly assets. The hat-games some times even seem deliberate directed in a style that seems to be for the purpose of allowing a wider variety of art without looking too off (e.g. Fortnite).

Two things you are missing is:

1. With NFTs games can take a cut of resales. With something like cs:go there was a substantial secondary resale market for things like skins, which valve wasn’t able to capture but with NFTs they could have taken say 10% of each resale.

2. Because the data is public it’s possible for other games to bootstrap off the data (we have seen this with “airdrops” in the crypto land). Meaning a game which is coming out can give some perk to people who own X in fortnite because they think their game is similar and want to entice people to try their game, especially people who they know like fortnite.

In the tech world we are always talking about how valuable data is. The blockchain makes that data public so secondary products can exist to serve needs the game doesn’t care about. And provides the ability for the original game to capture part of that market if they wish because they own the initial contract. But because the data is public, other games can also use that data how they want.

> With NFTs games can take a cut of resales

How is this a positive? Where were the people begging GameStop to write publishers a check for the used games they bought and resold?

They didn't say it was a positive for users. But users aren't the ones who are going to add NFTs to games.

Penny Arcade explains: https://www.penny-arcade.com/comic/2021/12/22/ubisoft

> 1. With NFTs games can take a cut of resales. With something like cs:go there was a substantial secondary resale market for things like skins, which valve wasn’t able to capture but with NFTs they could have taken say 10% of each resale.

So what is EA's incentive to join the Valve blockchain where Valve gets 10% of each resale? And if there's no incentive for EA to join, why isn't it just a centralized marketplace rather than a blockchain?

> 2. Because the data is public it’s possible for other games to bootstrap off the data (we have seen this with “airdrops” in the crypto land). Meaning a game which is coming out can give some perk to people who own X in fortnite because they think their game is similar and want to entice people to try their game, especially people who they know like fortnite.

Valve and other companies already have this data, in much greater specificity than "this wallet owns a longsword".

> So what is EA's incentive to join the Valve blockchain where Valve gets 10% of each resale?

They already can do this via the [non-nft-based] Steam marketplace where Steam itself takes a 5% fee from every transaction.

That is entirely the point. Centralized is just obviously better.

1. I think Valve takes a cut of every marketplace sale, as well as the game publisher. More importantly they control the market completely so they surely can choose what share to take on every sale. They certainly don't need NFTs.

Am I missing something?

He is talking about 3rd party websites that trade in skins

>why the fuck would you want scarcity on longswords?

You would want scarcity on longswords if your business model included selling loot crates that may contain longswords.

If your business model included selling loot, you would not allow NFTs from other companies from which you earn nothing. And if the token is from a previous game of your own company, you can again just use a database without all the complexity.

Exactly. If you need longswords to be scarce, you're going to have a bad time when marty minecraft builds 1,000 longswords and wants to bring them into your game.

The complexity of a NFT system provides a benefit to the company by (A) offloading processing power to people who might be making some money from 'mining' the chain, and (B) not having to run your own marketplace system, while still getting a percentage of TX fees.

If people are mining it, then the processing power required has just gone up by multiple orders of magnitude and is now vulnerable to third parties controlling the mining.

Please correct anything below:

There's a couple points: low- vs high-trust, and distributed vs centralized. Blockchains have in turn two mechanisms to match: proof-of-work to handle low-trust environments, and public cryptographic ledgers to handle distributed work. In this case, games are high-trust, centralized services. There is a single controller that authoritatively owns the current game state. So this does not seem a good match for blockchain technology.

If you're not in a low-trust environment, you don't need proof-of-X. You just a public cryptographic ledger written to by a set of trusted keys. Any party can extend the blockchain by just creating and signing the next block. (Would need some contention resolution for simultaneous write attempts -- could be as simple as whoever got the lower signature hash wins.)

I think Minecraft is an interesting game to bring up since multiplayer in this game exists in a very decentralized way. Anybody can host a server and your possessions (etc) on that sever are completely unrelated to other servers.

One could imagine some sort of opt-in system that servers could enable that would allow for cosmetic items to travel with a player from server to server using NFTs as proof of ownership of the cosmetics.

There isn't a real reason for this to be done with NFTs vs some centralized database, but it does make more sense than the vast majority of games with are hosted on centralized systems already.

There is also a real reason for it not to be done with NFTs: it would take about thirty seconds for someone to be scammed and open a support ticket with [whoever - it won't be the right person, but I guarantee someone is getting a support ticket] and they obviously won't be able to reverse the transaction, and also unclear if they could even ban the scammer (right now, bans are per-server, unless server owners have coordinated otherwise, which they generally don't). Regardless, the user is going to have a bad time, versus a system using a mutable system, where a human could investigate and reverse the issue.

Obviously support agents make mistakes sometimes too, but that's a heck of a lot rarer than scams in MMOs.

This exact point has been my hesitation with NFTs in general. I think the immutable nature of NFTs is actually very incompatible with human nature; we make mistakes and a completely unforgiving system is only going to make life harder.

> There isn't a real reason for this to be done with NFTs vs some centralized database

That's like the main point...

Well my point is that Minecraft does actually feature some decentralization vs the vast majority of online games.

Sure. But to give a more extreme example, Dungeons and Dragons is entirely decentralized with individual DMs hosting games however they choose without even the knowledge or consent or transaction with Wizards of the Coast. Now imagine a player demanding the right to access content from another campaign with another DM. Or even more laughably, that they "bought" with USD from someone who played a DnD game at some point.

I'd argue that Nintendo kind of does this already with Amiibo. You own a figurine you purchased and by scanning it you verify the ownership, which yields a reward exclusive to owners, the tech behind it is different but the concept is very similar, including the fact that you can resell figurines and that some can get to be very expensive because of supply and demand.

I'd also argue that this feature is lackluster and I don't think it would have had any success at all if it wasn't for the fact that you also get a figurine.

There are many reasons why amiibo are not like NFTs, but I'm only interested in trashing this "in-game item NFT" idea. When you scan Mario, you have no expectation of instantiating mario into your game, because that would be stupid in just about every context. Smash AI aside.

There is an Epona Link one that instantiates Epona into breath of the wild, but it definitely doesn't do that in Mario Odyssey.

Amiibo are cool. People like them because they're cool and the in game bonuses are a fun little extra. That's very different from the idea of trading in game item NFTs with the intention of carrying over their utility to other games.

Nintendo completely owns Amiibo and doesn't see the value in coding the same effect for each Amiibo into, why would any developer want to put in the work to implement items they didn't create and profit from?

Exactly

You have an expectation that NFTs would surely instantiate objects, I see no reason for that. Moreover I see no motivation for game companies to keep support.

Imagine you have an NFT for, say, a gun, let's go with AK47 because of its popularity, and say it unlocks it for the current Call of Duty (whatever that is now). Why would Activision make it work with the next CoD? Is it supposed to work with Battlefield too? Is there anything stopping people at Valve from giving you a cosmetic if you validate it, if they so desire?

I mean yeah, that's my point. It's a bad idea.

The only thing I can think of that NFTs could potentially add to Amiibos would be part of a form of DRM. The amiibo data is trivially piratable onto NFC cards, and there is a cottage industry of custom amiibo cards.

Still though, if you pirate you don't get the actual official figurine, there are certainly other ways to implement DRM, consumers hate DRM, and despite Nintendo's well known aggressiveness in litigating and preventing piracy, they don't seem to care about DRM on amiibos, apparently because the data is not the core value-prop.

People literally buy devices to emit fake codes to get the rewards despite the fact that they dont actually own the Amiibo....

So maybe this analogy works better than you realized.

For indie games however, it could make sense. Hear me out.

It's true that items are unique to games. But if you want to allow some kind of trading, you will have to implement it yourself (next to programming, art, marketing, etc.). Linking this to crypto-tokens could have the benefit that you outsource the trading part. Your players "own" their items through crypto tokens, and can trade them on crypto exchanges.

You can implement it yourself in a centralised way of course. But the question is if you want to spend the resources on that.

But why. The source of the drop would be some centralised server anyway.

Adding crypto assets seems way more programmer work than doing in game trading, which you would want anyway as a player.

So an indie dev is going to spend the time to create an interface between Stardew Valley and Slay the Spire cards?

It's a huge undertaking that would need to be custom done for each game's data it interacts with. And indie games are less likely to conform to standards than others.

Yep. Indie devs will spend god knows how many hours and their tight budgets building a cutting edge revolutionary tech, so amazing that will be able to render unknown items with unknown specifications on the fly. All that just for some random investment genius recoup the money that he spent buying a ugly monkey jpeg.

Indie developers typically want to design, well, their own game. Their own vision, art, music, mechanics working in concert. I don't think anyone is dreaming of creating a showroom for a bunch of random other assets out there in the world. Asset-store flips are already considered jokes. Original, boutique art in an indie game will always win out and stand out.

They'd still need to do the work to implement every single item you are talking about. No indie would even want to do that. Nobody goes indie to work on compatibility drudge-work. Maybe if they are trying to jump on get-rich-quick financialization trend, but not if they want to actually work on their art.

This is close but not quite how I expect they'll come to be used. I think they'll become a lot more important if companies like Meta are successful in creating virtual connected spaces based on open standards. In that scenario, with public buy in, ownership of a digital work shifts meaning slightly to one where NFTs suddenly make more sense.

Biggest issue with some 'use your item as an avatar in any game' is that doing cross-engine models is hard, and pretty much impossible if you want the model itself to be immutable, lest it break with some engine update rendering it useless. The only in game item thing that really works is when the game code has a texture algorithm (like CS:GO skin variants/wear levels) and uses the immutable nft data to calculate their unique item texture.

It's not just technically laughable, cross-game assets make zero sense from a design and aesthetic standpoint. Splatoon and Gears of War are both third-person shooters, but characters in one would look jarring and hilariously out of place in the other.

> That's just not how games work. A longsword in dnd is not a longsword in final fantasy, nor is it a longsword in dark souls, nor is it a longsword in minecraft.

That's not a terrible idea. Crossovers between games. Good gimmick.

And a lot of what you're talking about is culturally constructed, it doesn't have to be that way.

Crossovers are fine. That's not the issue being noted here. The problem is that people imagine generic items are cross compatible within many games, but that just doesn't work. If you want to make a crossover version of the master sword in minecraft, sure, that's cool. If you want to somehow import the data and just assume some sort of parser will get the properties and the look and feel right, you're going to have a shit time. And then still you'd be better off on a centralized setting.