What are NFT games?

What Are NFTs?

An NFT (Non-Fungible Token) is a one-of-a-kind digital token issued on a blockchain, uniquely identifiable and non-interchangeable with other tokens. Generated by smart contracts, NFTs are used for a wide range of digital assets—including in-game items, characters, and digital artworks—both within and beyond gaming environments.

Thanks to their “non-fungible” nature, NFTs have established value as digital collectibles and are regarded as unique assets, much like physical collections. Each NFT contains distinct metadata and identification information, uniquely recorded on the blockchain. This uniqueness enables NFTs to be leveraged across industries from digital art to virtual real estate, helping shape emerging digital economies.

What Are NFT Games?

NFT games leverage blockchain technology to manage items and characters as NFTs, allowing players to own these assets as property. This system preserves the uniqueness and value of items, delivering high transparency and security in trading and usage.

Unlike traditional games, NFT games let players truly own the items or characters they earn. Blockchain technology records digital asset ownership, enabling players to control their assets independently from game operators.

Interest in NFT games is accelerating. The battle royale game “Off The Grid (OTG),” which incorporates NFTs, recently topped the free games category on the Epic Games Store. Such success stories highlight how NFT games are becoming a new paradigm in gaming—not just a passing trend.

How Are Blockchain Games and NFT Games Different?

Blockchain-based games span a range of genres, sometimes causing confusion among users over their distinctions. While all these games utilize blockchain technology, they fall into different categories based on their features and objectives. The following is a detailed breakdown of blockchain game types.

Blockchain Games

“Blockchain games” is a broad term for games that leverage blockchain technology—where game data and transactions are recorded on the blockchain, ensuring transparency and tamper-resistance. This enables players to self-manage their assets without relying on the game operator.

In blockchain games, in-game items may function as tokens or crypto assets, tradable among players or on major crypto exchanges. This structure allows players to convert in-game assets into real-world economic value.

Leading examples include “Decentraland” and “The Sandbox,” where players can buy and sell virtual land and buildings, conduct economic activities in virtual worlds, and grow their assets. In these games, players can purchase virtual real estate and generate income through development or leasing.

NFT Games: A Subset of Blockchain Games

NFT games form a subset of blockchain games, with in-game items and characters issued as NFTs—making them unique, ownable, and tradable digital assets. NFTs are recorded on the blockchain, ensuring verified ownership and preventing duplication or tampering.

In NFT games, players can earn economic value by reselling collected items or characters on external marketplaces. Each NFT has its own attributes and rarity, with prices set by market supply and demand. Players can profit by collecting strategically and selling at opportune times.

Notable NFT games include “Axie Infinity” and “CryptoKitties,” where players can earn income using NFT items. In “Axie Infinity,” players raise creatures called “Axies” and battle to earn tokens. In “CryptoKitties,” players breed unique digital cats, producing rare combinations that can be traded at premium prices.

GameFi: Partially Overlapping with NFT Games

GameFi combines “game” and “finance” and represents blockchain games focused specifically on profit generation. Some GameFi titles follow the “Play to Earn (P2E)” model, where players earn by playing, though not all GameFi projects are strictly P2E.

GameFi often incorporates NFT and DeFi (decentralized finance) features, allowing players to exchange in-game tokens or NFTs for other cryptocurrencies or deploy them in DeFi protocols. This integration lets players use in-game assets for financial activities such as staking and yield farming, earning additional returns.

For example, “Axie Infinity” is both an NFT game and a GameFi project, exemplifying the P2E model where NFT characters generate revenue. Players earn tokens through daily quests and battles, which they can sell on crypto exchanges or reinvest in-game. Consequently, some NFT games also fall under GameFi or P2E categories.

Summary: Differences and Overlaps

Each game category has its own features, but they often overlap.

• Blockchain Games is a broad umbrella for all games based on blockchain technology, where data is managed transparently and reliably. NFT games and GameFi are subsets of this category.

• NFT Games are a subset of blockchain games in which in-game items can be owned and traded as NFTs. Some NFT games also feature P2E or GameFi elements, with a focus on earning potential. The main distinction is that they grant players true digital asset ownership.

• GameFi is a category of blockchain games employing monetization models like P2E, specializing in converting in-game assets into profit. GameFi and NFT games frequently overlap, offering new revenue streams by merging gaming with finance.

These categories are not strictly separated; many games combine features from more than one. For example, a game might be a blockchain game with NFTs and GameFi aspects. Understanding each game’s technology and economic model is key.

Key Features of NFT Games

NFT games offer features not found in traditional titles, providing new earning models and gameplay experiences. These innovations maximize the benefits of blockchain technology, fundamentally transforming the gaming experience.

True Digital Asset Ownership

In traditional games, items and characters are managed on company servers. Players may appear to “own” these items, but they only have usage rights to assets stored in the operator’s database.

In NFT games, blockchain technology grants players direct ownership of items. Even if the game is discontinued, items remain in the player’s wallet as assets and can be traded in other games or marketplaces. This is a breakthrough mechanism for true digital asset ownership.

This feature gives players confidence that their investment is preserved—even if the game shuts down, acquired NFTs still have value and can be used on other platforms or kept as collectibles.

Interoperability (Cross-Platform Use)

NFTs obtained in NFT games may be usable in other games or applications on the same blockchain, allowing asset utility across different games. Ownership isn’t limited by the game operator—players can use their NFTs across multiple platforms.

For example, a character obtained in Game “A” might be usable in Game “B.” This cross-compatibility extends the value of a player’s investment across games.

Interoperability is closely tied to the concept of the metaverse. In the future, various virtual worlds and games may connect seamlessly, letting players move across platforms with one digital identity and set of assets.

Transparency and Cheating Prevention

Because NFT games use blockchain, all transaction histories are public and nearly impossible to tamper with. Cheating and data manipulation common in traditional games are much harder, since data is stored on decentralized networks. This makes cheating easier to detect and enables fair play environments.

All blockchain transactions are public and verifiable, preventing in-game cheating or operator manipulation. Players can confirm that game rules are applied fairly and enjoy a highly reliable gaming environment.

Additionally, smart contracts lock in rules such as item drop rates, making them immutable. This prevents operators from arbitrarily changing game balance or favoring specific players.

Economic Benefits

NFT games enable players to sell in-game items as NFTs, providing direct income opportunities. Leasing NFTs for profit is also possible. Unlike conventional monetization models, NFT games offer players a range of direct profit mechanisms.

Players can earn by acquiring rare items and selling them at premium prices or raising popular characters and leasing them to other players. Tokens earned through in-game actions can be sold on crypto exchanges for real-world currency.

These economic benefits are especially significant for players in developing countries. In recent years, NFT gaming has become a primary income source in some regions, helping users achieve economic independence.

NFT games are also spawning new professions, such as professional NFT gamers, NFT traders, and asset managers, contributing to the growth of a new economic ecosystem.

How to Earn with NFT Games

A defining feature of NFT games is that players can trade NFTs on open blockchain marketplaces, monetizing in-game items and earning rewards for gameplay. Developers can also set up royalty models, creating sustainable revenue streams distinct from traditional pay-to-play models.

There are many earning strategies, with approaches varying based on the player’s skill and investment strategy. Here are three common ways to earn:

1. Trading Items

Players can sell in-game items or NFTs on marketplaces to earn income. Rare items may command high prices if demand is strong, and values fluctuate based on game popularity and user interest.

To profit from item trading, it’s important to track market trends and identify high-demand assets. For example, if an update boosts a particular item’s power, demand and prices may rise. Strategic buying and selling can maximize profits.

Long-term holding of rare items may also increase their value. Limited-edition or early-issue NFTs often become prized collectibles.

2. Gameplay Rewards

Players may receive tokens or NFTs for activities like daily missions, events, or PvP victories. These can be sold to other users on marketplaces or used in-game.

Consistent gameplay rewards can provide a steady income. Many NFT games offer daily login bonuses and extra rewards for completing tasks. By accumulating these, players can grow assets over time—even without an initial investment.

Players can also win substantial prizes by participating in PvP battles or tournaments. Highly skilled players can earn significant income through competitive play.

3. X to Earn Models

Some games use “Play to Earn” or “Move to Earn” models, rewarding players with cryptocurrency or tokens for activities like gaming or exercise. Participation often requires purchasing an NFT, but earned tokens can be converted to cash or used in other games.

The X to Earn model monetizes not only gameplay but also real-life activities. For instance, Move to Earn rewards physical activity, encouraging healthy lifestyles through economic incentives.

By combining fun and profitability, these models attract a wide range of users. For casual players who couldn’t previously profit from gaming, X to Earn is an especially compelling option.

Examples of X to Earn Models

X to Earn models come in many forms, rewarding various activities. Here are some representative models and specific examples:

Play-to-Earn (P2E) Model

P2E lets players earn cryptocurrency or digital assets through gameplay. Unlike standard games, in-game items have real-world economic value as NFTs, enabling players to own and trade them externally.

Players acquire crypto or NFTs through quests, battles, and daily tasks, and can trade them on external marketplaces for profit. Additionally, P2E games let players use earnings in DeFi protocols for additional returns.

This structure delivers income opportunities through gameplay, creating new economies beyond gaming. The P2E model blends entertainment and financial incentives, encouraging engagement and long-term community growth.

Long-term sustainability requires careful economic design, such as controlling token inflation and balancing new and existing players for continued growth.

Key Examples

• Axie Infinity: Players raise “Axies” and battle to earn tokens. The game is a major income source for many players, especially in developing countries.

• CryptoKitties: Players breed digital cats to produce rare combinations, which can be sold at high prices. As a pioneer of NFT gaming, this title helped showcase blockchain’s gaming potential.

Move-to-Earn (M2E) Model

M2E lets users earn cryptocurrency or tokens by being active in real life. Unlike other X to Earn models, M2E uniquely rewards physical activity, supporting healthier lifestyles.

Most M2E platforms require NFT purchases to earn rewards, but some offer free features for non-NFT holders. Apps use smartphone sensors to track movement, awarding tokens for walking or running. Tokens can be used for in-app purchases or exchanged externally, letting users profit from exercise.

M2E is especially popular amid rising health awareness. By rewarding exercise, these platforms motivate users to stay active and develop healthier habits.

The “STEPN” app quickly gained hundreds of thousands of users after launch, and the M2E ecosystem is poised for continued growth. Gamification turns routine activities into fun, rewarding experiences.

Key Examples

• STEPN GO: Users earn tokens by walking, with additional rewards for purchasing NFT sneakers. The app blends fitness and profit for a new lifestyle experience.

• Sweatcoin: This free app rewards users with tokens for steps taken. Tokens can be redeemed for goods and services in the in-app marketplace.

Tap-to-Earn Model

Tap-to-Earn rewards users for simple app interactions, like tapping the screen. While this model is sometimes used in NFT or blockchain games, it does not always involve NFTs.

For example, Notcoin lets users tap coins in the Telegram app to earn crypto, without NFTs. Tap-to-Earn stands out for its simplicity and intuitive controls. Most actions involve tapping, with repeated taps earning points or rewards.

As players progress, they can upgrade skills or items and unlock new characters or levels, adding a sense of achievement. Many Tap-to-Earn games offer automation for more efficient reward collection.

This model is especially popular among casual gamers and smartphone users. Its simplicity makes it accessible to all, and short play sessions fit busy lifestyles.

Key Examples

• Notcoin: A basic Telegram game where tapping earns crypto. Its simplicity has attracted a large following.

• Hamster Kombat: A tap-centric game where players raise characters and battle for rewards.

NFT Games vs. Social Games

Both NFT games and social games are enjoyed online, but they differ in technology and features. The following table summarizes the main differences:

NFT games issue items as NFTs on the blockchain, enabling ownership and trading. Social games use centralized servers, with items limited to in-game use and trading typically prohibited.

NFT games offer superior fraud prevention and transparency, giving players new income models and a trustworthy environment. Blockchain records all transactions, making tampering difficult and ensuring fair gameplay.

Social games primarily drive revenue through in-game purchases. Items have no asset value and the games focus on player interaction and community. Many feature strong social elements, such as guilds and cooperative play.

NFT games provide opportunities for asset growth, while social games emphasize accessibility and social enjoyment. Each game type offers unique appeal, and players can choose based on their goals and preferences.

Risks and Considerations in NFT Games

NFT games offer benefits but also carry risks. Before participating in NFT games, players should understand and address these risks. Common risks and countermeasures include:

Financial Risks

NFT games often require significant upfront investment—especially for popular titles or rare NFTs. Getting started may mean purchasing NFT characters or items, with prices ranging from hundreds to thousands of dollars.

Market volatility can cause NFT values to drop, risking loss of invested funds. Crypto markets are highly volatile, with NFT prices fluctuating rapidly. Invest only what you can afford to lose.

If a game loses popularity, NFT demand and value may fall sharply. Assess the game’s sustainability and consider diversifying your investments across multiple games to reduce risk.

Fraud Risks

Fraud occurs via fake marketplaces or malicious smart contracts. Attackers may create phishing sites imitating official platforms to steal assets.

Use reputable wallets and platforms, and confirm the legitimacy of trading partners and contracts. Always access official links and avoid suspicious sources.

Never share private keys or seed phrases. If leaked, all wallet assets may be stolen. Keep security software updated and enable two-factor authentication for added protection.

NFT Security and Storage

Managing NFTs requires a wallet that supports the appropriate token standards (e.g., ERC-721, ERC-1155). Incompatible wallets may not display or manage NFTs correctly.

Limit unnecessary wallet permissions for security. When connecting to smart contracts, confirm the permissions being granted and only allow the minimum necessary.

Hardware wallets provide added protection, storing private keys offline to guard against online threats.

NFT Loss Risks and Countermeasures

NFTs can be lost due to game rules or transfer errors—for example, sending to an unsupported wallet or through scams. Double-check recipient addresses and consider a small test transfer before sending NFTs.

To reduce this risk, use trusted wallets and verify details before transferring. NFTs require careful management, similar to physical valuables. Regularly back up your data and store it in multiple locations for added safety.

Be cautious when using NFTs in-game. Some titles may consume or destroy NFTs during certain actions. Understand the rules and avoid using valuable NFTs carelessly.

The Future of NFT Games

The NFT gaming market has experienced rapid growth and is expected to continue expanding. Leading market research shows publishers have earned billions from NFT in-game item sales, with further growth projected.

Over the next few years, the compound annual growth rate (CAGR) is expected to exceed 30%, with the market reaching over $10 billion. Growth is being driven by more games with NFT mechanics and rising demand from a broader player base.

Currently, NFTs account for a few percent of total in-game purchases, but that share is expected to rise. While PC games are central, major platforms adopting NFT trading could drive even faster growth.

If industry giants like Apple and Sony fully support NFT trading, the market could expand further. For now, they remain cautious, but as NFT adoption spreads, they may gradually enter the market.

Are NFTs “Dead”?

Some reports claim most NFT projects have failed, with many holders facing significant losses. On average, holders have suffered double-digit percentage declines, and many projects have short lifespans. Around one-third of NFT projects disappeared in recent years, marking a record failure rate.

This has led to skepticism about the NFT market’s future. Many investors and players doubt NFT sustainability and consider leaving. However, this is not the end of the NFT market but rather a sign of maturation and industry consolidation.

Industry leaders remain optimistic about gaming and NFTs. A leading NFT marketplace co-founder and CEO emphasizes NFTs’ potential, particularly in gaming and physically-backed assets, and stresses the need for seamless onboarding as adoption grows.

Some companies don’t see NFTs as finished. A major US venture capital firm’s recent crypto market outlook predicts NFTs will become mainstream digital brand assets across companies and communities.

Sustainable economic models are essential for NFT gaming success. Games focused on long-term value—not short-term speculation—are likely to thrive. Improving user experience and simplifying blockchain technology will help more players join NFT games.

Conclusion: The Future Growth of NFT Games

NFT games use blockchain to manage in-game items and characters as NFTs, enabling true ownership and trading. Models like “Play to Earn (P2E)” and “Move to Earn (M2E)” allow gameplay and physical activity to generate earnings, with unique digital assets traded on external markets.

NFTs are expected to grow from a small percentage to nearly 10% of the in-game purchase market in the coming years. The NFT gaming market is set to expand more than 30% annually, exceeding $10 billion—a sector to watch closely.

The future of NFT games depends on advancing technology, improving user experience, and building sustainable economic models. While challenges remain, innovation and continual improvement could establish NFT gaming as the next frontier of digital entertainment.

Monitor this sector and consider NFT games as an investment option. NFT games have the potential to build new economic ecosystems and communities beyond gaming. With collaboration among players, developers, and investors, this field is poised for further growth.

FAQ

What Are NFT Games? How Do They Differ from Traditional Games?

NFT games use blockchain technology to let players own and trade in-game assets as NFTs. Unlike traditional games, they provide true ownership and cross-platform interoperability. Players can buy and sell NFTs with cryptocurrency, turning in-game assets into real-world value.

Can You Earn Money with NFT Games? How Does Play-to-Earn Work?

Yes, you can earn money with NFT games. In the Play-to-Earn model, players sell in-game items and characters as NFTs, converting them into cryptocurrency. However, value can fluctuate and games may end, so only invest what you can afford to lose.

What Do You Need to Start an NFT Game? What Are Typical Startup Costs?

You’ll need a wallet, in-game NFTs, and cryptocurrency. Startup costs are typically $350–700, but vary by game and NFT pricing.

What Are the Main Types and Popular NFT Game Titles?

Popular types include RPG monster-battler Axie Infinity, Move to Earn app STEPN, strategy TCG Gods Unchained, fantasy MMORPG Nine Chronicles, and farming simulation Pixels. These titles increasingly stress the balance between gameplay and profit.

What Risks Should You Watch for in NFT Games? Are There Fraud or Loss Risks?

NFT games involve risks such as market volatility, fraudulent projects, and smart contract vulnerabilities. Choose reputable projects, safeguard your wallet, and avoid over-investing.