Guide to In-Game NFTs

Guide to In-Game NFTs
2 April 2023

All you need to know about NFTs

In recent years, the world of video games has undergone a significant transformation with the rise of non-fungible tokens (NFTs). One of the most significant impacts of this innovation has been on video game items, where the concept of "in-game NFTs" has emerged as a new way of buying, selling, and owning in-game assets. In the gaming industry, virtual items play a significant role. They allow players to customize their gaming experience, show off their achievements, and often serve as a symbol of their status and skill level within the gaming community. With the advent of blockchain technology and non-fungible tokens, these virtual items have taken on a whole new level of significance. In this article, we'll explore what in-game NFTs are, how they work, and their impact on the video game industry.

NFT marketplace for game items

Table of Contents


What are NFTs?

How do In-Game NFTs work?

Examples of In-Game NFTs

Benefits of In-game NFTs

Challenges of using NFTs

Play-to-earn games that use NFTs

The Future of In-game NFTs

Case Studies of In-game NFTs

Ethical and Legal Issues of In-game NFTs

In-game NFTs and the Gaming Industry

Criticisms of In-game NFTs




In-game NFTs, or non-fungible tokens, are unique digital assets that are used within video games. These assets are verified on a blockchain, which means they are tamper-proof and cannot be replicated. This makes them valuable, as they can be bought, sold, and traded just like physical assets.

In-game NFTs have gained popularity in recent years as blockchain technology has become more mainstream. They offer a new way for players to engage with their favorite games, and they can even provide a new source of income for gamers who are skilled at acquiring and selling rare items.


What are NFTs?

Before we dive into in-game NFTs, it's important to understand what NFTs are in general. NFT stands for "non-fungible token". Here "non-fungible" simply means "unique", and the "token" is the proof of ownership of said asset. This is done by creating a unique digital token on a blockchain, typically on the Ethereum blockchain. The token contains metadata that describes the asset it represents, stores digital ownership, and contains its creator's data, along with any associated rights or royalties. Because non-fungible tokens are unique, they cannot be exchanged for another token on a one-to-one basis, unlike cryptocurrencies such as Bitcoin or Ether.

Blockchain technology lets NFTs contain proof of ownership and authenticity. A blockchain is a decentralized, digital ledger that records and verifies all transactions related to that blockchain. "Decentralized" means it is not controlled by a single central authority or entity, but a distributed network. This makes it easy to verify the ownership and origin of the asset the NFT represents, and to track its ownership history. Non-fungible tokens are digital assets stored in a digital wallet using blockchain technology, the same way you might keep a physical work of art in a safe in real life.


How do in-game NFTs work?

In-game NFTs work similarly to other NFTs, but they are specific to video games. These digital assets can include anything from in-game items like weapons, armor, and virtual real estate to rare collectibles.

When players make an in-game purchase, they end up owning a unique, verifiable digital asset that cannot be replicated. This means that the item has value, and it can be bought, sold, or traded just like physical assets. The blockchain technology ensures that ownership of the digital assets is secure and cannot be disputed, and keeps a transaction record for all of the assets acquired.

NFT game cards

Examples of in-game NFTs

NFTs can take many forms, but some examples include:

  • Rare weapons or armor in a first-person shooter game;
  • Virtual real estate in a simulation game;
  • Special mounts or pets in a role-playing game;
  • Unique skins or emotes in a multiplayer game.

Some video game companies have even started to create their own NFTs to sell to players, further blurring the lines between the physical and virtual worlds. NFTs can be used in all gaming categories no matter the genre to add game assets and to build in-game economies.


Benefits of NFTs

There are several benefits of in-game NFTs, including:

Ownership—NFTs give gamers full ownership of in-game purchases, allowing them to buy, sell, or trade them as they see fit;

Monetization—using NFTs as game assets offers several benefits both to players and game developers. For players, game NFTs can provide a new level of engagement and personalization within a game. They also offer a new source of income for skilled players who can acquire and sell rare items. For game developers, NFTs can provide a new revenue stream. They can also increase player engagement and loyalty, as players may be more likely to spend time. NFTs allow gamers to monetize their gaming skills by creating and selling unique in-game assets;

Transparency—the use of blockchain technology ensures that the ownership of in-game items is transparent and secure, preventing fraud and scams;

Rarity—NFTs are unique and one-of-a-kind, making them more valuable than traditional in-game items;

Cross-game compatibility—NFTs can be used across multiple games and platforms, giving gamers more options and flexibility.


Challenges of using NFTs

While there are several benefits to gaming NFTs, there are also some challenges that need to be addressed. These challenges include:

Price volatility—the value of NFTs can be volatile, making it challenging to predict their worth. Crypto markets have shown great instability and this would affect blockchain-built games as well;

Accessibility—not all gamers have access to cryptocurrency, making it difficult for them to participate in in-game NFT trading. NFT marketplaces need some time to reach a wider audience;

Ethical concerns—some gamers may feel that the creation and trading of NFTs are unethical, as it can create an unfair disadvantage for those who cannot afford to buy them. These concerns of pay-to-win have existed in traditional gaming ever since microtransactions became a trend.


Play-to-earn games that use NFTs

Whether you are a gamer looking to monetize your skills or you are simply interested in the world of NFTs and their growing popularity, we’ll explore the intersection of gaming and NFTs, and how you can earn with games using NFTs. So, in what ways can you earn with games using NFTs? Here are a few:

1. Play-and-win games that offer NFTs as rewards

Some games offer NFTs as rewards for winning or completing certain tasks. By playing and excelling in these games, you can earn NFTs that can then be sold on the secondary market.


2. Buy and sell NFTs on secondary markets

If you have a keen eye for valuable in-game items, you can purchase NFTs on secondary markets and then resell them for a profit. Just like any other investment, this strategy requires some research and understanding of the market. You can gather NFTs from specific promotional events and resell them afterwards on the marketplace.


3. Create and sell your own NFTs

If you’re a skilled artist or game developer, you can create your own unique items for popular games and sell them as NFTs. This requires some initial investment in time and resources, but can be a lucrative option in the long run. For example The Sandbox metaverse lets you create ASSETs. The term refers to the voxel assets in The Sandbox. They are entities that are designed with the intention to provide content to experiences in new games. They can also be collectables, be monetized, and be traded on the marketplace. Sandbox holds ASSET-creating competitions with token prizes. That's just one example.


4. Create and sell virtual real estate:

Just like in the real world, virtual real estate can be valuable in the gaming world. If you have the skills to create immersive virtual worlds or environments, you can sell them as NFTs to other players. Or rent land you have bought to other players. For example in Decentraland players who own LAND within Decentraland can officially rent out the rights to the space through their digital marketplace.


5. Breed NFTs to get new NFTs

In the world of blockchain games, players can earn passive income not just through battles and exploration, but also through breeding. Breeding in blockchain gaming refers to the process of creating a new NFT that can be traded in the game.

Breeding is a popular feature in the blockchain game Axie Infinity that allows players to earn passive income. In Axie Infinity, players can breed two Axies (in-game creatures) to create a new, unique Axie. The offspring Axie inherits traits from its parents, such as its appearance, stats, and moves. The rarity and desirability of the offspring depend on the traits of the parents and the rarity of the combination. As such, players can earn significant amounts of cryptocurrency by breeding and selling rare Axies on NFT marketplaces.


The future of in-game NFTs

The use of in-game NFTs is still in its early stages, and it's unclear how the market will evolve in the coming years. However, it's clear they have the potential to transform the gaming industry by giving gamers more ownership and monetization opportunities as well as other future mechanics.

As the market continues to grow, we can expect to see more NFT games and gaming platforms adopting NFTs as a standard feature. This will create a more robust and interconnected gaming ecosystem, where gamers can own and trade in-game assets across multiple platforms.

There are more and more NFT games built around it as a core mechanic. The main benefit players get from the rise of the NFT games industry is the fact that they can recoup the cost of playing games or even make money with play-to-earn games. Gaming economies offer players a choice of play-to-earn games models while in traditional games money flows only in one direction—away from the player.

As with any new technology or feature, it is ultimately the players who will shape the future through their choices. Players will decide which games and NFTs are popular and valuable, and which are not.

By participating in NFT marketplaces and providing feedback to developers, players can help to ensure that NFTs are used in a fair and balanced way that enhances the overall gaming experience.


Case studies of in-game NFTs

These are some popular NFT games that have already implemented NFTs in games:

Axie Infinity—this game allows gamers to collect and trade digital creatures called "Axies", which are NFTs. They can be valuable digital collectibles, and be used for breeding;

The Sandbox—this game allows gamers to own and trade virtual real estate using NFTs. It features several play-to-earn models like creating assets for the game;

Decentraland—this game allows gamers to own and trade virtual real estate and other assets using NFTs. You can earn money by staking land.

Famous NFT collection Bored Ape Yacht Club


Ethical and legal issues of in-game NFTs

The use of NFTs in games raises several ethical and legal issues, including:

Ownership disputes—in-game NFTs can be stolen or hacked, leading to ownership disputes and legal issues;

Money laundering—the use of cryptocurrency and blockchain technology in NFTs can make it difficult to trace the source of funds, leading to potential money laundering concerns;

Unfair advantage—the creation and trading of in-game NFTs can create an unfair disadvantage for those who cannot afford to buy them, leading to concerns about the ethics of the practice. But while there are free-to-play games, traditional games have been tied to a cost of playing ever since games were first made. With NFT games the player can often earn money by selling the game items, which is not the case in other games.


In-game NFTs and the gaming industry

The use of in-game NFTs has the potential to transform the video game industry by creating new monetization opportunities and giving gamers more ownership and control over in-game assets. For example traditional game mechanics like a loot box can be turned into NFT gaming-specific digital assets. These can then be bought with digital tokens earned through playing the game. Such moves generate value both for game companies and players. This, in turn, can lead to a more engaged and passionate gaming community.

However, the use of NFTs also raises several challenges and ethical concerns, which must be addressed by game developers, regulators, and the gaming community as a whole.


Criticisms of in-game NFTs

Some critics argue that in-game NFTs are a form of "digital rent-seeking" that adds little value to the gaming experience. Others argue that the creation and trading of NFTs create an unfair disadvantage for those who cannot afford to buy them. There are also concerns tied to the safety of the NFTs in wallets that hold other NFTs and cryptocurrencies, as a vulnerability might lead to the loss of items from different games. This is why security is so important for blockchain games.



In-game NFTs are a new and exciting development in the video game industry, and they have the potential to transform how gamers own and trade in-game assets. They offer several benefits, including ownership, monetization, transparency, rarity, and cross-game compatibility. However, they also raise several challenges, including price volatility, accessibility, and ethical concerns.

Despite these challenges, the future of NFTs looks promising, as more games and platforms adopt them as a standard feature. The recent year has seen some major publishers become more welcoming towards NFT games and digital currency. The use of in-game NFTs can create a more interconnected and robust gaming ecosystem, where gamers can own and trade an in-game item across multiple platforms.

However, the use of NFTs also raises several ethical and legal issues, including ownership disputes, money laundering, and unfair advantage concerns. Game developers, regulators, and the gaming community as a whole must work together to address these concerns and ensure that the use of in-game NFTs benefits the gaming industry as a whole.

In conclusion, in-game NFTs have the potential to revolutionize the video game industry by giving gamers more ownership and monetization opportunities. However, their use also raises several challenges and ethical concerns that must be addressed to ensure their long-term viability and success.

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