All you need to know about NFT with an example
NFTs are digital items with unique properties and abilities that can be used in any game world. The most popular examples of these include rare weapons, armor, mounts, or other equipment. Thanks to the open source nature of the technology, anyone can create his own item and sell it to others. But what if you want to use a NFT for something else? What if you don't just want to give your player a new weapon—what if you want them to pay you instead? This is where the concept of non-fungible tokens (NFTs) comes into play.
The basic idea behind an NFT is simple: You make a special piece of gear that has some kind of value on its own, but when combined with another item, becomes much more valuable. For example, let's say I made a sword that had the ability to double all damage dealt by the user. When I sold this sword to someone else, they could then combine it with my previous sword to get a powerful two-for-one deal! Of course, such a system would require me to have two identical swords in order to work properly. It also requires the person buying the NFT to have both the original and the upgraded version of the item. However, there is nothing stopping me from creating one sword that does exactly what I described above. In fact, I'm going to do exactly that right now. Here we go...
─ Item : Double Damage Sword
─ Type : Two Handed Weapon - Unique
─ Durability : 120/120
─ Grade : B Grade
─ Weight : 2st.
─ Description : A legendary blade forged by the hands of King Calamity himself. The power contained within will increase the strength of every attack by twenty percent.
Now that's a pretty nice upgrade. There aren't many people who have ever seen a sword like this, so the price should be high enough to keep people interested. Even better, since I've created a unique item, no one else can buy this particular sword. If you try to purchase it from me, the transaction won't complete. Now let's see how much money I can get for this thing.
"Hey, if you're looking for a sword, I might have just the thing."
─ You have been sent a message by Player : Merdon Redale.
─ Merdon Redale seeks a quality sword at a reasonable price.
"I'm not sure about 'quality,' but he seems serious. Let's see what he offers..."
Merdon was offering 1 gold coin per sword, plus 20% off the regular market rate for upgrading an existing sword. He wasn't willing to offer anything less than that, which meant the total cost for me to upgrade the Double Damage Sword to the Supercharged Double Damage Sword would come out to 5 gold coins. That's still cheaper than the base price of 6 gold coins, but I'd rather sell it outright for 10 gold coins. After all, I only need ten gold coins to afford the equipment I already bought. Plus, I'll probably end up selling these upgrades to other players as well, which means I'll actually make more money that way.
But what if I don't want to give away the upgrades? What if I want to charge Merdon for them? Well, it's time to change the parameters of our negotiations. "I accept your offer," I say aloud.
─ Successfully negotiated contract with Merdon Redale. Upgrade cost: 5 Gold Coins.
The screen fades to black before fading back in with the new details.
─ Congratulations! You have successfully upgraded your Double Damage Sword to the Supercharged Double Damage Sword for a total cost of 5 Gold Coins. Your weapon is now worth 25% more damage dealt. This item may not be transferred to another player.
I look over the details of my item again. It looks the same, and it has the exact same stats. So, why did I suddenly get a better deal? Why didn't the price stay the same after upgrading the sword? Because it's an NFT. When the player gets the sword, they have the option to turn it into an NFT. They can then sell it to me for the amount they originally paid. Of course, I would have to pay the player for it, too, but that's not an issue. I have the money. The question becomes whether or not the player wants to part with their NFT.
A few days later, I receive a notification that Merdon has sold his upgraded sword to me. The NFT transfer took place and the money went into my account, minus the fee I had to pay him. I check my balance and see that the sale has gone through.
─ You have received : 10 gold coins in exchange for a NFT upgrade to your Double Damage Sword.
"Well, I guess it's not a bad deal for me. Ten gold coins is a good chunk of change, even if it's not a huge profit. I'm going to use this money to buy a few things. First, I'm going to upgrade the rest of the weapons in the armory."