Friday, January 7, 2022

A Position Of Ignorance or What Did NFTs Ever Do For Us?

at Time To Loot has a post up in which he looks ahead to 2022. I could even say he "looks forward " to it because he's really pretty positive about what might be coming next. I definitely wouldn't be able to say the same about some of the prediction posts I've read so far.

Among other things, Naithin talks about his hopes for blogging. One of the things he says he'd like to see are more "Discussion posts" by which he means "posts that have the seed of an idea worth (in at least one person’s mind, at least) discussing." I very much agree with him that these kinds of conversations are one of the best parts of blogging and since his post sparked this one I guess the ball's rolling already.

That's the good part. Before you start to feel all warm and fuzzy, wait until you see the fire that spark lit.

Yes, it's NFT time again! When isn't it? It is, so ironically, the gift that keeps on giving. 

It's weird to think it was barely two months ago I found out what an NFT even was. Tipa was the first blogger I read on the topic but a whole raft of people have weighed in since as more and more gaming companies throw themselves onto the blockchain/crypto/NFT dogpile.

UltrViolet at Endgame Viable begrudgingly joins the party, late and irritable, with a thought-provoking post wondering what the hell the fuss is all about. He concludes "My basic point at the end of it all is something like: NFTs aren’t great, but I’m not yet convinced it deserves the level of righteous fury on display lately. Just … don’t buy them."

Maybe he's right. It seems a little unlikely it'll be that simple but maybe it will. It's far from clear yet what NFTs in online games will look like. Perhaps we will just be able to ignore them. 

If I'm honest about it, although I have a pretty clear idea what NFTs are by now, I'd still struggle to tell you what they're for. Other than money-laundering, of course. That part's obvious.

UltrViolet suggests there's a conflation of unrelated concepts when NFTs are linked with "Play To Earn" and player-made content. Maybe he's right. I might have misunderstood how it works.  Actually, though, I think it might be UltrViolet, who's getting mixed up. 

As I understand it, "Play To Earn" means generating some form of cryptocurrency by performing in-game activities, not designing and being paid for in-game content per se. NFTs are the means by which such activity would be recorded and recompensed. It means you do your dailies and earn 0.0001 of some made-up currency the company owns, which in theory you can then trade out for real-world dollars when hell freezes over.

Player-made content in the sense of in-game items is something different. We've certainly had plenty of that in games before. It was one of John "Smed" Smedley's many Big Ideas back in the days of Sony Online Entertainment and he for sure wasn't the first to come up with it.

As Wilhelm often points out, online gaming companies can already do all the things they say they need NFTs for without NFTs and they always could. Some of them did. So what's the difference? 

I don't know! If I had to guess, though, I'd say it's money. Square Enix President Yosuke Matsuda claims he expects to see "an eventual right-sizing" of NFT-backed digital goods sales but given the starting point, transactions in six and seven figures, it seems all too likely the "right size" will be a lot higher than anything we've been used to until now.

There's also convenience. SOE's Player Studio was always bedeviled by a convoluted, time-consuming process of application, approval and payment. Binding the whole thing to the blockchain might speed things up. Maybe? Who knows?

That's the thing. No-one does know. All of this could end up dead in the water like 3DTV or it could be the next Free To Play revolution, all but impossible either to ignore or avoid.

Which is why it's such fun to write about. Here's a dirty litle blogging secret - it's a lot easier to write about things no-one really knows much about than it is to put together posts on stuff people know really well. That's one of the reasons we all end up jumping on the back of every latest hot game or news story. Anyone can bang out a thousand words of speculation or excitement or outrage based on nothing more than a few buzzwords and some vaguely-remembered headlines. If no-one knows any better, who's going to call you on it?

I have a dirtier secret than that, though. There's another reason I can't seem to stop myself posting about NFTs (And the Metaverse, for that matter, but I'll save that revelation for another day.) The thing is, I kinda like the whole idea of NFTs. 

Oh, I don't like the moneygrubbing part or the crass commercialism or the cynical exploitation or the climate-wrecking cost. All of that stinks. No, the part I like is how abstruse the whole thing feels. 

It has an aesthetic that reminds me of a lot of things I like and admire, particularly certain 20th century art movements. There are resonances that echo Futurism, Dada and Situationism, for sure. Particularly the last one. I keep thinking of John Cage's 4.33. The whole slippery concept is so hard to grasp that most commentators I've read fail to agree, let alone explain, exactly what having paid for an NFT gets you.

I love the idea that you can "own" the right to point to something that doesn't exist. As has been explained in enormous, numbing detail in some of the pieces I've read on the topic, someone who owns an NFT owns neither the image itself, nor the reproduction rights, nor even guaranteed access.

The comparison has been made to owning a star, something you've been able to do for many years but that's a bit like comparing owning a pet rock to owning a pet. Everyone understands that your star or your pet rock is a conceit. NFTs, we are meant to believe, are real. As real as a dog or a cat.

Or an ape. It needs to be admitted, at least by me, that some NFTs are cool. I mean, come on, admit it. Those Bored Apes are great. You'd like one. I'd like one and I don't even like apes. 

They're cool because someone came up with a great name (Bored Ape Yacht Club is so slick it almost slides off the page.), added a great look (Those things are really drawn!) and topped it off with a gloss that made it feel spaceage and strange. Why bother with substance when you can sell style?

Plus exclusivity. That always works. Or it works for those who can duck under the velvet rope.

Public feeling in gaming right now is very much opposed to NFTs and most likely for good reason. Chances are they won't make any of our games better and they might make them worse. I suspect the main reason most people don't like them, though, is that they know they'll never be able to have them. Not at the kind of prices they cost now, anyway.  

Which is also why Squenix's boss thinks the price needs to come down. When NFTs begin to feel affordable to the more affluent gamer, then we might begin to see a split in the resistance. Even gaming whales most likely won't pay hundreds of thousands for single NFTs of in-game items but they might pay thousands of dollars for hundreds of them. It's a strategy that's been working up to now, after all.

All of which speculation brings me back to something else Naithin mentioned, something I'd already been thnking about: Valve's hard nope to NFTs. It was an unadulterated good news story when it broke back in October, wasn't it? We all cheered when we heard Steam was banning all blockchain and NFT games.

Did we, though? I'm not so sure we did. I'm guessing a lot of us either didn't notice at all or looked at the headline blankly and wondered "What's an NFT?"

Valve may have gone too early to get full PR credit for their clear-eyed vision of what's good for gaming but now they're stuck with it. As AAA gaming company after AAA gaming company comes out with tentative plans to invest in the future by bolting blockchain and NFT onto their existing properties or building it into new ones from the ground up, where does that leave Steam as the platform of choice going forward?

It's not all that hard to imagine a scenario where, in a couple of years' time, most new games will come with some kind of NFT feature as standard. Are none of them going to be allowed onto Steam at all? Conversely, is access to the platform so vital that developers will give up the right to make the money everyone else is making just so they can be on Steam?

Yeah, I have no idea. That's kind of my point. It's impossible to predict but such fun to try. It's going to be messy, whichever way it falls and fascinating to watch. All this stuff may be horrible but like a lot of horrible things it can be hard to look away.

All of which is as much as to say I'll probably be writing about all of this from a position of ignorance for a while yet, at least until I'm as bored as one of those hyper-expensive apes. I'm not sure it's the discussion Naithin would have wanted to kick off but it's the one we've got. Anyone going to follow on?


  1. From everything I've read about them, NFTs seem to deserve all the scorn they get because they're late-stage capitalism taken to a comically absurd degree. No longer are we merely being sold lower quality products at a higher frequency - NFTs want to us to just pretend that we've received some good or service and can we please hand over our money now without actually getting anything in return, thanks. And sure, scammers will always exist, but seeing these things being given this degree of publicity is frightening and really not something the world needs right now.

    1. I really should have worked "late-stage capitalism" into the post somewhere. I wonder just how "late-stage" we actually are? It does seem as though selling people the notion that we've sold them something without actually selling them anything ought to be about as far as you could take it but I have a queasy feeling it's not. I guess the next step would be to sell people the option to buy the notion they've bought something. I'm not sure there's an obvious end-point to this.

      It does fascinate me and to some disturbing extent it makes me happy, too. It's as though conceptual art is subsuming capitalism. It's not going to end well, though.

    2. An option market for NFTs is a brilliant and terrifying thought. I think it currently would be hard to find enough buyers for calls to make the puts work at all, though. Thonking…

  2. Interesting continuing discussion. I certainly don't imagine myself participating in any NFT related activities. I'm probably being a bit obtuse, but to me, this whole thing just seems like a slightly new spin on RMT and with that the potential for some negative impacts on the games I play-- even if I'm not partaking of the NFT/RMT part.

    Any time you have the potential to monetize in game player activity (legitimately or otherwise)-- character boosting, rare item or gold selling, etc.-- you potentially give rise to an entire class of mercenary players being played by entrepreneurial types grinding, gold, advancement or rare drops in pursuit of their efforts.

    In PVE games I play, I see that having a potentially negative impact on the PVE experience-- running into botters, or aoe grinders in game-- breaking immersion and perhaps monopolizing some content to the exclusion of the more pedestrian players like myself-- and perhaps more importantantly, screwing up the in game market for items whether through scarcity, price inflation/currency devaluation, etc. That doesn't sound like much fun.

    In PVP games, it seems like it leads potentially to pay to win even if only indirectly and could be game breaking. FTP games with a cash shop with other than cosmetic items already struggle with keeping some balance between earned and bought achievement.

    The final issue that confounds me is why on earth would a company pursue some kind of persistent, transferable virtual asset scheme that is tied to a currency mechanism who's value may fluctate wildly due to factors completely outside of the game? It feels to me like deciding only to permit RMT transactions in the currency of a small unstable third world country rather than any of the more stable national currencies.

    I'm just not understanding how creating two sources of extreme volatility-- pure scarcity/supply demand effects on items, aka Tulipmania, as a result of effective RMT, coupled with currency exchange rate volatility-- makes for a winning combo for a game company. If they are "selling," they lose control of scarcity/price stability as well as subjecting their ultimate return of value to currency speculation risk. Even if the game company intends to make money "brokering" these exchanges, the exchange rate volatility compounds what would otherwise look like a simple cash shop play.

    Color me confused.

    1. You put your finger on one of the aspects that confounds me, too. Other than my personal conspiracy theory that the big atraction for big game companies in adding an NFT element to their games is as a smokescreen for raising the floor for all digital item sales, I struggle to see what the companies expect to get out of it. Oh, except for the huge hike in the share price every time they announce their intention to jump on the bandwagon, of course. Square Enix' share price rose 8% overnight on the publication of that New Year's letter.

      As I was trying to make clear in the post, though, my inability to understand what the hell is going on with all this is a big part of what makes it all so fascinating. I'm pretty sure that if and when it all settles down and becomes just yet another tedious, structural element of the industry, I'll lose all interest in it. For now, though, it's like aliens have landed and we're trying to work out just what it is they're trying to say to us. I just hope when we work out what it is, we find they're here to give us the benefit of their advanced technology, not to destroy everything we hold dear.

  3. "I suspect the main reason most people don't like them, though, is that they know they'll never be able to have them. Not at the kind of prices they cost now, anyway."

    I don't think this statement holds up under scrutiny. 99.99% of all NFTs are worthless and can be 'bought' for the cryptocurrency equivalent of pennies. In gaming, the only NFTs available from a major publisher, the three items Ubisoft released for Ghost Recon Wildlands, were given away for free with few takers.

    I think people are perfectly fine with dubiously owning digital content. We don't really own the stuff we buy on digital marketplaces. We aren't even renting the stuff we stream from subscription services. By and large people reject NFTs because they don't actually give us anything we don't already have. Who gets a commission of any particular sale, and the possible resale value in marketplaces that exist only in technicality aren't important to buyers.

    1. I think I covered myself pretty effectively in the title when it comes to not knowing what I'm talking about! I haven't done any research as such, just read quite a lot of articles and posts from which a few impressions have stuck. None of the prices for NFTs I've seen in any context at all have been of the order of "pennies", though. Maybe most of them are but naturally if so those sales and transactions aren't making any headlines.

      In the series Tipa did, when she actually played some of the games that use NFTs and bought and traded (or at least checked the cost of trading) some of them, my memory is of some eyewatering numbers. Not the hundreds of thousands that I read about in the non-ganming press when art and music NFTs change hands but hundreds of dollars for single items in mobile games that nobody much plays. I just took a quick look at that post torefresh my memory and I seem to have remembered it about right, although she does say there's a huge range of prices. She concludes by saying "This is why I can’t believe cryptogaming will ever hit the mainstream — it’s just SO EXPENSIVE. " So that's where I got my basic idea of the high costs involved.

      The Ubisoft example is very interesting. Ubisoft described it as "an experiment" and the report I read speculated that Ghost Recon Wildlands had specificaly been chosen because it was one of their less high-profile games. According to Engadget Ubisoft "minted" more than 3000 NFTs and by Christmas had sold about 18 of them, for a total of just under $2k. That's not much but as proof of concept it's not nothing, either.

      As for gamers not being salty about the costs... a hell of a lot of gamersd seem to have been very salty indeed about the kind of money "whales" have been spending in games for years now. Part of that is certainly an objection to the way dev time gets redirected to luring and harpooning those whales but it's always been my impression that much of the anger is also coming from the knowledge that other people have more money to spend on stuff they want. There have always been as many complaints about the pricing of cash shop items as there are about their existence.

      The question of whether it matters that these are NFTs or just regular in-game cash shop items is interesting. Leaving aside the environmental implications, I agree that most gamers won't care what the technical aspects are - they just want their fancy outfits and flashy mounts. If NFTs coming into games has the (almost certainly intended) effect of raising the base cost of all in-game items, though, I'd definitely see that as a problem for everyone. Even the whales.

  4. I think I agree with Everwake re: the source of anger and distrust not being (at least solely) driven by FOMO as you suggest.

    I think instead, the majority of those in the know (which will still be an overwhelming minority overall) are just simply distrustful of the big publishers more generally. After years of seeing how things have progressed, hearing about technologies being developed in concert with psychologists that range from just when/how to display microtransactions to impacting multiplayer matching algorithms it isn't exactly difficult to make the leap that anything they're this excited about isn't a good thing for us.

    The other major element though is the environmental impact. It's difficult to quantify for sure -- the article I'll link has a good analogy between NFTs and the difficulty in associating carbon cost to an individual who takes a flight. But even the more efficient algorithms coming use significantly more power than just... not doing this... and the transactions are still using proof of work Ethereum in the meantime regardless.

    1. The environmental impact is the most worrying of all the aspects of the enterprise, for sure. That said, pretty much all aspects of gaming and online behavior are worrying from that perspective. Blockchain and associated behaviors are just the extreme end of the problem. It's noticeable that most of the would-be reputable gaming companies getting involved in this are already making noises about how their schemes are going to be environmentally responsible, which just makes me think of the whole carbon trading scam from a few years back. Not doing it at all would clearly be the best way to prevent further environmental impact.

  5. What i completely miss from the discussion is taxes.

    I read somewehre, that since NFTS are worth something in the real world they are subject to income, sales tax etc. which sounds about right for me.
    This seams to be a major factor why most companies go to great lengths to make abundantly clear, that nothing in game is worth anything in the real world.
    It also opens up a lot of problem with child labor laws i would think.

    I think most of the companies hope to sidestep the issue by using blockchains. Lets wait what will happen when the tax authorities get a on board.
    I for once don't want to have include my 'game' earnings into my tax statements.

    1. I completely agree. It does get mentioned sometimes but since no-one really knows where it could go the discussion stops pretty quickly. My guess is that, as with lockboxes, most of the people making the decisions to add this stuff to games are relying on how famously slow governments and legal authorities are to come to terms with new technology. By the time tax law catches up they'll be on to the next Big Thing and happy to dump NFTs to avoid any liabilty.

      I suspect that the relevant authorities are starting to gather enough expertise and knowledge to speed the process up each time, though, and the wild west period for each of these innovations is going to get shorter and shorter. Calling the whole thing "Play to Earn" is pretty much sticking a flag in it saying "Tax Authorities Look Here!".


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