NFTs (non fungible tokens) are a kind of token which are built on the blockchain and are not interchangeable with items or tokens of a similar type or quantity. They are entirely unique and there is no way to copy or steal them, giving them a higher value than other kinds of virtual assets.
They also offer far more flexibility than FT (fungible tokens). Since NFTs aren’t dependent on third parties that would usually store and validate them, they don’t require trust in order for transactions to take place. Therefore, when someone playing a game purchases these tokens, they can be assured that even if the game were to shut down or even disappear, those tokens would still be in their possession because they are owned by that person rather than the game publisher or another company.
These characteristics allow for numerous advantages over the way that many types of virtual goods are currently managed in video games and other digital environments. These include verifying the rarity of an item as well as its origin, date of creation and other details which clarify its value.
One game which is actually built on the Ethereum blockchain and utilizes the concept of non-fungibility in a very concrete way is CryptoKitties. Each cat that is bred and sold in the game or through its market is unique, cannot be duplicated and is wholly owned by the person who created it or the buyer when ownership is transferred.
All of this was made possible with the development of the ERC-721 token standard, the aim of which was to create non-fungible assets on the blockchain. With this new standard available, developers of CryptoKitties were able to create digital cats that have unique traits and at the same time, allow buyers to have complete ownership of their crypto cats.
In regard to video games, such non-fungible assets could be valuable for even more reasons, such as if a game publisher created items that offer players substantial advantages, but only in limited quantities, thus driving up their value, or such items as classic skins and character tools that players might have input in designing — which would have an impact on the game’s virtual goods market. This would allow players to perhaps combine different features of one character with another and the result would be a new character which couldn’t be duplicated. With modifications the worth would grow, and players could then sell them at substantial profit or simply maintain a library of characters which in no way resemble those of anyone else.
Given how popular such items as character skins, weapons, and other items are in the video game community, allowing players more freedom for modification and ensuring they stand out from other players is a concept which video game publishers should be jumping on in order to benefit from this expanding market.