Are NFTs a Grift or the Future of Gaming?

They'll at least shake up how games are made

5 min read
Hands on the keyboard of a laptop. A colorful video game with little creatures is on the screen.

The NFT-based game Axie Infinity, developed by Ho Chi Minh City–based blockchain-tech company Sky Mavis, has popularized an in-game economy based around the Ethereum blockchain.

Irina Velichkina/Alamy

Scam or revolution? The inexorable creep of non-fungible tokens (NFTs) into video games has polarized an ongoing debate in the cryptocurrency and gaming worlds. (Neither of which tend to be shy about sharing their opinions online.) But while some of the more ambitious claims made by NFT’s promoters seem unlikely to pan out, the technology could still shake up the relationship between gamers and developers.

NFTs build on the same underlying blockchain technology as cryptocurrencies, but while any two bitcoins can be exchanged like-for-like, each NFT is unique. These tokens can therefore be used as a certificate of ownership for digital items, which is both easily verifiable and impossible to fake thanks to the cryptographic underpinnings of blockchain technology. The technology hit the mainstream last year and since then NFTs linked to digital images, GIFs, videos, and tweets have been going for millions of dollars apiece, with total sales in 2021 topping US $25 billion.

But while the NFTs themselves are unique, the digital items they assert ownership over can be easily copied or downloaded. This has led to claims they have no inherent value and the market is driven by speculation. Their environmental impact has also been criticized due to the processing requirements of some blockchains, although more eco-friendly options do exist.

NFT advocates “get wrapped up in the technologies of ownership and how markets will work. That’s just not the source of value in games.”
—Edward Castronova, Indiana University

More recently, the technology has been muscling into the game industry with both a new breed of blockchain game companies and established developers extolling their virtues. NFTs might seem like a more natural fit for gaming than digital art, as they can be attached to unique in-game items—such as outfits or weapons—which can actually be used by their owners and are not easy to copy in the way a JPEG is. So far, the reaction from gamers has been largely hostile though, with many criticizing the technology as a way to extract more money from players. But advocates say it gives gamers a way to truly own their digital items and sell or trade them, without being beholden to the whims of a particular app store or game publisher.

“They’re the perfect vehicle to store unique game data that players should be able to own and use, potentially across other experiences,” says Aleksander Larsen, the cofounder of Sky Mavis, which produces popular NFT game Axie Infinity. As gamers play various titles, they can accrue NFTs linked to costumes, weapons, characters, and achievements, he says, which they can either decide to sell on once they are done with a game or retain as unique collectibles.

By linking game items with the wider blockchain ecosystem, NFTs also give developers instant access to powerful financial capabilities, says Larsen. Some games have leaned into this to create a new gaming model known as “play-to-earn” with Axie the poster child for the approach. Players buy NFTs of monsters that can be battled against each other to earn cryptocurrency or bred to create new NFT monsters to sell or rent out to other players. Sky Mavis takes a cut of all transactions, but Larsen says the approach allows gamers to capture some of the value created in the virtual world. “We’re trying to make the pie bigger by sharing parts of the revenue,” he says.

Despite the excitement though, Edward Castronova, a professor of media at Indiana University Bloomington who specializes in the economies of virtual worlds, says there’s nothing especially new about these ideas though. Games like World of Warcraft and Runescape, among others, have long allowed players to trade valuable in-game items, and while they don’t have direct routes to monetization, third party sites make it possible to buy and sell loot for real money.

Xavier Coelho-Kostolny, a 3D-character artist, compares the NFT-gaming craze to taking a cup holder from a BMW and trying to put it in a Honda Civic.

The technology would improve the transparency and security of these in-game economies, while providing easier access to sophisticated trading features, says Castronova. But he thinks it’s an incremental improvement at best. And while NFTs could potentially enhance already entertaining games, he thinks more often than not they’re a distraction that causes developers and investors to lose sight of what matters to customers.

“They get wrapped up in the technologies of ownership and how markets will work”, he says. “That’s just not the source of value in games.” People play games to have fun, he says, and unless adding NFTs improves the gameplay, they aren’t adding any real value. The failed attempt to introduce an auction house into the game Diablo III, which allowed payers to sell items for real money, demonstrates how trading dynamics can easily make a game worse rather than better.

One of the most alluring claims made by proponents of NFTs in games is that they could potentially facilitate the transfer of in-game items between different titles. This was one of the justifications for Ubisoft’s poorly received release of a collection of NFTs for its Ghost Recon Breakpoint game.

But while in principle, NFTs are a good way to manage ownership across separate gaming ecosystems, the technical challenge of actually transferring items between them means its little more than a pipe dream, says Xavier Coelho-Kostolny, a 3D-character artist at Magnopus, who has worked on triple-A games. He compares it to taking a cup holder from a BMW and trying to put it in a Honda Civic. “The Honda Civic doesn’t have the structural supports, it doesn’t have the general shape, the materials are all wrong, it’s probably going to look weird because the style of the cars are wrong,” he says.

But an NFT does give contributors to a crowdfunded game project something of immediate value that they can trade on the open market. That could still be significant.

Many game studios use bespoke software that differs in everything from 3D file formats, to how material textures are rendered to underlying physics. Unreal and Unity, the two biggest commercially available game engines, can’t even agree on whether up and down are denoted by the y- or z-axis, says Coelho-Kostolny. While there are efforts to build open standards for virtual worlds, they are still at an embryonic stage. The legal headaches involved in allowing one company’s intellectual property to appear in another company’s game would also be enormous, adds Coelho-Kostolny. And it’s far from clear what incentives exist for a developer to build support for an item it won’t make money from.

Larsen agrees interoperability between games is a distant dream, and he recognizes that NFT games can’t be all about the trading. A sizable proportion of Axie users play specifically to earn money, and that’s something they are trying to change. “We think the game needs to be more fun,” he says. “That’s the basis of anything to make it sustainable.” But he says that the excitement around NFTs has allowed the game to grow far faster than would have otherwise been possible, and he believes the approach presents a novel growth model for smaller developers. Giving people a way to take part ownership in a game also creates an entirely new dynamic between players and developers. “They are actually co-growing the game with you,” he says.

NFTs, in other words, provide a more flexible way for small developers to crowdsource funds, says Paul Gadi, chief technology officer of OP Games. Without NFTs, a game developer on a crowdfunding campaign might resort to in-game Kickstarter premiums that can only be delivered once a game's development cycle is fully completed. However, with NFTs attached to these premiums—that exist independently of the game itself—the developer can provide something of immediate value that can be collected and traded on the open market. The technology could even help create more concrete connections between players and developers through decentralized autonomous organizations, or DAOs. These are groups of people who collaborate on a project without a central hierarchy based on rules encoded in smart contracts on the blockchain. Decisions are made by votes and voting rights can be assigned based on NFT ownership. These could still be significant developments in gaming technology.

“What would games look like if games were collaboratively designed with the players?” says Gadi. “And what would it look like if the NFTs were used as a way to govern the game development?”

The Conversation (3)
Dwarzgarth Blogsplot12 Feb, 2022

Dwarzgarth Blogsplot12 Feb, 2022

The Forgotten Runes Wizards are working on this exact game.

FB TS10 Feb, 2022

Crowds of people manipulated/herded/rushing to buy essentially worthless stuff, is a clear sign of a financial bubble/scam, or not?

NFT craze is just a modern Tulip Mania, created by bitcoin/cryptocurrency shills/promoters/scammers, as a new cash cow!!!

The Inner Beauty of Basic Electronics

Open Circuits showcases the surprising complexity of passive components

5 min read
A photo of a high-stability film resistor with the letters "MIS" in yellow.
All photos by Eric Schlaepfer & Windell H. Oskay

Eric Schlaepfer was trying to fix a broken piece of test equipment when he came across the cause of the problem—a troubled tantalum capacitor. The component had somehow shorted out, and he wanted to know why. So he polished it down for a look inside. He never found the source of the short, but he and his collaborator, Windell H. Oskay, discovered something even better: a breathtaking hidden world inside electronics. What followed were hours and hours of polishing, cleaning, and photography that resulted in Open Circuits: The Inner Beauty of Electronic Components (No Starch Press, 2022), an excerpt of which follows. As the authors write, everything about these components is deliberately designed to meet specific technical needs, but that design leads to “accidental beauty: the emergent aesthetics of things you were never expected to see.”

From a book that spans the wide world of electronics, what we at IEEE Spectrum found surprisingly compelling were the insides of things we don’t spend much time thinking about, passive components. Transistors, LEDs, and other semiconductors may be where the action is, but the simple physics of resistors, capacitors, and inductors have their own sort of splendor.

High-Stability Film Resistor

A photo of a high-stability film resistor with the letters "MIS" in yellow.

All photos by Eric Schlaepfer & Windell H. Oskay

This high-stability film resistor, about 4 millimeters in diameter, is made in much the same way as its inexpensive carbon-film cousin, but with exacting precision. A ceramic rod is coated with a fine layer of resistive film (thin metal, metal oxide, or carbon) and then a perfectly uniform helical groove is machined into the film.

Instead of coating the resistor with an epoxy, it’s hermetically sealed in a lustrous little glass envelope. This makes the resistor more robust, ideal for specialized cases such as precision reference instrumentation, where long-term stability of the resistor is critical. The glass envelope provides better isolation against moisture and other environmental changes than standard coatings like epoxy.

15-Turn Trimmer Potentiometer

A photo of a blue chip
A photo of a blue chip on a circuit board.

It takes 15 rotations of an adjustment screw to move a 15-turn trimmer potentiometer from one end of its resistive range to the other. Circuits that need to be adjusted with fine resolution control use this type of trimmer pot instead of the single-turn variety.

The resistive element in this trimmer is a strip of cermet—a composite of ceramic and metal—silk-screened on a white ceramic substrate. Screen-printed metal links each end of the strip to the connecting wires. It’s a flattened, linear version of the horseshoe-shaped resistive element in single-turn trimmers.

Turning the adjustment screw moves a plastic slider along a track. The wiper is a spring finger, a spring-loaded metal contact, attached to the slider. It makes contact between a metal strip and the selected point on the strip of resistive film.

Ceramic Disc Capacitor

A cutaway of a Ceramic Disc Capacitor
A photo of a Ceramic Disc Capacitor

Capacitors are fundamental electronic components that store energy in the form of static electricity. They’re used in countless ways, including for bulk energy storage, to smooth out electronic signals, and as computer memory cells. The simplest capacitor consists of two parallel metal plates with a gap between them, but capacitors can take many forms so long as there are two conductive surfaces, called electrodes, separated by an insulator.

A ceramic disc capacitor is a low-cost capacitor that is frequently found in appliances and toys. Its insulator is a ceramic disc, and its two parallel plates are extremely thin metal coatings that are evaporated or sputtered onto the disc’s outer surfaces. Connecting wires are attached using solder, and the whole assembly is dipped into a porous coating material that dries hard and protects the capacitor from damage.

Film Capacitor

An image of a cut away of a capacitor
A photo of a green capacitor.

Film capacitors are frequently found in high-quality audio equipment, such as headphone amplifiers, record players, graphic equalizers, and radio tuners. Their key feature is that the dielectric material is a plastic film, such as polyester or polypropylene.

The metal electrodes of this film capacitor are vacuum-deposited on the surfaces of long strips of plastic film. After the leads are attached, the films are rolled up and dipped into an epoxy that binds the assembly together. Then the completed assembly is dipped in a tough outer coating and marked with its value.

Other types of film capacitors are made by stacking flat layers of metallized plastic film, rather than rolling up layers of film.

Dipped Tantalum Capacitor

A photo of a cutaway of a Dipped Tantalum Capacitor

At the core of this capacitor is a porous pellet of tantalum metal. The pellet is made from tantalum powder and sintered, or compressed at a high temperature, into a dense, spongelike solid.

Just like a kitchen sponge, the resulting pellet has a high surface area per unit volume. The pellet is then anodized, creating an insulating oxide layer with an equally high surface area. This process packs a lot of capacitance into a compact device, using spongelike geometry rather than the stacked or rolled layers that most other capacitors use.

The device’s positive terminal, or anode, is connected directly to the tantalum metal. The negative terminal, or cathode, is formed by a thin layer of conductive manganese dioxide coating the pellet.

Axial Inductor

An image of a cutaway of a Axial Inductor
A photo of a collection of cut wires

Inductors are fundamental electronic components that store energy in the form of a magnetic field. They’re used, for example, in some types of power supplies to convert between voltages by alternately storing and releasing energy. This energy-efficient design helps maximize the battery life of cellphones and other portable electronics.

Inductors typically consist of a coil of insulated wire wrapped around a core of magnetic material like iron or ferrite, a ceramic filled with iron oxide. Current flowing around the core produces a magnetic field that acts as a sort of flywheel for current, smoothing out changes in the current as it flows through the inductor.

This axial inductor has a number of turns of varnished copper wire wrapped around a ferrite form and soldered to copper leads on its two ends. It has several layers of protection: a clear varnish over the windings, a light-green coating around the solder joints, and a striking green outer coating to protect the whole component and provide a surface for the colorful stripes that indicate its inductance value.

Power Supply Transformer

A photo of a collection of cut wires
A photo of a yellow element on a circuit board.

This transformer has multiple sets of windings and is used in a power supply to create multiple output AC voltages from a single AC input such as a wall outlet.

The small wires nearer the center are “high impedance” turns of magnet wire. These windings carry a higher voltage but a lower current. They’re protected by several layers of tape, a copper-foil electrostatic shield, and more tape.

The outer “low impedance” windings are made with thicker insulated wire and fewer turns. They handle a lower voltage but a higher current.

All of the windings are wrapped around a black plastic bobbin. Two pieces of ferrite ceramic are bonded together to form the magnetic core at the heart of the transformer.

This article appears in the February 2023 print issue.