What Would a Useful NFT Look Like?

What Would a Useful NFT Look Like?

What do people mean when they talk about "utility NFTs" and what could that look like?

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Arran
·Jun 14, 2022·

6 min read

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NFTs are a scorching issue in the spheres of crypto, investors, corporations, and primarily gaming. Many people are hesitant that gaming companies will only use this as an exploitive cash-grab, and rightly so. Ubisoft's recent Ghost Recon NFTs have failed miserably to sell, most likely for the fact they don't have any appeal to anyone.

A common discussion point in favor of NFTs has utility, providing something beyond a simple picture attachment. So what do people mean when talking about "utility NFTs" and what could that look like?

Giving NFTs a Purpose

A common suggestion by NFT fans is to "Imagine taking your favorite skin from Valorant and using it Fortnite". This is laughably impossible for many reasons; conflicting art styles, different game engines, and incompatible asset file formats, among many other things.

A better explanation for the idea of a utility NFT would be; to imagine using a gun from Fallout 3 in Fallout New Vegas. The reason these explanation works is that it's already possible. With the use of mods and over 100,000 downloads on that mod alone, it seems a popular idea, and something companies might want to invest in.

More and more games are exploring the idea of having some form of cross-compatibility and cross-progression, which isn't new. Mass Effect already has a long-running system of decisions and in-game credits transferring to each new game with your save file.

Assassin's Creed recently introduced cross-progression that allows you to continue your game from PC to Playstation. With games shifting to cross-platform and cross-game progression, it makes sense to utilize NFTs as a platform-independent way for users to hold items and progress. All compatible matches can access a collection of weapons, amour, pets, achievements, and other things. Not something you have to buy that sits on your laptop doing nothing, something you earned in-game that can be brought forward through years of gaming.

Think along the lines of your favorite gun in Borderlands being available in Borderlands 2, your favorite pet in Elder Scrolls Online being available on PlayStation and Xbox, or a collectible achievement that unlocks dialogue in future games. It isn't magic and requires game companies to do something to utilize it, but they're already doing this in more complicated ways.

The above outlines the use of a utility NFT and what it could provide users, but there's another vital question to address; why?

Why Bother with Utility NFTs

The current system of cross-platform and cross-game data is messy. Some rely on your save file, some rely on the cloud, and some need a DRM check-in to company servers and breaks the moment there's a network issue.

This becomes even worse when games introduce "integrations" like allowing a connection with Steam or Twitch or trying to build their own platform like Borderlands Shift. This is because it needs new code, a new API, and a new way of "integrating" and linking users and accounts specific to the company and the game.

NFTs can help address these issues not by providing a fast plug-and-go solution but by providing a standard way to make data available and verify users' ownership.

If you hold and manage your own data, there would be no more company firewall removing your access when you go offline (or they have another outage).

If your laptop dies and you don't have a backup, you tend to lose everything you worked for. There is an obvious solution for this local save problem; the cloud. That means having your data saved on a company server, Ubisoft or EA, or another company holding and managing all of your data.

This works fine as a solution to losing local data. However, dedicated company servers are still prone to outages, bandwidth issues, DDoS attacks, and even data loss. By storing data on the blockchain the servers are public and distributed; even if half the servers go offline you have half the servers left to download from. If the entire blockchain network goes offline, there's probably a more significant issue with the internet or the world.

Another issue NFTs can potentially help to reduce is DRM. If you hold and manage your own data, there would be no more company firewall removing your access when you go offline (or they have another outage). Companies can still implement any code they want in-game to try and enforce DRM and limit your access to items, but with an NFT, even if the entire company went bankrupt, you would be able to access all your items on the blockchain. Potentially making use of them with the help of game-DRM removal mods or even community games built using the same game engine, and they'll always be available on any platform created to show them off and list what you've earned, assuming they don't build a reliance on another centralized platform.

The most complex frontier of modern games is integration. When you have an NFT, there's a single way to access the data; this was designed to make NFTs a flexible data structure with a simple retrieval method. Current game integrations use complex sets of APIs and company-owned code, with each company doing things their own way. By utilizing NFTs as a standardized data source, every platform can use one single API to access your game item NFTs. Whether Twitch wants to integrate a way to access or reward viewers with an in-game item, Steam is building a showcase to show off your collection of years of work, or any third-party collection and marketplace portals building a simple way to access and utilize your game data; there would be a straightforward way of getting this data regardless of which game it came from.

The drawbacks of an NFT

NFTs, like anything, come with their own drawbacks, not always on the user side but mainly on the corporate side.

NFTs are publicly available data, the purpose of an NFT is a publicly verifiable piece of data, but with an NFT, a corporation wouldn't own this. Ubisoft would no longer be the king of your domain; you wouldn't need to rely on Ubisoft platforms and give your data to access and utilize your items, which means less ownership and less data collection for corporations, not something companies necessarily want to forfeit.

Another widespread discussion surrounding NFTs is energy consumption, which is different for every blockchain network. Every blockchain functions differently; the difference is how a blockchain chooses to verify things. While every blockchain offers a similar way to record, store, and access data, the code they use to agree on this can be highly different. Ethereum and Bitcoin use code that makes a server expend as much CPU power as possible, leading to high energy usage. The solution to this? Use a different blockchain.

Much like any piece of technology, companies need to examine what's available and what they carefully should be using. Several well-tested and highly used blockchains like Tezos and Solana exist with extremely low energy consumption, less than you would typically use by storing the data in a typical multi-region server setup.

Solana transaction energy usage at 1,837 J comes in less than 1 hour of an LED lightbulb

source: Solana's Energy Use Report: November 2021

NFTs in the Future

Not everyone likes NFTs, not everyone believes they have a purpose, and that's okay. NFTs are a new technology with evolving discussions, and like anything new, they'll be abused and exploited by anyone looking to make a dollar.

The purpose of this article isn't to tout NFTs as a global solution to everything or to try and sell anything to anyone, only to inform the possibilities of a useful NFT and what that could look like soon if companies make an honest and innovative commitment, and not a simple cash-grab or marketing gimmick.

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