1 July 2021

NFTs & Blockchain in the Gaming Industry

With our previous work on games and applications based on the blockchain, we thought it would be good to talk about it! With their growing popularity, let’s dive into blockchain, NFTs, and smart contracts.

We’ll talk about what they are, why they’re trending, and the security measures to consider in this evolving digital marketplace. If you’d like to learn more about blockchain and smart contracts security before delving into this, we have an article here!

What are NFTs?

NFT stands for non-fungible token. Non-fungible means these tokens aren’t replaceable by something identical to it. Unlike cryptocurrency or even regular currency, each individual token is unique and not interchangeable. One bitcoin or one dollar can be exchanged for another bitcoin or another dollar. They are identical or fungible. NFTs are not.

An NFT can be anything, it can be a token that simply has value. Or it could be a piece of art, an item in a game, anything. The main thing is, it is unique. Even if others of the same item or type exist. There will only ever be the one of that particular NFT.

In addition, most NFTs cannot be broken up into smaller pieces. Cryptocurrencies can be broken into smaller units. But an NFT cannot be broken down like this. To do so would be like buying half a painting or half a mount in an MMO, it just doesn’t work like that.

Why talk about NFTs?

Basically, they’re getting popular. They’re seeing more use and are being created across many industries as items to be owned, traded, and sold. Blockchain and cryptocurrency is no longer a niche digital technology or currency. As a result, NFTs are growing in popularity.

For games in particular, NFTs and blockchain based gaming have a different build. Traditional games generate revenue in a singular direction. Towards the developer.

Blockchain built games and decentralized applications often allow the user/player to gain and own value of in-game and in-app purchases.

Unlike a traditional game, buying an item or expansion for real world currency is still owned entirely by the developer. And ownership can be revoked.

With an NFT however, the player owns it entirely. It can be held onto, traded, and sold as they see fit. And in games, these NFTs aren’t always locked behind a purchase. Many games allow players to earn cryptocurrency and NFTs by playing or earning achievements.

Why are NFTs growing in popularity?

This is a question we’ve discussed quite a bit and there’s definitely a few answers.

We think that, ultimately, people like to be in control of their own assets. There is an independence in owning your own NFT. It’s yours, and it can’t be revoked or taken away. With the nature of NFTs in gaming often being customization items, there’s also a level of prestige in owning certain skins or items. It’s like Pokémon cards, people love building their collection and catching them all!

We think there’s almost the nature of self-fulfilling prophecy here. NFTs are growing in popularity because of their use. Therefore, developers are pushing into a blockchain and NFT based system. Thus, they become more accessible and more popular. Now we have an array of games using these systems. These include, Blankos Block Party, CryptoKitties, Gods Unchained, Sorare, and many more.

Are NFTs secure?

As always, our focus is on security and the safety of developers and players. For those who don’t know, the blockchain concept has been proven to be secure in design. As always, this is entirely based on the implementation and configuration.

We talked before about the implementation of smart contracts. As they’re custom code written on top of the blockchain technology, they need to be water-tight before being added. Because once the smart contract is in, it’s in. And they determine proper confirmation of both currency and transfer.

This extends to applications based on blockchain technology. With the inclusion of NFTs and a value inherent to their design, the need for proper security increases tenfold.

We have discussed the many reasons why hackers target the gaming industry, and they are a constant threat. But add onto that the ability to generate new NFTs and you have a huge problem. The blockchain is secure, but it’s only as secure as your application.

Kompromised Kitties

There are many reasons IT security is paramount. Once NFTs are added in, there are additional considerations.

In CryptoKitties, for example, players can breed two kittens to create a brand new one. It will be unique to that player and is an NFT they now own. Now imagine if a hacker compromised the breeding system and could create an infinite number of the rarest kittens available. Each one would intrinsically have a value and the hacker would be rolling in profits. If unmanaged, the hacker would simply oversaturate the market and devalue a huge portion of players NFTs.

The other threat is, as always, player account security. While developers are responsible for the overall security, they are now responsible for the value of NFTs lost due to a lack of security. Should an account be compromised, the hacker would have access to account items, unique NFTs, and hard -earned cryptocurrency.

If you’d like to learn about our previous work with blockchain, you can find a portfolio detailing it here! You can also find our game penetration testing service on our site. And if you want to talk to us about security, don’t hesitate to contact us.