What is an NFT game?

What Is an NFT?

An NFT (Non-Fungible Token) is a one-of-a-kind digital token issued on a blockchain. Each NFT is uniquely identifiable and cannot be exchanged for another token of equal value. Generated by smart contracts, NFTs are widely used as digital assets both inside and outside of games—ranging from in-game items and characters to digital art.

The core "non-fungible" property of NFTs establishes their value as digital collectibles. Like physical collectibles, NFTs are appraised as unique assets in the marketplace. Blockchain records ownership with transparency and certainty, guaranteeing the authenticity of digital assets. This technological advance is fundamentally reshaping the concept of ownership in the digital world and driving the creation of new economic ecosystems.

What Are NFT Games?

NFT games use blockchain technology to manage in-game items and characters as NFTs, creating an innovative game system. With this structure, players can truly own the assets they earn in-game. While traditional games put all data under the control of the game company, NFT games allow players to manage their assets directly on the blockchain.

This technology guarantees the uniqueness and value of in-game assets and provides a high level of transparency and security for transactions and usage. The decentralized ledger prevents unauthorized duplication and tampering, enabling a fairer gaming environment. Interest in NFT games has surged recently, with titles like "Off The Grid (OTG)"—a battle royale game utilizing NFTs—achieving top spots in the free games category on the Epic Games Store and gaining strong market visibility.

How Do Blockchain Games and NFT Games Differ?

Blockchain Games

Blockchain games is a broad term for any game built on blockchain technology, where game data and transactions are recorded on-chain. This approach ensures data transparency and tamper resistance, giving players an environment where they can control their assets without relying on the game operator.

Blockchain games feature in-game items managed as tokens or crypto assets, allowing for player-to-player trading and transactions on external crypto exchanges. This economic system has created a new model where in-game activities produce real-world economic value. Notable examples include Decentraland and The Sandbox, where players can buy and sell virtual land and buildings, conduct economic activities in a virtual world, and grow their holdings. These games foster diverse economic activity, from real estate transactions to content creation, in the metaverse.

NFT Games: A Subset of Blockchain Games

NFT games are a specific category within blockchain games, distinguished by the issuance of in-game items and characters as NFTs. This lets each item be owned and traded as a unique digital asset. NFTs are recorded on-chain, making duplication and tampering technically impossible and reliably guaranteeing ownership.

This structure enables players to resell collected items and characters on external marketplaces for economic gain. The model, where in-game activity directly produces revenue, is transforming the traditional gaming industry. Prominent NFT games include Axie Infinity and CryptoKitties, both of which let users earn revenue from NFT items. Axie Infinity is especially known as a pioneer of the Play to Earn model, where players raise and battle NFT characters to earn rewards.

GameFi: A Segment of Blockchain Games That Overlaps with NFT Games

GameFi is a fusion of "Game" and "Finance," focusing on profit-generating models within blockchain games. GameFi often incorporates the Play to Earn (P2E) model, where players can earn through gameplay, but it is not limited to P2E alone.

GameFi usually combines NFT and DeFi (Decentralized Finance) features, allowing players to exchange in-game tokens and NFTs for other crypto assets or use them in DeFi protocols. This enables players to maximize earnings through diverse asset utilization. For example, Axie Infinity functions as both an NFT game and a GameFi title, operating as a classic P2E model where NFT characters generate revenue. Players earn tokens by winning battles, which can then be exchanged on crypto exchanges. In this way, some NFT games are classified as GameFi or P2E, with these concepts often overlapping.

Summary of Differences and Overlaps

• Blockchain Games are the umbrella category for all games built on blockchain technology, featuring transparent and reliable data management. Decentralized networks create fair environments independent of central authorities.

• NFT Games are a subset of blockchain games that let players own and trade in-game items as NFTs. Some NFT games also feature P2E or GameFi elements, emphasizing profitability. Players have full control of their assets, which can be used beyond the game itself.

• GameFi is a category of blockchain games centered on monetization models like P2E, allowing players to convert in-game assets to real earnings. There is significant overlap with NFT games, and the boundary between them isn’t always clear. DeFi integration enables more advanced asset management.

Key Features of NFT Games

NFT games deliver unique features beyond traditional games, offering players new ways to earn and enjoy. The integration of blockchain technology is revolutionizing the gaming experience itself.

True Digital Asset Ownership

In traditional games, items and characters are held on operator-controlled servers, so players lack real ownership. Data is at risk of being wiped out if the service ends. In NFT games, blockchain technology gives players direct ownership of their assets.

Even if the game shuts down, items do not disappear—they remain in the player’s wallet as assets. These NFTs can be traded or sold on other games and marketplaces, enabling true digital asset ownership. Players can retain the lasting value of their time and effort as permanent assets.

Interoperability

NFTs obtained in one NFT game can sometimes be used in other games or applications on the same blockchain, enabling asset mobility across different titles. This means ownership is not restricted by the game operator—players can freely use their NFTs on multiple platforms.

For example, a character acquired in Game A might be used in Game B, increasing asset liquidity across games. This interoperability means NFT value extends beyond a single game, gaining recognition throughout a wider ecosystem. In the future, items and avatars may be usable across the entire metaverse.

Transparency and Anti-Fraud

NFT games leverage blockchain so every transaction is public and extremely difficult to tamper with. Cheating and data manipulation, common in traditional games, are much more easily detected in NFT games, as the data is stored on a decentralized network.

All transactions are recorded and can be verified by anyone, establishing a fair playing field and building player trust. Arbitrary changes or manipulation by operators become difficult, enabling more democratic and transparent game management.

Economic Opportunity

NFT games allow players to sell in-game items as NFTs for direct profit. In traditional games, only the operator profits, but in NFT games, players can become active participants in the game economy.

Players can also earn by leasing NFTs to others—a system known as "scholarship," where NFTs are lent to players unable to afford the initial costs, with rewards shared. Unlike conventional monetization models, NFT games provide multiple ways for players to profit directly, turning in-game activity into real economic value. This new model is driving a revolution in the gaming industry.

How to Earn in NFT Games

A defining feature of NFT games is the freedom players have to buy and sell their NFTs on open blockchain marketplaces. This enables in-game items to be monetized, so gameplay can yield tangible rewards. Developers can also earn ongoing royalties from each transaction, creating a sustainable revenue source distinct from traditional monetization models.

Item Trading

Players can sell items or NFTs earned in-game on marketplaces for profit. Rare items see high demand and may fetch significant prices, with values fluctuating by game popularity and user demand. Some rare items have traded for multiples or dozens of times their original price.

Marketplaces offer a variety of sales methods, including auctions and fixed prices, so players can choose the best strategy. With all trades recorded on-chain, price transparency is ensured and a fair market is maintained.

Gameplay Rewards

Tokens or NFTs may be awarded for in-game activities such as daily missions, event participation, or PvP wins. These rewards can be sold to other users or used to enhance or upgrade in-game assets.

Special NFTs are often offered as event or tournament rewards, enabling players to grow their assets through regular gameplay. This system allows players to enjoy the game while building wealth—a new gaming experience.

X to Earn Models

Some games use X to Earn models, such as "Play to Earn" or "Move to Earn," where users receive cryptocurrency or tokens as rewards for specific activities like gaming or physical movement.

Often, players must purchase NFTs in advance to participate, but earned tokens can be redeemed for cash or used in other games. This model gives users a direct economic incentive to stay engaged. X to Earn is expanding into areas beyond gaming, helping shape new digital economies.

Key Examples of X to Earn

Play to Earn (P2E) Model

Play to Earn (P2E) is an innovative framework where players earn crypto or digital assets by playing games. Unlike traditional games, in-game items have real-world economic value.

In P2E games, the items and characters you earn are issued as NFTs, making them uniquely yours and freely tradable on external marketplaces. This turns play into real economic activity.

Players can earn crypto or NFTs by completing quests, winning battles, or finishing daily missions. These assets can be sold to other players for profit, and many P2E games allow you to use earned NFTs or crypto in DeFi (Decentralized Finance) platforms for additional returns, such as staking or yield farming.

This system provides earning opportunities via gameplay, forming a new economic ecosystem beyond gaming. In emerging markets, P2E is gaining attention as a new source of income and is having real social impact.

Leading Examples

• Axie Infinity: Earn rewards by raising and battling NFT characters
• CryptoKitties: An early NFT game that lets you collect and breed digital cats

Move to Earn (M2E) Model

Move to Earn (M2E) is a Web3 innovation that rewards users with crypto or tokens for physical activity. Unlike other X to Earn models, M2E pays users for actual movement, supporting healthier lifestyles and economic incentives.

Many M2E platforms require the purchase of digital items like NFT sneakers, but some offer free features for users without NFTs. These apps use your phone’s accelerometer and GPS to track exercise, awarding tokens based on distance and time spent walking or running.

Earned tokens can be used to buy items or upgrade NFTs in-app, or exchanged for other crypto on external exchanges. This approach enables a new lifestyle where physical activity brings economic rewards. For example, the app STEPN gained over 550,000 users shortly after launch, highlighting the growth potential of the M2E ecosystem. M2E is expected to continue spreading as a model that combines health and finance.

Leading Examples

• STEPN GO: Earn tokens by walking
• Sweatcoin: Converts your daily steps into tokens

Tap to Earn (T2E) Model

Tap to Earn (T2E) is a model where users receive rewards for simple in-app actions like tapping the screen. While some T2E games use NFTs or blockchain, others do not require NFTs at all.

For example, Notcoin lets users tap coins in the Telegram app to earn crypto, but does not use NFTs. This makes T2E games easy to join for those new to crypto or blockchain.

The biggest feature is its simplicity—just tap the screen repeatedly to earn points or rewards. As you progress, you can unlock more abilities, items, characters, or levels, providing a clear sense of achievement.

Many T2E games offer automated features so players can earn efficiently, even while offline. This model is an accessible introduction to the blockchain ecosystem for casual gamers and crypto newcomers alike.

Leading Examples

• Notcoin: A tap-based game on Telegram
• Hamster Kombat: A casual game powered by tapping actions

NFT Games vs. Social Games: What’s the Difference?

Both NFT games and social games are online, but they differ in technical foundation and features. NFT games use blockchain to issue items as NFTs, allowing true ownership and free trade by players. Social games rely on centralized servers, with items used only in-game and generally not tradable externally.

NFT games are superior in preventing fraud and maintaining transparency, since all transactions are recorded on-chain for high reliability. They offer new economic opportunities: gameplay can generate direct earnings. In contrast, social games focus on in-game purchase revenue, and items have no asset value. Social games prioritize cooperative play and communication for social enjoyment.

NFT games provide the potential for asset building and long-term value. NFTs remain even after service ends and can be used elsewhere. Social games are valued for their ease and social features, emphasizing community through co-op play and guilds. Each model offers different benefits, so players should choose based on their goals and preferences.

Risks and Considerations of NFT Games

NFT games have many advantages but also come with risks. Understanding these risks and taking suitable precautions is crucial when investing or participating.

Financial Risks

Initial investment for NFT games can be high—especially for popular games or rare NFTs. Some titles require buying NFTs worth hundreds or thousands of dollars just to play. Crypto market volatility can also cause NFT prices to plummet, risking your funds.

NFT value depends on supply and demand. If a game loses popularity, NFT values can drop sharply. Some NFTs that once traded at high prices have become nearly worthless in just a few months. Only invest surplus funds and diversify your holdings to mitigate risk.

Fraud Risks

Fake marketplaces and malicious smart contracts are on the rise. Phishing sites and counterfeit NFT projects are frequently reported, so vigilance is essential.

Use trusted wallets and official marketplaces, always verifying counterparties and contracts. Enter site URLs directly, enable two-factor authentication, and avoid suspicious links. Researching the project team and community reputation also helps prevent fraud.

NFT Security and Storage

You need a compatible wallet to manage NFTs. Confirm that your wallet supports required token standards, such as ERC-721 or ERC-1155—otherwise, you risk losing your assets when transferring NFTs.

Don’t grant unnecessary wallet permissions. When connecting to smart contracts, review requested permissions and grant only what’s needed. Keep your private key and seed phrase offline and secret. For high-value NFTs, hardware wallets are best practice.

NFT Loss Risks and Prevention

NFTs can be lost through rule violations or sending mistakes—such as transferring to an unsupported wallet or falling victim to scams. Blockchain transactions are irreversible, so handle transfers with care.

To minimize risk, use reliable wallets and verify addresses before sending. Test with small amounts before large transfers and double-check recipients. Like physical property, lost NFTs are nearly impossible to recover, so practice careful management and risk awareness. Regular backups and distributing NFTs across multiple wallets are also recommended.

The Future of NFT Games

According to market research, NFT-based in-game item sales have generated billions of dollars for publishers in recent years, and the NFT gaming market is forecast to continue strong growth. Annual growth rates have exceeded 30%, with the market expected to surpass $10 billion within a few years.

This growth is fueled by more games incorporating NFT mechanics and a broader user base—including those joining for investment purposes, not just gaming. The market’s reach is expanding rapidly.

While NFT sales were once a small share of all in-game purchases, their proportion is rising rapidly. PC gaming is central, but as major platforms adopt NFT trading, growth is expected to accelerate further.

Should major platforms like Apple and Sony fully support NFT trading, the market could expand dramatically. However, these firms remain cautious due to regulatory and technical hurdles. Once those are resolved, explosive growth is possible.

Is the "NFT Is Over" Narrative Relevant?

Some reports claim most NFT projects have failed and most holders are losing money—average losses exceed 40%, and the average project lifespan is about a year. Around one-third of NFT projects have vanished in recent years, revealing high failure rates.

Still, industry insiders remain bullish on the intersection of gaming and NFTs. The co-founder and CEO of a leading NFT marketplace notes that gaming and physically-backed NFTs are gaining market traction. The gaming industry’s embrace of NFTs and the push for frictionless onboarding are seen as critical for future growth.

Efforts are underway to improve user experience, making wallet creation and crypto purchases easier so even beginners can join NFT games. These initiatives are key to mass adoption.

Many companies believe NFTs are far from dead. Leading venture capital firms forecast that NFTs will become mainstream digital brand assets across businesses and communities. Major brands are using NFTs for loyalty and community-building, signaling continued growth.

Conclusion: NFT Game Growth Remains in Focus

NFT games leverage blockchain to manage in-game items and characters as NFTs, giving players the freedom to own and trade digital assets. True digital asset ownership—unachievable in traditional games—has become reality, and a new model now links gameplay directly with economic activity.

Models like "Play to Earn (P2E)" and "Move to Earn (M2E)" let everyday actions like gaming and exercise become sources of income, with unique digital assets tradable on external markets. These models go beyond gaming, ushering in new lifestyles and economic opportunities.

The NFT game market has grown over 30% per year recently and is expected to surpass $10 billion soon. As blockchain technology advances and user experience improves, even more people are likely to join the NFT gaming space.

Despite claims that NFTs are "over," major firms and VCs remain optimistic, seeing great potential in gaming and NFTs. If leading platforms fully support NFT trading, the market’s potential will increase further.

Keep watching for new advancements and game titles in this field. NFT games are not just a passing fad—they could become a new pillar of the digital economy. If you’re considering investing, make sure you understand the risks and take a long-term view on market growth.

FAQ

What Are NFT Games? How Are They Different from Traditional Games?

NFT games use blockchain to give players true ownership of in-game assets. Unlike traditional games, they are less vulnerable to cheating, won items don’t disappear, and you may earn profits from sales.

How Can You Make Money with NFT Games?

There are two main ways: sell NFT items or characters you’ve earned on a marketplace for profit, or buy popular NFTs and sell them for a higher price later.

What Are the Pros, Cons, and Risks of NFT Games?

Pros: true asset ownership and earning opportunities. Cons: high gas fees and market volatility. Risks: scams, smart contract vulnerabilities, and regulatory uncertainty.

What Are Some Popular NFT Games?

Popular examples include The Sandbox, Axie Infinity, Captain Tsubasa -RIVALS-, Sorare, and CryptoSpells. These games feature Play to Earn models and metaverse elements, each with their own strengths.

What Do You Need to Start NFT Gaming? What Is a Wallet?

You’ll need a wallet (such as MetaMask) and a crypto exchange account. A wallet is a digital tool for securely storing and sending/receiving NFTs and crypto. Never share your recovery phrase with anyone.

Do NFT Items in Games Really Have Value? Can You Sell Them?

Yes, NFT items hold real value. Rare items can be traded at high prices and are freely sold on NFT marketplaces. Their value fluctuates with demand, but NFTs in popular games tend to retain value over time.