[trophycase]

The killer app of Ethereum already exists, and it is the set of standards being built on it that allow you to easily interoperate with other financial applications. NFTs are basically what the name implies, whereas "tokens" represent something fungible (e.g. stocks in a company), NFTs are a new standard (ERC721 or others) for representing non-fungible digital goods (deeds for houses, collectibles, game assets, etc.).

Suppose I'm a small indie game studio. I create a game, and this game has skins for characters, weapons, what have you. I want to build a real money economy around these assets, but don't have the manpower to deal with payment processors, build a marketplace, etc. My company could just represent the skins as ERC721 tokens and instantly have access to the wealth of infrastructure that already supports the ERC721 standard. People can buy and sell on a marketplace of their choosing (Opensea, Blur, etc.), they can manage their assets using a wallet of their choice (Metamask, Rainbow, Frame, Coinbase Wallet, etc.).

This is just one example, but can be applied to literally any non-fungible asset that be represented digitally. And although the application I mentioned is primarily a financial one (because Ethereum is the internet of finance), there are certainly non-financial use cases for having a fully interoperable, decentralized representation of a digital good.

It's important to understand that NFTs didn't invent digital scarcity. This is an idea that's existed for a long time. Downloading a song I have to pay for, League of Legends issuing a limited edition skin, even the notion of a privileged role on a website (e.g. moderator) implies some sort of digital scarcity. People value having status, people value having scarce things, NFTs didn't invent that idea, they just make it much easier to represent these things in a very standard way and plug into mechanisms that allow for price discovery of these things (which I repeat, already are deemed to have value, but have extremely high friction to trade).

Maybe you don't understand because you aren't a digital native. I grew up playing World of Warcraft, and even from a young age I understood the power of having something other people didn't have. When I saw other players with their Naxxramas gear and I'm sitting there in normal Uncommons, it implied a difference of status. There was value in getting this gear because it made you feel special and important, or part of a certain community. The entire premise of the game revolves around the idea of scarcity (people have to work to get the best gear). If people had the best gear from the start, they wouldn't show up to raid every week, they wouldn't spend hours and hours farming materials or gold. That's digital scarcity, it's always existed.

[pavlov]

> "I want to build a real money economy around these assets"

It's not a real money economy when you're asking your customers to first convert their money to crypto magic beans. Dealing with crypto exchanges has been shown to be a great way to put your money into scammers' pockets. Customers will blame you when that happens.

If you want to sell skins, why not let customers pay with real money via Stripe or another payment API? It's certainly a much easier integration task than reconciling your game database with the Ethereum state of those assets, and the end-user UX is lightyears better so you'll probably sell a lot more skins.

This Instagram NFT shutdown demonstrates again that the mainstream has no appetite for crypto despite the breathless claims of the past ten years.

[trophycase]

"why not let customers pay with real money via Stripe or another payment API"

Because stripe takes a massive cut?

"the end-user UX is lightyears better so you'll probably sell a lot more skins"

for now

"This Instagram NFT shutdown demonstrates again that the mainstream has no appetite for crypto despite the breathless claims of the past ten years."

Everybody in the community already knew this. Like you've said, the UX isn't there yet. That's obvious to anyone that is in the space. Nobody was sitting here applauding Meta for their obvious bandwagoning onto the latest thing. Maybe if they actually wanted people to adopt NFTs they should work on improving the UX or build some fucking infrastructure instead of just leeching off the community trying to make a buck. If you want people to display their art as NFTs on instagram, then create an Oculus App that's a virtual art gallery, allow people to display their instagram NFTs in that gallery. Interface with other technologies that already exist in the space. Use your billions and billions of dollars to make the experience better for everyone. They didn't even fucking attempt to build anything.

[pavlov]

Stripe's cut is less than what the ETH-USD rate can move in a single day.

With crypto prices trending down, your game skin business is probably going to lose more money just to the crypto exchange rate than they'd pay out to Stripe... And meanwhile you didn't get any of the convenience of using Stripe, so your revenue is probably a lot smaller because your players just aren't using the feature.

[trophycase]

What you said about price action is basically completely wrong, but regardless it's not like you're forced to pay in ETH. Any asset can be represented digitally.

[srmarm]

I bought an NFT last year so I could understand how they worked in practice. It was an absolute ballache - it took me over an hour or so to get everything set up and I had to throw good money after bad to cover gas fees which were only revealed after I'd converted my real money into eth. In the end I think I spent a similar amount or even more on fees than the NFT itself cost. The gas fees certainly cost way more than normal card processing fees would have been for a transaction of that size.

[piaste]

> Because stripe takes a massive cut?

2.9% plus 30 cents per transaction, sure, but after that you have actual fiat money that you can use to pay salaries and suppliers.

Ethereum isn't free, either. You gas fees, withdrawal fees, and the volatility in selling. Probably comes out to a little less in total, but is a 0.5% saving worth adding all that attrition to your sales process?

[trophycase]

Ethereum isn't free, but L2s and L3s will cost cents or even fractions of cents. 2.9% + 30 cents per tx is a MASSIVE amount. Consider that a profit margin of 10% is considered good for a business.

[MomoXenosaga]

I'm old enough to remember Microsoft points for Xbox live.

People want to pay in their local currency with their local bank account not jump through shady hoops. I want to play videogames not chat with little girls in the Philippines.

[ascagnel_]

Microsoft Points were a dark pattern to obscure the actual cost of games and to leave customers with partially-depleted point counts. They're not a good thing to look back at. Microsoft wisely stopped their use about a decade ago, and Xbox purchases are done in fiat currency instead.

[trophycase]

Whatever man, you're gonna use it without knowing regardless. But feel free not to educate yourself now and miss all the opportunity.

[traveler01]

This is some boomer level commentary right here.

Shows complete lack of understanding of what you're talking about.

[mijamo]

I don't see how any of this is better using NFT. You have had digital tokens for a very long time without Blockchain. If I make a game with skins I have 2 possibilities: the first one is to only use the in game money system (no real money) at which point there is no point using Blockchain, or use real money to buy skins, at which point I will also have to implement refunds, KYC, reverting transactions, because that is always needed in the real world, and there the convenience of an NFT just disappears.

NFT seems only useful if there is a zero trust situation and irreversibility is wanted, but I see nearly no situation where this is the case.

[trophycase]

All of those things you mentioned can probably be solved with Account Abstraction and Application Specific Rollups. These technologies are still in the early stages but are moving along. Not trying to attack, but like a lot of people here, it seems that most people's understanding of Blockchains is stuck in like 2014. There are levels of trustlessness, and levels of irreversibility. None of the things I mentioned (when fully implemented) are going to be happening on the main Ethereum chain.

[illiarian]

> None of the things I mentioned (when fully implemented) are going to be happening on the main Ethereum chain.

The ability to say this with a straight face and realise nothing is amazing.

[trophycase]

???? I'm not sure what you're implying but look up the idea of the modular blockchain and educate yourself. Ethereum won't be the main execution layer for most transactions.

[illiarian]

> Ethereum won't be the main execution layer for most transactions.

Then there's no need for Ethereum.

I mean, knock yourself out, and build your tower of Babel where every next layer is an increasingly complex patchwork of workarounds, but don't pretend that this is somehow good, great, fats, amazing, better than grilled cheese etc.

[UncleEntity]

> All of those things you mentioned can probably be solved with Account Abstraction and Application Specific Rollups.

Or a database on the game server…

People keep trying to shoehorn blockchain whatever into places where a simple database would suffice and already exists.

Nobody is going to save in game character state in a Account Abstraction and Application Specific Rollup.

[Yizahi]

NFTs are a new standard (ERC721 or others) for representing non-fungible digital goods (deeds for houses, collectibles, game assets, etc.).

One look at this line and all further delusional house of cards falls down. There are no technical possibilities for NFTs to represent anything, it is technically impossible for current chains. There are only two exceptions - punk pixel art because they live fully on chain, and ENS records which are somewhat useful but only inside tokenbro industry.

[siwatanejo]

> My company could just represent the skins as ERC721 tokens and instantly have access to the wealth of infrastructure that already supports the ERC721 standard. People can buy and sell on a marketplace of their choosing (Opensea, Blur, etc.), they can manage their assets using a wallet of their choice (Metamask, Rainbow, Frame, Coinbase Wallet, etc.).

But doing all the work to integrate ERC721 into your game might take the same time (or more) than a simple centralized payment system (not to mention that transacting these ERCshits is costly, more than 5USD per trade most of the time). So why bother?

[mattdesl]

Most L2 developer experience is pretty easy nowadays. I would say a lot easier than Apple app development & distribution experience, for example. L2 fees are a fraction of the cost of industry standard payment processors.

The DX can continue to get better, but that’s not what is holding game devs back from choosing an L2.

[siwatanejo]

What L2 are you talking about? If lightning, I agree. But that doesn't support NFTs.

If another, which one? Take in account that L2s are based on a network of channels. You can only transfer value atomically among a network of channels if the tokens being transferred across the channels are fungible, otherwise what you transfer from Alice to Bob is not the same than what you transfer from Bob to Carol.

[mattdesl]

Most Ethereum L2s (rollups) follow similar patterns; once you learn how to build on one with tools like Hardhat + Alchemy/Infura + Solidity, you can easily transfer these skills to other L2s. zkSync, Scroll, Optimism, Arbitrum. Most of these aim to be EVM compatible, so NFTs and other contracts can be built on them.

[Euphorbium]

So the only thing that nft solves is game designers not having to build their market. That does not solve anything for the player. If anything, it exposes the player to a complete loss of his asset, due to mistake or theft. No value in that at all.

[trophycase]

I bought a bunch of skins in League of Legends. I no longer play the game. As a former player, I would love if I could sell those skins on the open market.

Many times while playing the game, I changed my main character, but had skins for other characters I no longer played (maybe they got nerfed or something). It would be great if I could exchange those skins for other skins of equal value for the character I switched to.

Yes, the company itself could implement all these different features, but at that point you're re-inventing the wheel. We have a set of standards regarding digital assets, and the technology already exists to do the things I mentioned seamlessly. The only thing the company needs to do is implement their assets as part of that (ERC721) standard.

[ahtihn]

> As a former player, I would love if I could sell those skins on the open market.

I hope you understand that for the same reason, Riot does not want you to be able to sell your skins?

[trophycase]

Maybe, but that's not true for all game developers.

[oblio]

We don't need NFTs for that, though. We could have an old fashioned Web 2.0 site for a digital skin marketplace. We could have SDKs for game devs that allow them to integrate with it.

The NFT spec doesn't even guarantee the basics of what it needs to support.

[dento]

How hard can it be to keep a many-to-many mapping between account ids and skin ids, and then make a way to transfer those between accounts, potentially for some fee? Steam has had it for a decade without any issues.

The game publisher still has the final authority on whether a skin is displayed in game or not, and no blockchain is going to change that.

The reason Riot doesn't do this is that it would reduce profits. If they would make more money otherwise, they would be doing that already.

[JohnFen]

> Maybe you don't understand because you aren't a digital native

Why do some people insist that if others disagree with their opinion, it has to be because those others don't understand?

[DonHopkins]

Are you a walking talking parody account?