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>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.

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).

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.

> 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.