Five Signs to Avoid NFT Video Games
(Image credit: David McBee)
New NFT game advertisements pop up all over social media, and NFT game developers often have seen large funding rounds, so it is worth taking a deeper look at problems with current NFT gaming. Not only do investors face many hazards with NFTs alone, but they also run even bigger risks for their assets when those NFTs are tied to games. Here are five reasons to think twice about investing in NFT games, including examples from currently playable NFT titles.
NFT games rely on cryptocurrency prices
Several NFT games use common cryptocurrencies for exchanging NFTs, but others use unique cryptocurrencies tied to one or more games. Both versions share the weakness in the current price of the underlying cryptocurrency. If that price fluctuates, so does the value of the NFT.
While not tied to a game, the only Castlevania 35th Anniversary NFT that has resold since initial minting has lost significant value in US dollars. According to the OpenSea website’s Castlevania – Axe Vs. Phantom Bat page, the clip from the classic Nintendo title, sold for 15 Ethereum on January 23, 2021. The sale was worth around $37,500, but now Ethereum trades for around $1,130 on June 14, so the owner lost $20,000 just by holding on to it, as demonstrated by the Coinbase Ethereum price chart.
The money risk amplifies for games that use multiple unique tokens since each could crash together. Axie Infinity uses AXS and SLP cryptocurrency to trade and breed the Pokémon-style creatures called Axie used in the game. Playing Axie Infinity can give players both currencies, but they only hold value if players maintain trading and buying the unique cryptocurrency.
Players could cash out of the game in unison
In most NFT games, players earn cryptocurrency while gaming that is often tied directly to the NFT title. The game STEPN had seen a mass exodus of players over the last few months as they cashed out when the price of Green Satoshi Tokens tied to the game traded for higher, as shown in this Medium article on Is STEPN Dead. The report also indicates a forced removal of players from China to comply with regulations, a risk for any NFT game traded in multiple countries.
Another article on STEPN by VICE covers other risks of that investment, including the fact that they need new players to keep investing. If the coin tied to the game suddenly flatlines and current players have already cashed out, then there will not be much interest for new adopters. It is important to note that growth is hard to maintain if the player base constantly shrinks.
Crypto wallets holding NFT game tokens are vulnerable to new phishing attempts
All Crypto wallets containing NFTs are vulnerable to phishing attempts, and Seth Green’s stolen Bored Ape NFT that he planned to use in a tv show is a perfect example. With little government regulation and third-party sites that host NFT auctions, it is easy to become vulnerable to such attempts. Since phishing already happens in normal video games, expect them to show up in greater numbers when bound to NFTs.
The hype surrounding NFT games can cause opportunities for unique phishing schemes when cryptocurrency markets react to an extreme trade volume. With many cryptocurrencies, GAS fees paid per transaction can fluctuate with that volume. When Bored Apes Yacht Club released their first round of NFTs tied to their game, Otherside, the GAS fees soared. Promising relief from those ridiculous charges, crafty criminals made off with $5 million, according to this VICE report on Scammers Net $5m.
NFT games can suffer from hacks of third-party systems
Any video game is susceptible to issues on third-party platforms that provide the service, such as an independent Xbox Game Pass title not functioning when Xbox is down. The independent developer is not the cause of the issue but still suffers at the whim of the service provider. With NFTs and games tied to them, they utilize third-party systems to complete exchanges. Thieves can penetrate the security of blockchain platforms and manipulate trades directly, as seen in this Washington Post article on Hackers hitting popular video game, stealing more than $600 million in cryptocurrency.
NFT games have development issues just like normal video games
Finally, NFT games have a basic risk associated with any video game, actual gameplay development. If the title’s gameplay is supposed to draw in more players constantly but sucks tremendously, then there is an issue. The normal video game industry focuses on entertainment through engaging gameplay but still is vulnerable to the problem of development hell. Most NFT game developers lack the experience and resources of their AAA counterparts, so there are greater chances for development problems.
Take My Neighbor Alice, which was mentioned in the Dot Esports article on the five best NFT video games. The developers promise a game that combines Stardew Valley, Animal Crossing, and a mix of Minecraft. So far, it only had a pre-alpha test that focused on an NPC town and not on farming or land construction primary to the game. As listed in the My Neighbor Alice roadmap, the project should have started selling land plots in the Second Quarter of 2022, but it is running out of time to get them out on schedule since the land sale page of My Neighbor Alice remains in a coming soon state for now.
NFT games combine the risks of video games with market financing, which can lead to disastrous results. They are subject to the value of their chosen cryptocurrency, players cashing out, new phishing attempts, third-party hacks, and normal game development issues. The hazards of NFT games make investing both time and money into them seem like a reckless undertaking.
