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What Are NFT Games (Explained With FAQs)

In 2023, the Global NFT Games Market boasted a valuation of USD 3,292.73 million, with a projected CAGR of 17.93%, expected to reach USD 8,856.95 million by 2032.

Such a massive growth underscores the transformative impact of NFT games, which blend traditional gameplay with blockchain technology, offering players true ownership of in-game assets, real-world value, and an unprecedented level of engagement. This has led to the rise of numerous play-to-earn NFT games where players can potentially earn money while enjoying gameplay.

Let’s take a closer look at what NFT games are exactly and how they work to merge the virtual and real-world economies.

What Are NFT Games

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NFT games are a new genre of video gaming that incorporates non-fungible tokens (NFTs) – unique 1-of-1 tokens built using smart contracts –  into their game mechanics. Here, NFTs are typically used as in-game assets, giving players the ownership of unique digital items such as characters, skins, weapons or any digital art. 

NFTs are like digital collectibles that you can purchase, sell, and trade either in games or on special websites called NFT marketplaces. Just like collectibles in the real world, these digital items are valuable because they are rare and a lot of people want them.

Interesting Fact: Popular NFT games allow players to earn substantial incomes. For example, players in “Axie Infinity” have reportedly earned over $2,000 per month by breeding, battling, and trading their Axies.

NFT games are different from regular games because they follow specific rules set by smart contracts. These are automatic rules written in code and stored on a blockchain, which is like a secure digital ledger. These rules manage how NFTs are made, used, and traded in the gaming environment. These smart contracts ensure transparency, security, and integrity, to ultimately establish a trustworthy framework for players.

What’s fascinating about NFT games is that they revolutionize how players interact by allowing them to own and personalize their gaming experiences. In addition, players can potentially earn real-world rewards or profit from their in-game investments by swapping or trading their NFT assets. 

Difference Between Traditional Gaming and NFT Games

An image showing the difference between traditional gaming vs NFT gaming

While traditional gaming and NFT gaming both provide immersive experiences, they diverge significantly in terms of asset ownership, economic potential, interoperability, and game dynamics. Let’s take a brief look at each of these differences: 

NOTE: For more in-depth insights (with examples), read our comprehensive article on the comparison of NFT Games with traditional gaming.

1. Ownership of In-Game Assets

In traditional games, players can acquire in-game items, characters, and upgrades, but these assets are controlled by the game developers. This means that players do not have true ownership and cannot transfer or sell these assets outside the game’s environment. 

In contrast, NFT games empower players with actual ownership of their in-game assets. Each asset is represented by an NFT, a unique token stored on a blockchain, which players can freely trade, sell, or hold as an investment. 

This shift from centralized control to decentralized ownership is a fundamental difference that offers players greater autonomy and potential financial gain. 

2. Economic Opportunities

Traditional gaming often involves spending money on in-game purchases, subscriptions, or downloadable content without any direct financial return. The economic model of NFT games introduces a play-to-earn framework, where players can earn real-world value through their in-game activities. 

By acquiring and trading NFTs, players can generate income, turning gaming from a mere hobby into a viable source of revenue. This model not only attracts traditional gamers but also appeals to investors and entrepreneurs looking to capitalize on the growing NFT market.

3. Interoperability

In traditional games, assets and items are confined to the game’s ecosystem, limiting their utility and value. NFT games break down these barriers by enabling the interoperability of assets across different games and platforms. 

In turn, an NFT acquired in one game can potentially be used in another, adding a new layer of utility and value to digital items. 

This interoperability leads to a more interconnected gaming ecosystem, where players can carry their assets across multiple virtual worlds, adding fun and maximizing the value of their investments.

How Do NFT Games Work

Below is a detailed breakdown of how NFT games function, making use of smart contracts, blockchain, and unique game mechanics to create an immersive and potentially lucrative gaming experience.  

1. Blockchain Technology and NFTs

At the heart of NFT games is blockchain technology, which ensures transparency, security, and immutability. Each in-game asset, represented as an NFT, is stored on a blockchain. Ethereum and Solana are two most popular blockchains for NFT creators. This technology guarantees that each asset is unique and ownership can be securely transferred between players (if need be).

2. Smart Contracts: The Backbone of NFT Games

Smart contracts are crucial to the operation of NFT games. These are self-executing pieces of code stored on the blockchain that define the rules and interactions of the NFTs within the game. For instance, they can dictate how to create, trade and utilize NFTs within the game environment. The autonomous nature of smart contracts eliminates the need for intermediaries, ensuring a seamless and trustless transaction process.

3. Creation and Implementation of NFTs

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Developers create NFTs by writing smart contracts that specify the properties and functionalities of these tokens. Each NFT is imbued with metadata that includes details such as ownership, history, and attributes. This metadata is what makes each NFT unique and valuable.

4. Real-World Example: The World’s First Major NFT Game CryptoKitties

A prime example of how NFT games work is CryptoKitties, one of the pioneering NFT games. The game revolves around breeding, buying, and selling virtual cats, each represented by a unique NFT.

  • Main Contracts: CryptoKitties operates using a few key smart contracts, the most notable being the geneScience contract. This contract governs the random mechanics behind the creation of new cats, determining their traits and characteristics.
  • GeneScience Contract: Initially, the code for this contract was kept secret by the developers to maintain the element of surprise and randomness in the breeding process. This secrecy spurred the community’s interest, leading players to develop analytical tools to decipher the odds of certain traits appearing in new kittens.
  • Player Strategies: With the insights gained from analyzing the geneScience contract, savvy players could optimize their breeding strategies to produce rare and valuable cats. This not only added a layer of strategy and competition to the game but also allowed players to potentially earn substantial amounts of money by trading rare breeds.

5. Economic Ecosystem

NFT games create their own economic ecosystems where players can earn real-world value through in-game activities. By owning and trading NFTs, players can monetize their gaming efforts, making NFT games not just a source of entertainment but also a potential income stream.

6. Interoperability and Asset Ownership

One of the most exciting aspects of NFT games is the concept of true ownership. Unlike traditional games where in-game assets are confined to the game’s ecosystem, NFTs can be transferred and used across different platforms and games. This interoperability expands the utility and value of NFTs, providing players with more opportunities to leverage their assets.

Final Thoughts

NFT games represent more than just a passing trend; they signify a profound transformation in the digital gaming landscape, reshaping how players experience, own, and connect within virtual realms. With big gaming companies like Ubisoft, Sony, Konami, Epic Games and Square Enix entering the NFT space, NFT gaming is set to become a mainstream aspect of video gaming in the future. 

In addition, cutting-edge Web3 games such as Pikamoon continue going one step further with the excitement of free-roam open-world metaverse dynamics and exclusive NFT collections, marking an all-encompassing pivotal shift in gaming and passive earning potential.

So, don’t forget to download the Pikamoon Beta on Android and Apple devices to join the #PikaArmy, and become part of a community where PIKA is set to unlock unprecedented gaming experiences in the near future. 

What Are NFT Games – FAQs

What does NFT stand for?

NFT stands for non-fungible token, a unique digital identifier that is recorded on a blockchain and used to certify ownership and the authenticity of a digital asset. 

Do NFT games make money?

Yes, absolutely. NFT games can be profitable as they allow players to earn money by collecting, trading, and selling in-game assets that are represented as NFTs. Players can also gain passive income through various rewards and incentives within the game, creating financial opportunities beyond traditional gameplay. 

Who owns NFT in games?

In NFT games, the players who acquire NFTs own them, with ownership verified and secured through the blockchain’s secure ledger. This means players have full control over their digital assets and can trade, sell, or use them across different platforms, depending on the game’s rules.

Why are NFTs good for gaming?

NFTs benefit gaming by providing true ownership of in-game assets, enabling players to trade and resell items, thus creating a vibrant secondary market. In addition, NFTs can enhance the gaming experience by offering unique, verifiable items and creating new revenue streams for both players and developers through innovative game mechanics and economies. 

What should investors look for in an NFT game?

First, check out the folks behind the game. Do they know their stuff? Have they made successful games before? Look into their background. Next, look at the game itself. Is it easy to use and well-made? Do a lot of people play it regularly? If yes, it’s a good sign. Lastly, before you invest any money, do your homework.

How do you earn profits from NFT Games?

In NFT games, players can make money by trading rare NFTs, participating in in-game activities for rewards, creating and selling content like art or music, and earning in-game currency that can be exchanged for real money or valuable rewards. 


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