A Beginner’s Guide to NFTs
Metadata
Highlights
- NFTs are just digital abstractions used to represent assets that are one of a kind
- The same reason why cryptocurrency used in payments is more efficient than traditional payments, that it is borderless and significantly easier to transfer, applies to NFTs. For example, if you want to create tradable in-game items as a game developer, then you can instantly have them be tradable through protocols that allow for decentralized exchange of NFTs. You don’t have to create your own marketplace or go through the onboarding process of a centralized platform in order to have the items be tradable.
- Programmable art is another interesting concept where a piece of artwork can incorporate on-chain data to dynamically update certain features or characteristics of the work. For example, one could create a piece of programmable art whose background changes if the price of ether goes above a certain dollar-value. There are countless creative possibilities.
- A common skepticism is that someone can just take a screenshot of the image or get a digital file so it’s not really scarce. However, the same argument could apply to physical items as well. Anyone can take a photo of the Mona Lisa or create a replica of it, but it isn’t the real item from the artist. People are willing to pay a premium for the original work. Another interesting aspect of digital art or collectibles is that you can easily verify the item’s ownership history. Some digital items might be worth more depending on who owned it in the past.
- Decentralized marketplaces can significantly reduce transaction fees due to the improved efficiency of starting up and operating a marketplace. Marketplaces can also improve overall user experience and increase interest in the game.
- One concern with making in-game items tradable is that the ability to trade items can negatively affect the gameplay as people are focused on extracting value from the system or only the players that are willing to pay a lot of money for items can enjoy the game. Diablo III had an auction house where users could trade in-game items for in-game currency and cash. It was shut down because of how it affected the game. It was no longer fun and rewarding since players would just buy the best loot. In Diablo III, having the best loot was essentially the goal of the game so having an auction house severely affected gameplay whereas other games are not set up this way. It’s important for game developers to find a balance on what should be freely traded for their game (e.g. skins rather than weapons, game time itself can be traded, etc).
- Another point of friction with NFTs is that holders will need to self-custody them. However this complexity can be abstracted away with user friendly wallets that make it easy to onboard and support features such as a PIN, biometrics, and social account recovery.
A Beginner’s Guide to NFTs
Metadata
Highlights
- NFTs are just digital abstractions used to represent assets that are one of a kind
- The same reason why cryptocurrency used in payments is more efficient than traditional payments, that it is borderless and significantly easier to transfer, applies to NFTs. For example, if you want to create tradable in-game items as a game developer, then you can instantly have them be tradable through protocols that allow for decentralized exchange of NFTs. You don’t have to create your own marketplace or go through the onboarding process of a centralized platform in order to have the items be tradable.
- Programmable art is another interesting concept where a piece of artwork can incorporate on-chain data to dynamically update certain features or characteristics of the work. For example, one could create a piece of programmable art whose background changes if the price of ether goes above a certain dollar-value. There are countless creative possibilities.
- A common skepticism is that someone can just take a screenshot of the image or get a digital file so it’s not really scarce. However, the same argument could apply to physical items as well. Anyone can take a photo of the Mona Lisa or create a replica of it, but it isn’t the real item from the artist. People are willing to pay a premium for the original work. Another interesting aspect of digital art or collectibles is that you can easily verify the item’s ownership history. Some digital items might be worth more depending on who owned it in the past.
- Decentralized marketplaces can significantly reduce transaction fees due to the improved efficiency of starting up and operating a marketplace. Marketplaces can also improve overall user experience and increase interest in the game.
- One concern with making in-game items tradable is that the ability to trade items can negatively affect the gameplay as people are focused on extracting value from the system or only the players that are willing to pay a lot of money for items can enjoy the game. Diablo III had an auction house where users could trade in-game items for in-game currency and cash. It was shut down because of how it affected the game. It was no longer fun and rewarding since players would just buy the best loot. In Diablo III, having the best loot was essentially the goal of the game so having an auction house severely affected gameplay whereas other games are not set up this way. It’s important for game developers to find a balance on what should be freely traded for their game (e.g. skins rather than weapons, game time itself can be traded, etc).
- Another point of friction with NFTs is that holders will need to self-custody them. However this complexity can be abstracted away with user friendly wallets that make it easy to onboard and support features such as a PIN, biometrics, and social account recovery.
A Beginner’s Guide to NFTs
Metadata
Highlights
- NFTs are just digital abstractions used to represent assets that are one of a kind
- The same reason why cryptocurrency used in payments is more efficient than traditional payments, that it is borderless and significantly easier to transfer, applies to NFTs. For example, if you want to create tradable in-game items as a game developer, then you can instantly have them be tradable through protocols that allow for decentralized exchange of NFTs. You don’t have to create your own marketplace or go through the onboarding process of a centralized platform in order to have the items be tradable.
- Programmable art is another interesting concept where a piece of artwork can incorporate on-chain data to dynamically update certain features or characteristics of the work. For example, one could create a piece of programmable art whose background changes if the price of ether goes above a certain dollar-value. There are countless creative possibilities.
- A common skepticism is that someone can just take a screenshot of the image or get a digital file so it’s not really scarce. However, the same argument could apply to physical items as well. Anyone can take a photo of the Mona Lisa or create a replica of it, but it isn’t the real item from the artist. People are willing to pay a premium for the original work. Another interesting aspect of digital art or collectibles is that you can easily verify the item’s ownership history. Some digital items might be worth more depending on who owned it in the past.
- Decentralized marketplaces can significantly reduce transaction fees due to the improved efficiency of starting up and operating a marketplace. Marketplaces can also improve overall user experience and increase interest in the game.
- One concern with making in-game items tradable is that the ability to trade items can negatively affect the gameplay as people are focused on extracting value from the system or only the players that are willing to pay a lot of money for items can enjoy the game. Diablo III had an auction house where users could trade in-game items for in-game currency and cash. It was shut down because of how it affected the game. It was no longer fun and rewarding since players would just buy the best loot. In Diablo III, having the best loot was essentially the goal of the game so having an auction house severely affected gameplay whereas other games are not set up this way. It’s important for game developers to find a balance on what should be freely traded for their game (e.g. skins rather than weapons, game time itself can be traded, etc).