NFTs. Blockchains. Cryptocurrency. If you’ve been following the tech world these past few years – or even if you’ve been living under a rock at this point – you’ve likely encountered these terms being thrown around like they’re beads at Mardi Gras. These have been around for years, but their recent surge in popularity is deafening.

The realm of video gaming has especially felt the effect of their popularity, with plenty of talk surrounding the controversial topics. Epic games announced last month that they fully embrace the medium, while Steam has banned them outright. Ubisoft recently stated that they plan to shift focus to developing blockchain games, and EA’s CEO is quoted as saying that “play-to-earn” games are “the future of our industry.”

Before we can even debate the topic, we have to understand what we are dealing with here. Crytocurrencies are digital or virtual currencies which are secured by cryptography, thus they are nearly impossible to counterfeit and to double spend. A defining trait of cryptocurrencies is that a central authority generally doesn’t issue them, thus they can be traded on the market freely without any government oversight or manipulation.

NFTs are somewhat similar, in that they too are digital tokens that can be owned, but they tend to represent real-world objects such as art, music, videos, and more. Within the digital code of these items are unique signatures that essentially make the item a “one-of-a-kind.” Unlike other forms of currency, NFTs have no set value; their worth is simply the amount the buyer is willing to purchase it for. It’s even in the name: NFT stands for “non-fungible token.” One dollar in crypto is worth one dollar in US dollars, but NFTs aren’t like that. Owning one picture for instance cannot be valued at the price of another, similar picture, because they are both entirely distinct objects.

The blockchain is a record system that tracks the transaction made in NFTs or other cryptocurrencies, and are linked in a peer-to-peer network. Using the blockchain, users can see what other people’s digital signatures have interacted with your current token. Imagine owning an image that a popular celebrity once owned, or being the current owner of a piece of cryptocurrency that has passed through the hands of hundreds-of-thousands of others. It’s exciting to think that you can own something that has such a long, rich, recorded history.

For video gaming, NFTs can take the form of digital items, such as gear in an RPG, or even entire characters. Let me explain: a recent Bloomberg article outlines a hypothetical situation for NFTs being used in Mario Kart. The author writes that every single game has a Mario character available, but also each character within each game is completely unique, and thus different from everyone else’s. The amount of races you win, the records you’ve set, are all attached to this particular Mario. Because you own this certain Mario, you have the ability to sell him for real-world money to someone who wants your Mario. Suppose you’re a popular streamer, who has been playing with this Mario on your public stream for years. Maybe you’ve set records, competitive world records even, with this Mario. When that kind of storied history is attached to this digital character, it can be quite attractive to the right kind of buyer.

When put like that, it’s not so much different than owning the half-eaten porkchop of Elvis Presley.

NFTs in video games allows for these digital pieces of code to become tangible objects. Weapons in the latest RPG become much more that stats and cosmetics, but possess a lineage that can be passed down from player-to-player across generations. The closest thing I can think of that currently exists are Pokémon that can be traded from game-to-game, player-to-player. That’s really exciting.

Yet this idea presents even more problems than these exhilarating possibilities. For starters, to generate these types of digital tokens requires a ton of data, and that data requires even more computing energy to produce. Cryptocurrencies can have devastating impacts on the environment, and currently nations around the globe are looking to decrease their ecological footprint, not increase it.

Secondly, NFTs becoming rampant in video games presents a dangerous trend of pay-to-play/pay-to-win scenarios. Consider having the ability to purchase the best character, the best weapon, the best whatever in any video game and immediately having an edge over other players. This is already a concern in the current gaming landscape, but NFTs would increase this ten-fold.

As it stands, cryptocurrencies aren’t looking to go away anytime soon, and if crypto really is the future of economics, video gaming will have to address this in some form, sooner rather than later. Do you see NFTs in video games becoming a major draw, or is it a fad that will quickly be forgotten? Have you invested in cryptocurrencies or NFTs, and how has that experience gone for you? We’d love to here your opinions in the comment section below!