The entire premise of Web3 gaming — like everything in Web3 — hinges on the “ownership of digital things on the internet.”
In reality, this promise hasn’t been fulfilled. Despite the buzzword soup in every pitch deck in the industry, few actually care about it. Fewer still are working to make it a reality.
It’s ironic given the lore on which Web3 was built. Ethereum co-founder Vitalik Buterin’s imagination was sparked by his disappointment with World of Warcraft — after Blizzard took away his warlock’s Siphon Life spell. Ownership of your gaming assets has been a core idea at the center of this industry from its earliest days.
And why not? Intuitively, for any gamer out there who spends time, money and emotional capital on their favorite digital characters and experiences, having ownership of those things and their value seems like a no-brainer.
Yet, while other parts of Web3 have been making significant strides — Bitcoin (BTC) as a store of value, stablecoins facilitating transactions, and real-world assets moving onchain — Web3 gaming lags behind.
Web3 technology fundamentally addresses digital property rights, solving the double-spend problem and ensuring that digital assets cannot be duplicated. This is what makes Web3 unique and valuable.
In an increasingly digital world, ownership of online assets — be it data, identity, currency or gaming items — matters immensely. Half of the world’s population engages in video games, making ownership in this space crucial.
In Web3 gaming, ownership is the differentiating factor from traditional gaming. Trading game items, virtual currency, and earning from playing games have been mainstays of gaming for at least 25 years, as I recall, back when I was a part-time gold farmer.
So, why is it that something so obviously interesting and player-centric as ownership has been met with revolt from the gaming world?
The answer is surprisingly simple: There is no ownership — at least not in any meaningful way. Ownership without interoperability is worthless. If players cannot use their digital assets across different platforms and games, they do not truly own them.
Owning a non-fungible token (NFT) game item today is like owning a dog that lives in your neighbor’s garage. You can look at it, and if they let you in the garage, you can pet it… but you don’t really own it in a meaningful way.
This situation parallels the arguments that Bitcoin advocates make about gold. While gold is a store of value, it mostly resides in someone else’s vault, limiting true ownership. Bitcoin, however, offers a gold-like store of value that anyone can truly own. Most gaming NFTs today are like gold in someone else’s vault.
Web3 gaming claims to provide that little bit of magic that is different — ownership of the items, characters, currency and more. On the surface, that seems to be what NFTs provide. However, the dirty truth is that true ownership is nothing without interoperability, and if you scratch a little below the surface, you find very quickly that it doesn’t exist.
For the billions invested in Web3 gaming and metaverse companies, there is not a single hero example demonstrating the true value of ownership, which is interoperability.
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Owning a digital asset that can only be used within the same company’s ecosystem is no different from traditional gaming ownership. I would say that 99% of Web3 games only provide this, so it is no wonder that it’s so easy to call the space a scam.
Because the big truth as it stands today is that ownership is a lie. True ownership and interoperability, if realized, would transform the industry, converting skeptics into superfans and attracting billions of new users to Web3.
So, why hasn’t true ownership happened?
It boils down to two factors: Technology and economics.
With technology, delivering true ownership is complex. It requires seamless interoperability across various game engines, shaders, textures, platforms and game modes.
For example, making an avatar interoperable between different games involves significant technical challenges, such as ensuring compatibility with different character sizes and shapes. Creating a file standard for interoperability introduces new problems, like how to store and update the file across different games.
Economically, there is a lack of motivation. Most Web3 gaming companies focus on their own projects and view true ownership and interoperability as threats to their business models, which rely on capturing value within their ecosystems. Supporting third-party content or creating interoperable file formats diverts resources from their primary development goals.
It’s also way too easy for dumb things to get funded by a wave of VCs investing in tokenomics and not technology driving an industry of farmers and not gamers.
There are three parts to the necessary solution:
- Technology to solve interoperability issues
- Technology to solve economic issues
- A hero to showcase it to the world
Building the technology to make this work is hard, it will take a long time, and it has more risk. It would be much much easier, quicker and cheaper to do what everyone else is doing and capitalize off the meme rather than to create something truly game-changing.
While the current state of Web3 gaming falls short of its grand promise, the potential for true ownership and interoperability remains a powerful vision. Achieving this could revolutionize the industry, offering gamers unprecedented value and transforming the digital landscape.
The journey toward this future requires a clear focus on two main areas: technology and economics. Technologically, we must address the complexities of interoperability. This involves creating universal standards that allow digital assets to move seamlessly across different platforms, game engines and experiences.
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It’s about building a foundational infrastructure that supports true ownership, ensuring that an avatar, wearable or any digital asset can be used across multiple games without losing its value or functionality.
The industry needs a shift in perspective when it comes to economics. Developers and companies must recognize that true ownership and interoperability are not threats but opportunities to expand the gaming ecosystem. By supporting open systems, they can attract a broader audience and foster a more vibrant and innovative community.
The challenge we face is to create an economic model that balances openness with sustainable development, ensuring that all participants — developers, players and businesses — benefit from the value generated.
Aaron McDonald is the co-founder and CEO of Futureverse.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.