Bad ending route for the video game industry part 2: The asset economy

[ggx2ac]

Link to all bad ending threads: https://www.installbaseforum.com/fo...-for-the-video-game-industry.1998/post-228671

The first bad ending thread mainly covered the topic of rent-seeking, the second bad ending thread focused on workplace democracy. This bad ending thread is going to cover the topic of the asset economy.

There's no anime this time around to setup the premise. Here's an 18-minute video of another economist named Gary Stevenson that gives a simple explanation of what the asset economy is and how it affects you in your life.

The Asset Economy (posted on the Garys Economics Youtube channel), description:

64,331 views Mar 12, 2023
"I call it this is because asset prices have increased enormously in the last 30 years and wages have only increased a bit we have moved into a new kind of economy where increasingly the work that you do is not really that important for determining how rich you are, increasingly the only thing that matters is how many assets your family has"

Edit: Adding a "too long, didn't watch" for the video about the asset economy. The price for assets like housing, land and stocks increased so much in the last few decades that wages cannot catch up to those prices. I have already mentioned this further down the thread but you, a millennial or younger are going to have a really difficult time buying a home. You did not live in the world your parents lived where "working hard and saving money" was enough for one of you to buy your first home. Your wages no longer mean anything for how wealthy you are, why else has it been mentioned time and again that you and your significant other both need to be earning a significant amount of income to afford a home? All the wealth in the West has gone into assets and you have governments that incentivize you to own assets such as housing or stocks by giving you tax cuts on those assets. What happens when you own a house and you're getting nice tax cuts out of it? You take out another loan and buy another home and become a landlord, now you get both tax cuts and a "passive income" by taking someone else's hard-earned wages as rent.

Most of you reading this thread are renters, you give up around 33% or more of your income to pay your landlord, you lose this much money you worked for which makes it harder for you to save up money for a deposit to take a loan and buy a home which doesn't include the fact that homes have gone up in price by around 10 times or more than what your parents had to deal with in their time. While you struggle to save up $1000 in a year, your landlord gets your wages from your hard-earned work which gives them at least $20,000 in "passive income" and then, there are people wealthier than your landlord who own many properties that they can earn "passive income" from $100,000 to millions of dollars. If this was a race to see who would own the most homes comparing you, a serf to the landlords of various wealth, you would struggle to even get one home while they easily can purchase many.

What's that? We just need more homes to give more supply than demand? If you were paying attention to how the system works, you might become lucky to afford a new home, assuming you can outbid all the asset owners who have already accumulated a lot of wealth and are incentivized by the State to keep acquiring more assets for tax benefits. All that wealth in the form of rent continues to go and collect into the hands of the asset owners and they know they will need to hold onto these assets for generations which means you become a serf, and your children become serfs, and their children become serfs (if they can even afford to have children at that point), unable to outbid the asset owners to acquire assets themselves to have some upward social mobility.

How does the asset economy tie into the video game industry? Think about why there are companies out there such as Ubisoft, Square Enix and Konami that are trying to get into blockchain/NFT/web3. By creating an asset economy inside of the games that they make which assumes that they own the marketplace that handles the transactions that occur for those assets, then they get to make money on the transaction fees from people exchanging assets for money.

Quoting from the Konami thread about Resella if you need an example of a marketplace:

From the Resella press release (DeepL translation):

Konami Digital Entertainment, Inc. announced at Tokyo Game Show 2023 (TGS2023) the launch of Resella, an NFT marketplace for blockchain technology-based services to all customers.

Resella is a marketplace where anyone can easily buy and sell NFTs as in-game items and characters, simplifying complicated procedures such as so-called gas fees (transaction fees for crypto assets) and preparation of web3 wallets, which have been hurdles to the spread of NFTs. The system has simplified the process.

Players will be able to purchase NFTs in Japanese yen while enjoying gameplay and sell items they no longer need in Japanese yen. The "Resella" service is scheduled to launch in conjunction with PROJECT ZIRCON, which was simultaneously announced on stage at TGS2023.

Resella is designed to extend the user experience by making NFTs, which have value in-game, available on various services beyond games, such as tickets to entertainment events and service usage rights.

We are looking for companies that are willing to join us in the challenge of "user experience first" web3services.

You might be thinking of other things that would be considered an asset economy in the video games industry, like that time when a copy of Super Mario Bros. sold for two million dollars at an auction house: https://www.theverge.com/2021/8/7/22614450/unopened-copy-super-mario-bros-sells-2-million-record

There's a long in-depth video about those retro games from Karl Jobst if you hadn't already seen it. Exposing FRAUD And DECEPTION In The Retro Video Game Market (posted on the Karl Jobst Youtube channel), description:

2,310,066 views Aug 24, 2021

In today's video we take a look at the current retro video game bubble. We learn who caused it to happen, who is profiting, and what needs to be done to fix it.

If you have already seen that video, there was a follow-up video in November 2023 about the prices of some of those games. The Retro Video Game Market Has Officially CRASHED (posted on the Karl Jobst Youtube channel), description:

1,334,697 views Nov 8, 2023

The graded video game market has finally crashed. Prices are down up to 90% or more since I released my original expose video. Lessons were learned, maybe.

Other examples of an asset economy in the video game industry would be owning IP. Think about the Embracer Group who acquired many studios to own their assets, especially their IP. Embracer Group hit a slump and then had to layoff developers from the studios it acquired. The assets were more important than the workers, they weren't going to sell off the IP to keep the workers around (who, unironically were responsible for creating that IP) because IP such as Tomb Raider is what they see as going to be accumulating wealth for the company.

Need an example of another company? Disney. Remember when Disney entered the video game industry with Disney Infinity? The game that was like Skylanders at the time? When Disney Infinity failed, Disney fell back to licensing out their IP to third party publishers/developers to make money such as when EA paid Disney for the Star Wars license.

While I have brought up the asset economy in relation to physical video games and then intellectual property, the focus is on the asset economy that would make use of blockchain/NFT/web3. Digital assets would not run into the same problem as physical video games at an auction house when it comes to scarcity because the company that produces digital assets can control its scarcity, the scarcer a particular asset is, the more valuable it becomes.

You might be thinking that it's nonsense, why would people choose to buy these digital assets inside of a video game? If you saw the first video posted in this thread (or read the "too long, didn't watch" edit), you would have heard the explanation of how all kinds of assets have increased in price; housing, land, stocks. If you are a millennial or younger, you never got to live in the world where you heard the phrase from your parents, "Work hard, save money and you'll be able to afford your dream home." because wages have been unable to keep up with the price of assets.

When you now have generations of people that will not be able to buy a home, what assets are going to be pushed to them as "affordable and a great investment" because it's new? The digital assets that come from the video game companies pushing blockchain/NFT/web3.

You are probably still thinking it's nonsense and that is reasonable, but these video game companies are going to keep pushing for an asset economy inside their games to create new sources of revenue for the company and people who are struggling are going to be struck by the hype from whatever video game outlet reports that some video game NFT of a horse sold for $150,000.

Bad Ending: The future serf

Letter to a fictitious descendant:
"Dear Generation Beta,

You will have difficulty finding upward social mobility in the world because wages cannot keep up with the price of assets for you to be able to afford a home. To afford a home, you will have to invest in digital assets such as NFTs from those video games you play. Make sure your account doesn't get hacked and that the video game company that sells the NFTs doesn't go bankrupt in 30 years. You have to ensure those NFTs you will be holding for decades actually goes up in value and is usable in games that will be made a decade later for someone to buy your NFT. If you are lucky enough to sell the NFT to a wealthy person in a period of time where the asset economy hasn't burst, then you might have a chance of attending a real-life auction to buy a home unless you are outbid by people that already own real assets such as homes who have had time to accumulate wealth thanks to rent.

Good luck with that.

Kind regards,
Your landlord"

 

[ggx2ac]

I posted in another thread an update about Project Zircon from Konami: https://www.installbaseforum.com/fo...-nft-marketplace-at-tgs-2023.1970/post-220474

Project Zircon is a web3 NFT game by Konami where they also launched an NFT marketplace called Resella that they own.

The update I posted about detailed a Free NFT distribution campaign, go to the link to see what the NFTs look like. From doing a DeepL translation of the press release in that post there was one quote from there that is relevant to this thread:

One of four types of PROJECT ZIRCON flag NFTs will be distributed at random. In addition, for every two flags NFTs held as of January 31 (Wed.), one bonus NFT will be given away. The free distribution period is scheduled to last until Tuesday, January 30, so please take advantage of this opportunity to list and purchase NFTs.

If you saw the linked post above, you would have noticed four Flag NFTs and one bonus NFT shown. Now when you read the quote, notice what it is saying, you will receive ONE flag NFT at random, at a certain date if you are holding two Flag NFTs you will receive the bonus NFT. For you to get a second flag NFT (and I don't know if they include duplicates for letting you get the bonus NFT) you have to go on Resella and buy an NFT there from a seller (referring to another user selling their NFTs).

Here is the official site for Project Zircon: https://zircon.konami.net/

Here is the Resella marketplace for Project Zircon: https://resella.jp/service/1754514282

When you go to the Resella marketplace, here is what the front page looks like (assuming the linked images are still working):

Everything listed currently is flag NFTs, when you sort by price, the most expensive flag NFT is 200k yen even though there are prices for the same NFT listed from 5000 to 7800 yen:

Not surprised with the price range, the game launched recently so its asset economy has only just started.

Konami launched a free NFT distribution campaign with giving out a free bonus NFT if you held at least two Flag NFTs by a particular date, why? As I mentioned in the OP of this thread, the point of video game companies pushing for asset economies using web3/NFTs/blockchain is to make money from transaction fees. Konami owns Resella hence, they earn money from the transaction fees that occur there.

Where is the proof that they are making money from transaction fees you say? You're probably also saying that the transaction fees are ONLY to pay for the "gas" to update the ledgers or whatever happens with NFTs.

I will show you where you can find this information.

DeepL translation below from guide to Resella, link: https://resella.jp/service/1754514282/guide

What is Resella?

Resella is a service provided by Konami Digital Entertainment, Inc. that allows you to buy and sell items in Japanese yen (credit card payment).
*No gas fees, wallets, or virtual currency are required.

Items from each title linked with Resella can be bought and sold as merchandise.
Registration of a KONAMI ID and agreement to Resella's terms of use are required to use this service.
*Some items cannot be bought and sold on Resella.

That's just one part of the information I am presenting, to find the rest of the information you need to look at the Terms of Service page: https://resella.jp/service/1754514282/term/Term_code_1

In the terms of service page inside Article 8, section 6 (Bing translated since DeepL kept repeating one phrase):

Article 8 (Conclusion and Performance of Sales Contract, etc.)

6. If the sales contract is concluded, the seller shall pay a fee separately determined by the Company (hereinafter referred to as the "sales fee"). (hereinafter referred to as the "Sales Commission"). You shall be liable for the following:

The Terms of Service clearly states that Konami receives a sales fee upon the completion of a transaction.

One thing you may be wondering is, "Couldn't Konami make money by selling the NFTs directly instead of accruing money through sales fees?"

Yes, they can. That's also in their Terms of Service where I highlight Article 2, sections 7 to 10 (Bing translated):

Article 2 (Definitions)​

In these Terms, unless otherwise understood in the context, the following terms shall have the following meanings:

(7) "Seller" means a user who sells products through the Service.
(8) "Seller, etc." means the Seller and the Company when they sell products through the Service (including cases where the purchase of products is performed in a game provided by the Company and the product is purchased on the screen related to the Service transitioned from the operation screen). Collectively refers to the Company in the above.
(9) "Purchaser" means a user who purchases a product through the Service.
(10) "Auction method" means a method of purchasing goods by a purchaser that falls under any of the following:
(i) A person who wishes to purchase a product that has been listed by the Seller without a fixed price (hereinafter referred to as the "Applicant"). The prospective purchaser who offers the highest desired purchase price within a certain period of time purchases the product as a purchaser (hereinafter referred to as "successful bidding"). Method)
(ii) A method in which a prospective purchaser offers the desired purchase price of the product within a certain period of time for a product sold by the Company, and the number of prospective purchasers determined by the Company in the order of the higher desired purchase price is accepted.

As you can see from the Terms of Service, Konami can sell products in Resella, not just users of it. Not only that, but you would also have noticed two different methods of selling an NFT, one is where there is a fixed price (like in the images above where you can buy an NFT for 200k yen), the other is at an auction where you have to be the highest bidder to win.

Konami can sell an NFT at a fixed price, or, if you read Article 2, section 10, line 2. They can auction an NFT, not only that, but the wording also indicates that they can auction off a number of NFTs and the winners are decided by the highest bidders. Remember in the OP of this thread where I said:

Digital assets would not run into the same problem as physical video games at an auction house when it comes to scarcity because the company that produces digital assets can control its scarcity, the scarcer a particular asset is, the more valuable it becomes.

So, for example, Konami can create an Auction of an NFT where there are only 100 of that particular NFT available. Therefore, the top 100 bidders in that auction would be able to win one NFT from it.

Now that I have proven that a company can make money off an asset economy including the methods for it. I want to highlight other things from the Terms of Service related to my OP because of how I mentioned in one part that these "digital assets" must be like real assets where you have to hold onto them for decades for their value to increase. While you are thinking about holding onto an NFT for decades, here are different sections highlighted from Article 5 and 6 of the Terms of Service (Bing translated):

Article 5 (Suspension of Service and Deletion of Account ID, etc.)​

1. In the event that a User falls under any of the following items, or if the Company determines based on reasonable grounds that a User falls under any of the following items, the Company may, without prior notice, suspend or terminate the provision of all or part of the Service to the User or deny access to all or part of the Service...

(1) In the event of a violation of laws and regulations.
(2) In the event of a violation of the Company's terms and conditions, including these Terms of Use.
(3) In the event of fraudulent activity
(4) When the Company determines that the registered information is false information.
(5) In the event that the User fails to follow the procedures required under these Terms or to contact the Company.
(6) When the registered information is duplicated with an existing registration
(7) When it is found that the contact method registered by the user can no longer be contacted
(8) When 5 years have passed since the date of the last use of this service or the service used by the user by authentication using Resella ID.
(9) In the event that the User is insolvent, incapacitated, suspended in payment, or insolvency;
(10) In the event of a nuisance to other users or third parties.
(11) When it is found that there is an illegal, inappropriate, or other problem with the account of the financial institution registered by the user, as pointed out by the financial institution.
(12) In the event that any of the items of Paragraph 4 of the preceding Article applies.
(13) In the event that the User or a third party makes violent demands, makes unreasonable demands that exceed legal responsibilities, uses threatening words or actions, or uses violence, or disseminates rumors, uses fraudulent means, or uses force to damage credibility or interfere with business.
(14) When the user moves outside of Japan
(15) In the event that the KONAMI ID registered for the Service by the User at the time of registration for use is deleted.
(16) In addition, when the Company deems it necessary to take measures such as suspending or terminating the provision of all or part of the Service or denying access to all or part of the Service.

Article 6 (Listing of Products)​

1. Sellers shall list products in accordance with the procedures prescribed by the Company.

5. The Seller may not list products that have already been listed on other services or other products that the Company prohibits from selling. If you list a product that is prohibited from being listed, regardless of whether the seller intentionally or negligently, it will be considered a violation of this agreement.
6. In addition to the products set forth in the preceding paragraph, the Company may, at its discretion, purchase specific products (hereinafter referred to as "prohibited products"). (hereinafter referred to as "Listing Prohibition Measures"). The Company shall be able to cancel the listing of prohibited products that have already been listed at the time of the ban without obtaining the consent of the seller.
7. The seller shall not make any listings that do not genuinely intend to sell, or listings that may cause people who see the listing to understand the product correctly or be confused by the product information alone.
8. You must not list your products with the intention of selling them only to certain other users. The Company may, at its discretion, determine whether the listing of a product is intended for sale only to certain other users based on the conditions and other circumstances of the listing.
9. In the event that an item is listed in violation of the preceding two paragraphs, or if the Company deems the listing to be inappropriate, the Company may, at its discretion, cancel the listing, and at the discretion of the Company, the Company may take the measures set forth in Paragraph 1 of the preceding Article against the seller.

I bolded some of the lines in Article 5 and, as you can see from Article 6, there are restrictions on what you can sell or how you can sell it.

The point of this post was, in the OP there was a lack of details on real-world examples of an asset economy related to web3/NFTs/blockchain. Now that Konami created this free NFT distribution campaign, you can now see the methods being used for how they plan to make money off their NFT marketplace and how you as a user will need to make sure you don't lose your account if you're hoping to make money from NFTs to buy real assets like a house.

 

[SinCityAssassin]

I wonder who convinced Konami that trying to make their own video game decentraland market would work.

 

[ggx2ac]

You would've heard the news recently that Microsoft became the most valued company worldwide by market capitalization of around ~$2.89 trillion which overtook Apple's market cap of around ~$2.89 trillion.

Company	Year	Market Cap milestone (first occurrence according to Bing AI)
Microsoft	2010	$250 billion
Microsoft	2018	$500 billion
Microsoft	2019	$1 trillion
Microsoft	2021	$2 trillion
Microsoft	2024	$2.89 trillion so far

I've put up this table because the reactions I've seen elsewhere seem to have overlooked how insane this is because they focused on console wars or Apple. I get it, Microsoft is a tech company that made around $73 billion net income in 2023 and has a P/E ratio of around 37 currently. Think about who is able to afford to buy Microsoft stocks right now at around $388 per share, of course Microsoft could do a stock split to make it easier for the retail investor to afford shares. However, with how high Microsoft's market cap is, the retail investor is not going to influence the price fluctuations of the stock price. You have to move billions of dollars to influence the share price and retail investors would need to have at least $100,000 per individual at one time to buy stocks to move the price up a small amount.

You might be thinking, "This is great, all that wealth must be trickling down to all the families that are shareholders." What I am showing next should give you more clarity about wealth inequality. Reminder: Income inequality is not the same thing as Wealth inequality.

Back in October 2023 according to the URL of the US Federal Reserve, they published the survey about "Changes in U.S. Family Finances from 2019 to 2022", source: https://www.federalreserve.gov/publ...s-in-us-family-finances-from-2019-to-2022.htm

(This means we'd have to wait until October 2026 for the next three-year survey covering 2022 to 2025)

The data I am showing from that survey is about the distribution of public stock ownership (direct and/or indirect) among families:
"Box 2. Direct and Indirect Holdings of Publicly Traded Stock"
"Figure A. Families with direct and indirect holdings of stock, by usual income group, 2013–2022 surveys"

Percentile of usual income	2013	2016	2019	2022
All	49	52	53	58
0–49.9	25	28	31	34
50–89.9	68	71	70	78
90–100	92	94	92	95

Source: https://www.federalreserve.gov/publ...xbox2figurea-familieswithdirectandin-74c9f80f

(The URL having #xbox2 in it is a coincidence.)

Now the table above will be hard to understand for those that have not studied Statistics. I have edited the table below to provide an "in English" version of it.

Percentile of usual income (incomes of families)	2013	2016	2019	2022
All (All family incomes)	49%	52%	53%	58%
0–49.9 (Lower to middle family income)	25%	28%	31%	34%
50–89.9 (Middle to Upper family income)	68%	71%	70%	78%
90–100 (Upper family income i.e. the Top 10%)	92%	94%	92%	95%

It's now "in English" but you still can't interpret it? Remember the survey is about the finances of families, that's why I put in incomes of families. From the survey, the percentage of all families surveyed that had ownership indirect or directly of publicly traded stock increased from 53% to 58% in 2019 to 2022.

Can't understand the rest? The upper family income percentile (the Top 10%), 95% of the Top 10% are holding stocks as of 2022. 34% of Lower to middle family incomes are holding stocks.

Can't understand how middle income is determined? If you are in the 50th percentile of family incomes, that means that 50% of the families in the survey earn more income than you do. If you are in the 90th percentile, 10% of families earn more income than you do.

That's one table explained. Here's the other table:
"Table A. Median and mean levels of directly and indirectly held stock, by usual income group, 2013–22 surveys
Thousands of 2022 dollars"

	2013	2016	2019	2022
Conditional median value	45.8	49.3	46.4	52.0
Median for 0–49.9	12.7	12.9	11.5	12.6
Median for 50–89.9	44.3	49.3	46.4	53.2
Median for 90–100	360.3	439.1	508.3	608.0
Conditional mean value	343.5	424.8	432.6	491.8
Mean for 0–49.9	68.3	64.5	64.6	81.5
Mean for 50–89.9	168.3	188.8	202.6	217.4
Mean for 90–100	1233.7	1684.1	1744.8	2138.2

Source: https://www.federalreserve.gov/publ...xbox2figurea-familieswithdirectandin-74c9f80f

Once again, I have edited it "in English":

	2013	2016	2019	2022
Conditional median value (middle value)	$45.8k	$49.3k	$46.4k	$52.0k
Median for 0–49.9% (percentile)	$12.7k	$12.9k	$11.5k	$12.6k
Median for 50–89.9% (percentile)	$44.3k	$49.3k	$46.4k	$53.2k
Median for 90–100% (percentile)	$360.3k	$439.1k	$508.3k	$608.0k
Conditional mean value (average value)	$343.5k	$424.8k	$432.6k	$491.8k
Mean for 0–49.9% (percentile)	$68.3k	$64.5k	$64.6k	$81.5k
Mean for 50–89.9% (percentile)	$168.3k	$188.8k	$202.6k	$217.4k
Mean for 90–100% (percentile)	$1233.7k	$1684.1k	$1744.8k	$2138.2k

You should understand now from the previous table where the lower to middle income percentile is. I have to remind you now of what the median and mean values are: The Median value is the middle value from a sorted list of values, e.g. the median of 2, 4, 6 is 4. The Mean value is the average from a list of values, e.g. the mean of 2, 4, 6 is 4.

The conditional median value from all families in the survey holding stocks is $52k, that means that the middle value from the sorted list is $52k. The conditional mean value from all families in the survey holding stocks is $608k, that's the average value. What does this difference in values mean? Here's a quote from the source:

In addition to these differences in stock market participation rates, there are significant differences in the value of stock market holdings across usual income groups, conditional on holding stock. In 2022, the conditional median value of stock holdings for the bottom half was $12,600, compared with $53,200 for the upper-middle income group and $608,000 for the top decile (table A). Conditional mean values are substantially larger than the conditional medians for all groups, implying a small number of households within each group hold most of the value of stock. There are wide differences in conditional mean and median values within and across groups.

Please note, it's saying for all groups, not all families. Look at each percentile group and see the differences between the middle value and the average. For example, the middle value of the top 10% is $608k, the average is $2.138M. The survey is pointing out that a small number of households in each of these percentiles are holding most of the value of the stock.

Now look at the table again and see the differences between these groups in 2019 and 2022, the median value from the lower to middle income group increased by $1.1k (+9.57% increase over 3 years) to $12.6k in 2022, but the average increased by $16.9k (+26.16% increase over 3 years) to $81.5k in 2022. Do the same thing for the top 10%, median value increased by $99.7k (+19.61% over 3 years) to $608k in 2022, the average value increased by $393.4k (+22.55% over 3 years) to $2138.2M in 2022.

Now that you have a clearer grasp of this data, you should be able to understand this wealth inequality is what keeps poor families poor and rich families obscenely rich. The family with the median value of $12.6k in stocks is going to take many decades to catch up with the family with the median value of $608k in stocks from 2022.

Need more wealth inequality facts?

There's this website called Forbes, and for some reason they keep a public list of billionaires in real-time: https://www.forbes.com/real-time-billionaires/

In that link, it will have an interactive list. You can sort the list by rank (by clicking on rank) and find out how many billionaires they have listed, they have approximately 2561 billionaires listed. They even keep listed people who used to be billionaires. You can even find out who the youngest billionaire is, and more often than not, the young billionaires inherited their wealth when you look at their profiles, yes, Forbes even provides profiles of these billionaires.

To keep this video game related, you can find out who the video game billionaires are. The only ones I could find are:
- Gabe Newell (profile: https://www.forbes.com/profile/gabe-newell/ )
- Yoichi & Keiko Erikawa (profile: https://www.forbes.com/profile/yoichi-keiko-erikawa/ )

When you look at Gabe Newell's profile, it will say his real time net worth is $4.3B as of January 13th, 2024. He is ranked #693 among the over 2000+ billionaires listed on Forbes. When you scroll down the page, they even give you a line graph showing the history of his net worth. In the graph, you need to hover the mouse over the circles to see the value, it starts at 2014 ($1.2B) and ends at 2023 ($3.9B).

Yoichi & Keiko Erikawa are the husband and wife who own Koei Tecmo, their last recorded net worth according to the profile is $2.75B as of May 30th, 2023. It doesn't say where they rank currently which probably means they can't get a real-time ranking.

To point out the wealth inequality even among the billionaires, I have to mention how the real-time billionaires list has billionaires ranging from $230B to $110B in net worth among the Top Ten as of January 2024.

What about NFTs?

The optimistic outcome is that people should realize that NFTs and other forms of Crypto are useless and have no value. The problem is that there is one group of people out there who can give them value, the wealthy. They have so much money that all they can do is buy assets because there are not many consumer goods out there that cost billions of dollars.

When someone buys an NFT, they are buying something that does not produce anything. Its value is reliant on other people buying it. This is why you have seen the comparison of crypto to gold by others, except it's a bad example. You can take gold and turn it into a product, sell it to someone and make a profit. You can't take Bitcoin, turn it into a product and then sell it to someone. All you can hope with Bitcoin is that someone is dumb enough to buy your Bitcoin for a higher value than what you bought it at.

What you want to hope is that Square Enix, Ubisoft and Konami fall flat on their faces failing to create an asset economy using NFTs so that no other company will ever attempt it. What you should dread is if some company creates an NFT managed fund where people give them money and then they'll buy NFTs from games like Project Zircon which for example, having more money and accounts than the average individual would allow them to buy for example, all bids for 100 NFTs put up for auction by Konami (go to my previous post in this thread to understand the context) and then sell those half those NFTs at a profit to then make the others they own increase in value to sell later on.

If you have seen my previous post about Project Zircon and Resella, it does not look like you actually have to play the game to buy those NFTs. If you are not having to complete a checklist of things inside of a game to be able to buy an NFT on Resella, then the asset economy is external to the game which is great for these NFT managed funds to just acquire "assets" without having to spend time playing a game.

When it's all about making profit, this is the perfect scenario for the likes of Ubisoft, Square Enix and Konami. This is still a hypothetical scenario because we have not seen it happen however, that doesn't stop it from becoming a reality and dragging the rest of the video game industry with it. All it takes is one bad year for Nintendo and then the shareholders will be having Nintendo making NFTs from all their IP just like they made them make mobile games with microtransactions.

 

[Gimmick]

Thank god that billionaires like Gabe can do what he want to help the game industry and have the funds to do stuff like Steam. We need more billionaires in the game industry.

And I like my landlord, he gives me a place to stay.

I think Nintendo needs more than a bad year to do NFTs. The entire industry would have to collapse.

 

[Mekanos]

Just want to say I very much enjoy these threads and the tenor of them. It’s a nice change of pace to stare at the reality of this industry.

 

[ggx2ac]

I eventually found the Terms of Service for Square Enix's NFT game Symbiogenesis.

Official site: https://symbiogenesis.app/

Terms of Service: https://docs.symbiogenesis.app/terms

Before I look at the Terms of Service. What is Symbiogenesis? From their about page: https://docs.symbiogenesis.app/docs/about

What is Symbiogenesis
A completely new form of NFT-based entertainment, where 10,000 collectible artworks meet real game utility.

‍NFT Collectible Artworks (Character NFT)
All 10,000 NFT characters have a unique design, with various races and professions, with a bust-up pictures that can be used as PFP. They will be sold as each chapter (of a total of 6) is unveiled.

They apparently modeled the themes of the game on Web2 and Web3:

SYMBIOGENESIS | Monopoly or Distribution

docs.symbiogenesis.app

Monopolize? Or Share?

...


To clear the game, players will need to gather items and information.

Multiple approaches are possible: either monopolize the necessary items as a single player or with close friends, or cooperate with various players.

...


This theme is a reflection of the contrast between Web2's centralized business model, and the decentralized principles of Web3 embodied by the blockchain technology, which are here symbolized by the "monopoly" and "share/distribution" keywords.

Can Web2 and Web3 live together in symbiosis? Or will the two approaches necessarily conflict?

What kind of interesting aspects can this decentralized approach bring?

By playing through SYMBIOGENESIS, perhaps you will reach this answer.

Take a look through the staff and development partner's page:

SYMBIOGENESIS | Staff and Development partner

docs.symbiogenesis.app

Here is what the front page of the official site for Symbiogenesis looks like (assuming the linked image is still working):

The first thing you are greeted with is a bunch of NFTs that remind you of other NFTs. Square Enix is using Ethereum as the base currency as you can see with the prices of these NFTs ranging from 1 ETH to 0.01 ETH.

When you look through the menu bar at the top, you'll notice that Square Enix uses OpenSea (a third party) to distribute the NFTs rather than own their own marketplace like Konami with Resella.

Going to that OpenSea link will take you to the Symbiogenesis page on Opensea and this is the kind of information you'll see (assuming the linked image is still working):

The information seems to indicate that the Symbiogenesis account opened on November 2023 in OpenSea. It's listed as using Ethereum. It mentions "Creator earnings 5%", to explain what this means, OpenSea has a Buyer-Seller-Creator model, that means that the creator of an NFT continues to receive money via a fee even if they are not the seller during a transaction.

That is how Square Enix makes money from this despite not owning their own marketplace like Konami. To show an example, here is one of the listed NFTs (assuming the linked image still works):

This person who is most likely a registered User of the game is selling an NFT they own. The current price of the NFT is 1 ETH, they conveniently show next to it the price in USD. 1 ETH is currently $2540. I don't know if this price includes the gas fees. When someone buys that NFT for $2540, Square Enix will receive a 5% cut of the transaction, that 5% comes to $127.

As mentioned in my previous post about the idea of NFT managed funds, see how these NFTs are external to the game? There are no indicated requirements that you had to have done a checklist of things inside a game before purchasing this NFT. Read the rest of my previous post to understand the context.

Now we can get to the Terms of Service for Symbiogenesis:

SYMBIOGENESIS | 利用規約

docs.symbiogenesis.app

The terms of service are in English so there's no need for machine translation this time like with Konami.

Article 1 (Purpose)​

These Terms of Use of SYMBIOGENESIS (these "Terms") set forth the terms and conditions of use of the Services (as defined in Article 2) operated by SQUARE ENIX, INC., SQUARE ENIX LTD. or SQUARE ENIX CO., LTD. (each, the "Company"). You may use the Services after reading and agreeing to these Terms. In addition, the Services are available to persons 18 years of age or older. Persons under 18 years of age are not allowed to use the Services. These Terms are a legally binding contract between you and the Company. If you reside in American Region (as defined in Article 2), you are entering into this contract relationship with SQUARE ENIX, INC., a company registered in the state of Washington, United States of America. If you reside in EMEA Region (as defined in Article 2), you are entering into this contract relationship with SQUARE ENIX LTD., a company registered in England and Wales. If you reside in Japanese Region (as defined in Article 2), you are entering into this contract relationship with SQUARE ENIX CO., LTD., a company registered in Japan.

Article 1 mentions the company you deal with depending on the region you reside in; you have to be 18 years or older to play Symbiogenesis.

Article 2 is where I'll highlight some definitions:

Article 2 (Definitions)​

In these Terms, terms are defined as set forth in the following items or other provisions of these Terms.

4. "Wallet Service" means a wallet service provided by a third party designated by the Company, which is equipped with functions to allow Users (as defined below) to manage NFTs (as defined below).

5. "Intellectual Property Rights" collectively means copyrights, patent rights, utility model rights, trademark rights, design rights, portrait rights, industrial property rights, other intellectual property rights (including the right to acquire these rights or to apply for registration of these rights), ideas, and know-how.

6. "Registered Information" means information provided by a User to the Company upon registering to use the Services (including any information subsequently changed and notified to that effect), and IDs, passwords, and other user information pertaining to the use of the Services (including any information on the Wallet Service required to use the Services).

7. "Services" means "SYMBIOGENESIS" and any and all services to be provided by the Company to Users in connection with "SYMBIOGENESIS" operated by the Company.

8. "User(s)" means person(s) who use the Services after agreeing to these Terms.

10. "Data" means any and all information generated, recorded, or stored on the server of the Company or a third party designated by the Company and on a User's hardware (i.e. personal computers and related equipment) as a result of the User's use of the Services.

11. "NFT(s)" means a non-fungible token (NFT) issued on a blockchain, representing the following information held by or available to a User when using the Services:
(ⅰ) Character illustrations and other digital art;
(ⅱ) Items specified by the Company; and
(ⅲ) Other information held or available when using the Services as specified by the Company.

12. "ETH" means Ether, which is a crypto asset (i.e. "crypto assets" as defined in the Payment Services Act), or its unit.

13. "Base ETH Rate" means the reference price for the latest ETH/JPY currency pair published by the Japan Virtual and Crypto assets Exchange Association (JVCEA) as of 12:00 p.m. (Japan time) on the day immediately preceding the date of execution of the Purchase Agreement (as defined in Article 7, Paragraph 3), and the reference price of exchanges shall be used for market classification. If it becomes necessary to change the Base ETH Rate, including cases where the publication of the reference price is suspended, the Company will specify a different exchange rate as the Base ETH Rate.

Article 4 goes over the terms of registering with a Wallet Service from a third party:

Article 4 (Registration for Wallet Service)​

1. In order to use the Services, each User must register with the Wallet Service provided by a third party. In connection with the use of the Wallet Service, each User shall comply with the terms and conditions set forth by a third party that provides such Wallet Service, and each User shall be deemed to have agreed in advance that if he/she lacks even one of the login passwords for the terminal device or the wallet, it will become impossible to use the Wallet Service, and that the Company will not be able to provide any remedy with respect to such Wallet Service.
   ‍
2. The Company assumes no responsibility for services provided by third parties, unless there is any willful misconduct or negligence on the part of the Company.

Highlighting some sections of Article 6:

Article 6 (Management of Accounts)
‍​

4. The Company shall assume no responsibility for any disadvantage that may be caused to a User as a result of losing or forgetting his/her own Accounts or the access credentials thereto (including, but not limited to, the loss of information on the blockchain associated with NFTs or the Services).
‍
5. The Company shall assume no responsibility for any damage incurred by a User, including the inability to use the Services, due to failure or loss of the terminal equipment used by the User, attacks by third parties such as malware, spyware, computer viruses, or hacking cracking, improper management or errors in use of the Accounts, or the use of the Accounts by third parties.
‍

Everything so far has been boring and standard. Article 7 goes into detail of paid services:

Article 7 (Paid Services)​

1. The Company may provide paid services to Users in using the Services. In addition, the Company may, as part of the paid services, charge Users a fee or other costs (including, but not limited to, blockchain network fees (including gas fees)) for transactions conducted upon using the Services.
   ‍
2. Any User who wishes to use paid services may use such paid services by making a purchase in accordance with the procedures prescribed by the Company at a price and by using a means of settlement set forth by the Company. In the event that the Company cannot confirm the fact of corresponding payment despite the User's purchase procedures, the Company may not reflect the result of such purchase and not provide such paid services.
   ‍
3. If any User wishes to purchase NFTs sold by the Company among paid services, he/she shall notify the Company of the application to purchase such NFTs in the manner designated by the Company, and when such User transfers, in the manner designated by the Company, ETH in the amount set forth by the Company as the consideration for such NFTs to a wallet designated by the Company (the "Company's Wallet") and the Company acknowledges the receipt of such ETH, a purchase and sale agreement for the purchase of such NFTs (the "Purchase Agreement") shall be concluded between such User and the Company. The cost of blockchain network fees (including gas fees) incurred in order to pay the consideration for such NFTs shall be borne by the User.
   ‍
4. Upon conclusion of the Purchase Agreement, the Company shall transfer NFTs that a User has purchased pursuant to the Purchase Agreement to a wallet managed by such User (the "User's Wallet"). Each User shall agree in advance that the Company may require a certain period of time to transfer NFTs to the User.
   ‍
5. If a User transfers crypto assets other than ETH to the Company's Wallet as the consideration for NFTs pursuant to Paragraph 3, the Purchase Agreement shall not be concluded. In addition, the Company shall have no obligation to return such crypto assets.
   ‍
6. In the event of any dispute arising between a User and a third party other than the Company with respect to any payment, the User shall seek to resolve such dispute with such third party, and the Company shall assume no responsibility, unless such dispute is attributable to the Company.
   ‍
7. The Company shall not make any refund with respect to paid services purchased by a User, unless otherwise set forth by the Company or required by laws or regulations.
   ‍
8. The Company may post the terms and conditions of purchase, payment, and use of paid services during the course of provision of the Services or in other places accessible by a User during the course of use of the Services. Users shall purchase, pay for, and use paid services in accordance with such terms and conditions, if any.

If you read Article 7, section 3. If you buy an NFT directly from Square Enix, you will enter into a purchase agreement with Square Enix and pay for the NFT using ETH to the Company's Wallet. The User has to cover the cost of blockchain network fees including gas to pay for the NFT.

Article 7, section 5 notes that if you try to pay Square Enix in cryptocurrency that isn't ETH, the purchase agreement will not conclude, and Square Enix has no obligation to return that cryptocurrency to you.

Article 7, section 7, no refunds unless company policy or laws and regulations say otherwise.

Moving onto Article 9, highlighting some sections:

Article 9 (Acquisition and Transfer of NFTs)​

1. The method and terms under which Users obtain NFTs shall be separately specified by the Company on the Services.

2. A User who owns an NFT may transfer the NFT to a third party in accordance with the method separately designated by the Company (a User who transfers an NFT to a third party, hereinafter, a "Transferor"). A person who receives the NFT from the User (a "Transferee") may use the information represented by the NFT on the Services by registering themselves as a User pursuant to Article 5, Paragraph 1.

3. The Company will not be responsible for any transactions between a User and other Users regarding NFTs.

6. If the Company reasonably determines that there has been a violation of laws and regulations or these Terms in connection with the transfer of an NFT, it may suspend, restrict or extinguish such NFT and the rights represented thereby. In addition, the Company shall not be liable for any loss or damage incurred by the Transferor or the Transferee as a result of any measure taken pursuant to this paragraph.

7. The transfer of NFTs may be subject to taxation depending on current laws and regulations or future amendments or other revisions to laws and regulations. Transferors and Transferees shall fully understand this possibility in advance and shall transfer NFTs at their own responsibility and expense. The Company does not give advice or take any other action with respect to taxation matters, including whether or not the transfer of an NFT is subject to taxation. In the event of any doubt regarding taxation, the Transferor and Transferee are requested to make their own decisions or to seek professional advice at their own responsibility and expense.

Article 9, section 6 is interesting to read, I didn't know that you could extinguish NFTs because I'm thinking back to years ago on social media when many artists had their work stolen and turned into NFTs to make a profit on. The difference here most likely is that Square Enix owns these NFTs, what does Square Enix do when someone steals the artwork from their NFTs and makes their own?

A reminder that, you may "own" these files that have a "digital ownership" label on the blockchain, but Square Enix still owns the IP associated with that NFT and can extinguish it.

Moving on, royalties:

Article 10 (Royalty)​

If an NFT is listed on an external marketplace and purchased by a third party, the Company may receive a part of the proceeds from the sale of the NFT related to such listing.

Taxes:

Article 11 (Taxes and Other Public Charges)​

The taxes and other public charges imposed on the transfer, possession, or use of an NFT shall be borne by the User. In addition, the User shall pay the type and amount of taxes and other public charges imposed on them at their own responsibility and expense.

Use of NFTs:

Article 15 (Use of NFTs)​

1. The holders of NFTs may use the functions listed below (the "Utility") in accordance with the details separately specified by the Company.
   
   (1) The function to view in-game side stories and character stories;
   
   (2) The function to receive points based on the holding period of NFTs ("Point(s)"). Points may be used to receive benefits or discounts as separately determined by the Company, depending on the quantity of Points held;
   
   (3) Using NFTs as icons or other content on various social networking services; and
   
   (4) Other functions designated by the Company on the Websites.

1. The Company may change the contents of the Utility provided in the preceding paragraph without prior notice to the Users.
   ‍
2. The holders of NFTs shall agree in advance that it may take a certain period of time to use the Utility.

‍

Article 15 is important to read. After you pay thousands of dollars for an NFT, you get to view in-game side stories and character stories related to that NFT you paid thousands of dollars for.

It seems the game has a points system that's based on how long you hold an NFT for. You get to use the NFT you paid thousands of dollars for as a profile picture on social media. Square Enix might figure out other uses for NFTs.

Moving onto Article 16:

Article 16 (Suspension and Discontinuation of the Services)​

1. The Company may discontinue or suspend the provision of all or part of the Services at any time without prior notice to the Users in any of the following events:
   
   (1) In the event of periodic or emergency inspections and maintenance of facilities and equipment related to the provision of the Services;
   
   (2) In the event that computers, systems, communication lines or other facilities are shut down due to a failure, fire, power failure or other unforeseen accidents, or force majeure such as natural disasters;
   
   (3) In the event that a measure is taken based on a court order or laws and regulations;
   
   (4) In the event that the Company reasonably determines that it is necessary to suspend the Services for operational or technical reasons;
   
   (5) In the event that the Company reasonably determines that it is necessary to conduct an investigation in accordance with laws and regulations, the rules of the Company, or other regulations;
   
   (6) In the event that it is necessary to confirm the security of the Services due to unauthorized access to the Services by a third party or other incidents;
   
   (7) In the event of any problems related to the handling of NFTs, such as a rise in blockchain network fees (including gas fees), the occurrence of a hard fork, or other issues; or
   
   (8) In any other cases where the Company deems such action to be unavoidable.

1. Notwithstanding the preceding paragraph, the Company may discontinue the provision of all or part of the Services upon prior notice to the Users.
   ‍
2. If a User is likely to breach these Terms or to interfere with the operation of the Services, the Company may restrict or suspend the use of the Services by such User.
   ‍
3. The Company shall not be liable for any damage incurred by any User as a result of the measures set forth in the preceding paragraphs.

‍

Highlighting some sections and lines from Article 17:

Article 17 (Prohibited Acts and Measures against acts in violation of these Terms)
‍​

1. In using the Services, the Users shall not engage in any of the following acts or acts that may lead to the following acts.

(14) Establishing or soliciting to a pyramid scheme

(18) Interfering with the operation of the Services or acting to one's own benefit or to the disadvantage of others, such as causing a failure in the Company's systems (including actions that prevent movement in accordance with system specifications through programs or other means), intentionally using programs or defects that do not work as designed by the Company to benefit themselves or cause disadvantages to others, or creating or distributing utilities;

(19) Altering, combining, analyzing, or reverse engineering the Company's systems (including programs, tools, and the information that may be used in connection with the Service Data;

(20) Using the Services by automatically repeating a specific action through the use of programs or other means;

(22) Causing loss or damage to the credibility of the Services;

(28) Sending ETH or any other crypto assets, etc. to the Company's wallet without the intention of entering into the Purchase Agreement;


2. If the Company determines that a User has breached or is likely to breach the preceding paragraph, the Company may, without prior notice or demand, take any measure that the Company deems appropriate against the breaching User, including the following. In the event that any disadvantage or damage is incurred by such User or other Users as a result of such measure, the Company shall not be liable for such disadvantage or damage to such User or other Users.

(1) Caution or warning;

(2) Suspension of use of all or part of the Services;

(3) Deprivation of the Service Data including characters, items, points, and other content acquired by such User;

(4) Changes to public records (including, but not limited to, profiles, bulletin boards, comments, and other content) in the Services;

(5) Cancellation of a User’s registration;

(6) Deletion of all or part of the Data;

Other ways to lose your user registration:

Article 18 (Cancellation of a User’s registration)​

‍

1. The Company may deregister a User without prior notice or demand if the User falls under, or the Company reasonably determines that the User may fall under, any of the following events. The Company shall not be liable to any person with respect to such determination:
   
   (1) In the event that the User violates any of the provisions of these Terms;
   
   (2) In the event that mail sent to the User is returned to the Company as undeliverable;
   
   (3) In the event that the newly registered or re-registered User is found to have been previously deregistered by the Company;
   
   (4) In the event that the User commits any of the acts listed in each item of Article 17, Paragraph 1;
   
   (5) In the event that the User is deceased; or
   
   (6) In the event that the Company otherwise determines that the User is not suitable as a User.
   ‍

1. If the Company deregisters a User in accordance with the preceding paragraph, the Company shall not be obliged to inform the User of the reason for the deregistration. If the Company incurs any damage as a result of a User falling under any of the items in the preceding paragraph, the User shall fully compensate the Company for such damage. In addition, the User shall immediately pay all monetary obligations owed to the Company, including usage fees, accrued at the time of deregistration in a lump sum.
   ‍
2. The Company shall not be liable for any damage incurred by a User as a result of the User's deregistration from the Services.

Here's the part about IP Rights:

Article 22 (Ownership of Intellectual Property Rights)​

‍

1. The Intellectual Property Rights in the Services, Websites, and creations (including images, texts, other works of authorship, portraits, marks, information, data, logos, or expressions) that the Company makes available to Users through the Websites in connection with the Services (such Intellectual Property Rights, hereinafter, the "Subject Intellectual Property Rights") shall be vested in the Company or their lawful owners.
   ‍
2. The grant of, succession to, or ownership of NFTs does not constitute an assignment or licensing of any Subject Intellectual Property Rights to the User beyond the extent necessary to use the Services.
   ‍
3. The Company grants Users a non-exclusive license to use, display, or view the Subject Intellectual Property Rights when using the Services, but only for non-commercial personal use. Users may not use the Subject Intellectual Property Rights for any purpose other than the use of the Services (including commercialization, use to promote or advertise products or services, and any other commercial use), or allow any third party to use the Subject Intellectual Property Rights, whether with or without consideration.

‍

Highlighting Article 23, section 3:

Article 23 (Damages)
​

3. The Company shall not be responsible for any matters related to a transaction between Users. In principle, the Company shall not intervene in any disputes between Users and is under no obligation to do so. Users have no right to seek resolution of any dispute with other Users or third parties from the Company.

Here's all of Article 24 because you'll want to know what Square Enix is exempt from being liable for after you had read all that other stuff where you're responsible for so many things, but Square Enix isn't liable for the following:

Article 24 (Exemption from Liability)​

1. In connection with Users' use of all or part of the Services, the Company does not guarantee to Users any of the following. In addition, the Company shall not be liable for any disputes or damage incurred by Users or any third party other than the Users due to the occurrence of any of the following events, unless the User incurs damage as a result of the Company's willful misconduct or negligence.
   
   (1) The Services will not be subject to any unauthorized attack by any third party;
   
   (2) The Services will be free of viruses or other harmful elements;
   
   (3) The provision of the Services will not be discontinued;
   
   (4) The provision of the Services will continue in the future;
   
   (5) The Services will not be unavailable or inaccessible;
   
   (6) The Services will not be altered;
   
   (7) Profile information or the Data will not be deleted or altered;
   
   (8) The infrastructure, systems, software, hardware, or other items used to provide the Services will be free of defects, including failure, error, malfunction, or failure of communication lines;
   
   (9) The products obtained from the Services or the information itself is legal, moral or accurate;
   
   (10) Users' use of the Services or the results thereof will be in accordance with their wishes or purposes;
   ‍
   (11) No damage will result from any of the foregoing items;
   ‍
   (12) Users will not be disadvantaged or will not incur damage by the use of third party sites to which the Services provide links (including campaign information);
   ‍
   (13) No damage will be induced or caused by any information obtained through the Services;
   ‍
   (14) No damage will be caused by any trouble between Users or third parties in the course of using the Services (such as suggesting any act that is illegal or contrary to public order and morals, defamation, insult, invasion of privacy, threat, slander, or harassment);
   
   (15) No damage will be caused by force majeure such as natural disasters, civil commotion, or riot;
   
   (16) No Damage will be caused by Users' failure to comply with any procedures, security measures, or other instructions provided by the Company;
   
   (17) No damage will be caused by or in connection with enforcement under Article 218 of the Code of Criminal Procedure, the Act on Communications Interception for Criminal Investigation, or any other laws and regulations, or a court order;
   
   (18) No damage will be caused as a result of the creation, revision, repeal, or change in interpretation (including where such change has a retroactive effect) of any laws and regulations, order of any supervisory authority, rule of any self-regulatory organization, or other rule or regulation that the Company is required to follow in relation to the Services;
   
   (19) No damage will be caused by an increase in blockchain network fees (including gas fees), the occurrence of a hard fork, or other such event; or
   
   (20)No damage other than the damage set forth in each of the preceding items will be caused by any event not attributable to the Company.
   ‍
2. In addition to the preceding paragraph, the Company shall not be liable for any damage caused by any delay, discontinuity, suspension, or other failure in the provision of the Services.
   ‍
3. The Company shall not be liable for any services (including, but not limited to, third party services and the Wallet Service) provided by any entity other than the Company.

There are 30 articles in total if you want to take a look.

You'll now have seen differences between Square Enix and Konami with how they're handling their NFT games in this thread. Konami created their own marketplace to make purchasing NFTs as simple as possible, no gas fees, no wallet service needed, buying NFTs in Japanese Yen.

Square Enix requires you to use a third-party wallet service, a third-party marketplace, pay for gas fees and to pay for the NFTs in Ethereum.

They're both still in it to make a profit.

 

[Ystad]

I still don't understand what an NFT buyer is actually buying. A unique digital image where the uniqueness is made possible by blockchain encoding? A digital toy? Or a profile of some sorts?
It also seems to be like buying a real world painting but this painting is located on the other side of the globe. I can never have this at my home wall, I can only look at it on my monitor.
The prices are also ridiculous.

The Symbiogenesis image above reminds me of Fire Emblem Heroes.
So, to help my brain, let's imagine a blockchained FEH, where each hero variation is unique due to blockchain encoding. I could then buy and sell heroes in a FEH digital marketplace? They can have different monetary starting values depending on e.g. artwork or in-game importance? They can increase in value, due to e.g. gained experience points or history of ownership (e.g. hero X-variation was once upon a time owned by a famous movie star)? Or even decrease in value due to e.g. losing in-game significance or being overpriced for current market conditions?

Lastly, in the context of "The Asset Economy", the FEH owner would make profit from the transaction fees and initial purchases. It would then also be beneficial to the FEH owner to make sure that transactions happen as often as possible to make more money. On the other hand, digital asset owners would like to not sell too quickly, because the idea is to invest in assets.

In the end, everything could turn into a stock market... or even crash? Can one buy an insurance for NFT stuff? Like a real estate insurance?

Sorry, but I'm trying to understand: what it is, what happens and how this is sustainable.

 

[ggx2ac]

I still don't understand what an NFT buyer is actually buying. A unique digital image where the uniqueness is made possible by blockchain encoding? A digital toy? Or a profile of some sorts?
It also seems to be like buying a real world painting but this painting is located on the other side of the globe. I can never have this at my home wall, I can only look at it on my monitor.
The prices are also ridiculous.

Consumers want to buy something that will make them money, it is pushed by the people who are trying to make it a thing because they want to make money. They want to convince you that it has value when it doesn't. They want to convince you that you have ownership of an NFT when it doesn't give you ownership of the IP. Who wants to own an NFT of something when it doesn't give them the rights to own the IP? Why pay thousands of dollars to "own" a .JPG or another file format that you can have for free? Because you're hoping that someone dumber and wealthier than you will buy it. It's exactly the same thing with Bitcoin.

I will give two examples showing that Crypto and NFTs are nonsensical because they have no value, but the wealthy are the ones who will give it value because all they can buy with their money is assets.

Recently, CNBC interviewed the CEO of BlackRock (i.e. one the biggest asset holding companies in the world holding about $9.42 trillion in assets as of June 2023 according to Wikipedia) about the recent approval by the US's SEC to allow Bitcoin ETFs. For everyone that has already read all my previous posts, you will know that wealth doesn't trickle down from the top, wealth comes from the bottom and accumulates at the top, poor stay poor, rich become obscenely rich (or the State hands out "subsidies" i.e. welfare to companies and, tax benefits to wealthy people). In the CNBC interview, the CEO of Blackrock who was skeptical of Bitcoin is now a believer, he believes it is an "alternative source for wealth holding" as "an asset class". He does not believe it will ever be a currency. He goes on to say that Bitcoin will be no different to "what gold represented over thousands of years." The rest of the interview is linked in the beginning of the paragraph.

The following is about gold because Crypto is always compared to gold as an asset.

Gold is something that is real, you can take gold and turn it into a product such as... a semiconductor which is needed for computer transistors and sell it to a computer manufacturer for a profit. You could have a patent for turning gold into semiconductors which then gives you IP (which is an asset). If other companies want to produce gold semiconductors, they have to pay for licensing from your patent to make semiconductors which makes you money.

Bitcoin can't be turned into a product and sold to someone like gold can. If you can't turn Bitcoin into some kind of product then you can't create an IP out of a Bitcoin product.

The cryptobro appears and says, "You can turn a crypto into an NFT. That is a product." And it's a useless product at that. To create an NFT, you take a file of any file format like .JPG and you have to put it onto a blockchain. Someone buys this NFT off of you for thousands of dollars, they get to claim "ownership" of this NFT. This NFT which most likely consists of a file that can be found on the internet for free and can be downloaded for free, is something you paid thousands of dollars for. The moment you use that NFT as a profile picture on social media, anyone can download it for free. You do not own the IP that is in the file of that NFT. You cannot transform the NFT into a product to sell to someone else, all you can do is sell "ownership" of the NFT to someone else.

Going back to gold, gold semiconductors for example can be recycled thanks to Chemistry and be melted down and repurposed into another gold product. You cannot take an NFT and alter the file so that it can gain more value or be a different product (and again, you do not own the IP in that file). The NFT you have stays perpetually worthless if no one wants to buy it and you can't do anything about it.

And that summarizes why NFTs and Crypto are worthless, acquire IP instead (like Embracer Group did).

The Symbiogenesis image above reminds me of Fire Emblem Heroes.
So, to help my brain, let's imagine a blockchained FEH, where each hero variation is unique due to blockchain encoding. I could then buy and sell heroes in a FEH digital marketplace? They can have different monetary starting values depending on e.g. artwork or in-game importance? They can increase in value, due to e.g. gained experience points or history of ownership (e.g. hero X-variation was once upon a time owned by a famous movie star)? Or even decrease in value due to e.g. losing in-game significance or being overpriced for current market conditions?

We don't know anything beyond artwork and unlocking stuff inside games when you are holding certain NFTs. I highly doubt any company will make NFTs that hold experience points. Remember that you can't alter the file of an NFT, it's immutable (the only thing you alter is on the blockchain about who owns the NFT). NFTs have "value" from being made scarce, this is highlighted very well in my post about Konami because you can control how much of a particular NFT exists.

Lastly, in the context of "The Asset Economy", the FEH owner would make profit from the transaction fees and initial purchases. It would then also be beneficial to the FEH owner to make sure that transactions happen as often as possible to make more money. On the other hand, digital asset owners would like to not sell too quickly, because the idea is to invest in assets.

Konami as the owner of Project Zircon and the Resella marketplace needs to create an asset economy to make money via distribution of NFTs.

Konami doesn't have to worry about people holding onto their "assets", they create them. They can spend every week creating a new NFT that has only 100 of them available and sell them at auction to the top 100 bidders. Many artists would love to have 100 people buying their artwork for thousands of dollars every week.

I've also already mentioned in the Konami post how they can entice people to buy an NFT, their recent promotion where they distribute Flag NFTs where each account holder gets one at random from a set of four and needs to purchase another from a user on Resella to receive a bonus NFT by a particular date if they are holding at least two Flag NFTs.

As long as people are willing to spend buying NFTs then Konami will happily take their money.

Whether those "assets" can actually increase in value over years is something we have not seen yet, and I am doubtful of it.

In the end, everything could turn into a stock market... or even crash? Can one buy an insurance for NFT stuff? Like a real estate insurance?

The stock market is why I gave the idea of an NFT managed fund because the NFTs are external to the game, the most steps so far is having to register as a User to buy NFTs. It doesn't mention anything about you having to play the game to buy/sell NFTs from the external marketplace.

The marketplace can crash; I don't think it can end up like the Great Depression.

Insurance companies can create insurance for anything, whether that already exists I don't know.

Sorry, but I'm trying to understand: what it is, what happens and how this is sustainable.

NFTs and Crypto already weren't sustainable with how they crashed in the last couple of years. Financial institutions are what can make them "sustainable*" assuming that everyone forgets that NFTs and Crypto produce nothing and can't even create IP out of like gold can.

*There's no sustainability under capitalism, there is always the perpetual cycle of booms and busts because that is a feature of "seeking infinite growth".

There's not much to understand because Crypto and NFTs are nonsensical.

 

[Ystad]

I also searched a bit by myself about NFTs in general. Like you mentioned, art NFTs do not contain the art itself within the NFT blockchain. They contain the certificate of ownership and a link to the art somewhere on the internet. My biggest misconception about art NFTs. Yes, in its current form, it’s nonsensical.

Consumers want to buy something that will make them money, it is pushed by the people who are trying to make it a thing because they want to make money. They want to convince you that it has value when it doesn't. They want to convince you that you have ownership of an NFT when it doesn't give you ownership of the IP. Who wants to own an NFT of something when it doesn't give them the rights to own the IP? Why pay thousands of dollars to "own" a .JPG or another file format that you can have for free? Because you're hoping that someone dumber and wealthier than you will buy it.

So, the only thing which is non-fungible (unique) in an NFT is the certificate and the reference to the art. A Leonardo da Vinci painting is non-fungible. An exact replica would still not be the same. And if I buy such a painting, I own it. An NFT referenced item is essentially still fungible – a copy has the same value. And I will never be able to own it. This is stupid. A scam.

We don't know anything beyond artwork and unlocking stuff inside games when you are holding certain NFTs. I highly doubt any company will make NFTs that hold experience points. Remember that you can't alter the file of an NFT, it's immutable (the only thing you alter is on the blockchain about who owns the NFT). NFTs have "value" from being made scarce, this is highlighted very well in my post about Konami because you can control how much of a particular NFT exists.

Whether those "assets" can actually increase in value over years is something we have not seen yet, and I am doubtful of it.

I understand that the NFT value comes from (artificial) scarcity.
My understanding of what NFTs could be is different from what companies want it to be.

Since NFTs do not contain the art itself (e.g. a game character profile), technically there could be a possibility of value increase… but this won’t happen. Unless companies could monetize the value increase.

Anyway, this is a moot point for us since the whole art NFT concept is crazy.

In the CNBC interview, the CEO of Blackrock who was skeptical of Bitcoin is now a believer, he believes it is an "alternative source for wealth holding" as "an asset class". He does not believe it will ever be a currency.

BlackRock and similar asset holding companies are about control and fooling people into investing in assets and “assets”. Poor will stay poor.

Bitcoins already exists as a digital currency, although very limited. But Bitcoins are not infinite. If BlackRock and others buy up Bitcoins as assets, there will be less Bitcoins available in the free market to be used as a currency.

 

[Mekanos]

NFTs are just the latest example of pushing rent seeking behavior as a profit avenue. Rent seeking is done when traditional forms of profit have been exhausted.

 

[ggx2ac]

You may have seen news spreading around from PCGamer that GameStop is closing down its NFT Marketplace.

Official site for GameStop's NFT Marketplace: https://nft.gamestop.com/

The following message is found there:

Important Update
GameStop has decided to wind down our NFT marketplace due to the continuing regulatory uncertainty of the crypto space.

Effective as of February 2, 2024, customers will no longer be able to buy, sell or create NFTs. Your NFTs are on the blockchain and will remain accessible and saleable through other platforms.

Going back to the PCGamer article you'll find the following:

The marketplace has been updated with a notice to this effect, citing "continuing regulatory uncertainty of the crypto space," the exact same wording GameStop gave when it announced the end of its crypto wallet.

I honestly don't think regulatory uncertainty has ever stopped a business from doing business before. You'd think all the fossil fuel companies are turning around right now and saying, "We're winding down operations due to continuing regulatory uncertainty around climate change."

In other news, the Guardian reports:

The details come in a report by Oxfam as the world’s richest people gather from Monday in Davos, Switzerland, for the annual World Economic Forum meeting of political leaders, corporate executives and the super-rich.

Let's see what this report from Oxfam mentions:

Oxfam said the most recent Gini index – which measures inequality – found that global income inequality was now comparable with that of South Africa, the country with the highest inequality in the world.

Reminder, the above is talking about income inequality, it's not the same thing as wealth inequality. You do not become wealthy by having income from doing work, you become wealthy from holding appreciating assets.

From the same article, here's what you want to know about wealth inequality:

The world’s richest 1% own 59% of all global financial assets – including stocks, shares and bonds, plus stakes in privately held business. In the UK, the richest 1% own 36.5% of all financial assets, with a value of £1.8tn.

Cheer up, all you gotta do is pull up your bootstraps and do that Sigma Grindset, wait, don't listen to that guy that says "work is for suckers", keep working like a dog for your corporate overlords. Wait, don't listen to that other guy that is saying how you can keep amassing assets without paying tax, we live in a "meritocracy" and all you have to do is work hard like those "hard-working" billionaires and maybe someday you'll be wealthy enough to attend the World Economic Forum. Wait, this other guy proves my point, Forbes keeps a real-time billionaires list of over 2000+ billionaires. With that growing number of billionaires you'll surely get on that list someday.

 

[Vena]

NFTs are just the latest example of pushing rent seeking behavior as a profit avenue. Rent seeking is done when traditional forms of profit have been exhausted.

Not necessarily exhausted, rent-behavior is just a common form of continued revenue generation like subscriptions and such. More, it's people with money or wanting money trying to commoditize parts of the internet that they have so far failed to (and continue to fail to) make into a product.

Of course, as many sensible people would have told you even years ago, this was a fools errand but it was a good vehicle for rug-pulls and other such scams that exploited people with and without money trying to "get rich on the next big thing". Which more or less defines a lot of recent happenings in the decentralized space from Decentraland to Crypto to Web3. Scams all the way down.

 

[Mekanos]

Not necessarily exhausted, rent-behavior is just a common form of continued revenue generation like subscriptions and such. More, it's people with money or wanting money trying to commoditize parts of the internet that they have so far failed to (and continue to fail to) make into a product.

Of course, as many sensible people would have told you even years ago, this was a fools errand but it was a good vehicle for rug-pulls and other such scams that exploited people with and without money trying to "get rich on the next big thing". Which more or less defines a lot of recent happenings in the decentralized space from Decentraland to Crypto to Web3. Scams all the way down.

I think the reason these scams are so enticing to companies though is because standard forms of commodification in internet spaces have reached their limit, more or less. We're seeing in general websites and companies move away from one-time purchases to subscription services, and even though we are seeing the limits of that approach, if they want to please their shareholders with constant growth they are going to keep trying things like that. What happens after that bubble bursts, well, I can't predict, but the gold rush seems to be over and now a lot of these companies are saddled with debt that they have to offload somehow.

 

[ggx2ac]

I saw a tweet from Serkan Toto replying to someone talking about how Web3 gaming has a long way to go because they reacted to Hideo Kojima and Sony announcing that new game from the recent State of Play.

Reminder: Serkan Toto is the CEO of Kantan Games. His business is a consulting firm, he has a PhD in economics, you would have seen him in media, here's a recent example: https://www.gamesindustry.biz/new-hardware-more-layoffs-ai-in-game-dev-analyst-predictions-for-2024

I remembered after reading that tweet that Serkan Toto has attended Web3 gaming events so I went to find if he had done any blogs or videos where he gives insights into why Web3 gaming should become successful.

The first video I find is a 37-minute video from a podcast titled:
How to Make the Winning Web3 Game in Asia with Serkan Toto
Description:

110 views Apr 14, 2023

Fresh out of the studio, Serkan Toto, CEO & founder of Kantan Games joined us in a discussion to discuss web3 gaming after the three eras of gaming in the Asia Pacific: console, desktop and mobile. Serkan explained what makes web3 games different from the past and explained why the next breakout of web3 games would likely be from Asia. He also explored the debate that divided the traditional hardcore gaming and web3 gaming community and elaborated on the strengths and weaknesses of web3 gaming in the Asia Pacific. Last but not least, he offered his perspectives on what a great web3 game would look like.

"Yes a lot of the blockchain companies don't know how to make games, and a lot of the game companies don't know how to incorporate blockchain into their games properly; there's really some truth to that. And there are some companies that put together both things like Animoca Brands for example, which started also as a gaming company and then morphed into a crypto gaming company. So they're trying to put these areas of ex expertise in together." - Serkan Toto

Main Site:

Disclaimer: This podcast is for informational purposes and the information is not constituted as investment advice. The speakers might have positions or holdings in the companies mentioned and please do your own research.

Assuming you remember everything I have posted so far in this thread, and assuming you also read my other thread about economic rent: https://www.installbaseforum.com/fo...for-segas-infinite-wealth-economic-rent.2317/

My threads so far have mainly been about predicting how bad the industry will go and to educate you on the concepts talked about in those threads.

Now there's a video to look at things from the other side, about how this will be good for business and for gamers.

I am not going to quote everything from the above video because I have to transcribe it, so you should watch the video.

I will transcribe a few things from the video and give my counterpoints.

At 8:35 in the video, the host asks Toto why "traditional gamers" are against the idea of Web3 gaming and play-to-earn games.

Toto responds:

Yeah, you're absolutely right. The hardcore gamers absolutely hate blockchain, pay-to-earn, crypto in general. Everything that the NFTs and one big point is that a lot of them don't really understand the concept. I always say, if you looked into crypto, if you looked into blockchain, if you looked into NFTs and digital ownership and all of these things and if you hated them, then I respect your opinion. But if you don't even own a wallet, if you have never really tried to understand crypto or what NFTs really are or they could mean, then we are both wasting our time because you don't really know what you're criticizing so that again it's lack of knowledge or fear of the unknown, or are fearing that their beloved game makers move into that space... (gives Square Enix as an example)

"HARDCORE GAMERS" that are brushed with this stroke, is exactly why I have been making these bad ending threads, it's exactly why I titled my "Apple pulls a Unity" thread the way I did. You need to understand how video game companies are profiting off of you, you need to understand that they can no longer achieve profits that give INFINITE GROWTH by selling games the traditional way as a one-time license. They have to get more money out of you, how? Rent. I already gave an example before in the economic rent thread, loot boxes, you pay hundreds of dollars to get a chance at getting something where that something is not worth hundreds of dollars. Again, rent is classified as unearned income. They didn't do anything to deserve that excessive profit that you are giving them.

Onto crypto and NFTs, look at the rest of this thread where I've talked about it in various posts. If that's not enough, look at the informative video Line Goes Up from January 2022 of which I timestamped it at when Axie Infinity is talked about because it's relevant to the podcast video above:


Assuming you still don't know how "crypto" works. I just finished listening to the audiobook of TechnoFeudalism by Yanis Varoufakis (the Economist that worked at Valve before becoming Greek Finance Minister in 2015). I haven't thought about Bitcoin in a long time, and he brought up a very good point about how it works. A reminder, Bitcoin was created as a Peer-to-Peer electronic payment system, you have a "digital wallet", it holds currency, it belongs only to you, it is not being held by a private bank. You want to send money to someone from another country, how that usually works is you'd go to your bank, and they do a SWIFT transaction, your currency (Euros for example) gets turned into US currency to go from one country to another before being converted to the receiver's currency.

Along the way, fees occur from the private banks that handle those transactions, those fees are just rent because, you understand how a private bank works right? Here's a common way they make money off the money in your account. They take your money and lend it to someone else, that someone else pays interest which is just rent and that gives the bank their profit. You don't really see that happen to your account because money is no longer tied to gold and is just IOUs. What's that? You said you never have any money in your account? That's fine, they make money off of you in other ways such as overdraft fees.

The point being, if you do a Bitcoin transaction instead to send money to the person in another country, you send money from your digital wallet to their digital wallet. There is no middleman that takes a fee in the form of rent like the private bank or a payment processor like Visa/Mastercard. This is where banks and payment processors find such a system dangerous, because they are no longer needed and hence lose money from not making profit via rent.

Unfortunately, Bitcoin has poor execution, among many of the problems one of them is that it takes massive amounts of electricity to process a transaction and then APPEND it to a ledger i.e. the Blockchain.

Now in the present, look what happened to Bitcoin, it was created during the Global Financial Crisis. It had potential to take profits away from the private banks that got saved by the governments that bailed them out. Capitalism has subsumed Bitcoin and cryptocurrency that Bitcoin is now treated as an "asset", it is now treated as "gold", its own existence has been warped beyond recognition and the private banks will never use it as a currency unless they can make rent from it. I'm not saying that Bitcoin is viable as a currency, you can watch the Line Goes Up video for more detailed insight for why it wouldn't work anyway.

Now you have more knowledge about cryptocurrency than the average crypto bro that wants to convince you to buy an NFT. You are now knowledgeable enough to argue with Serkan Toto and not waste his time as he is quoted saying.

During the interview at 10:30 of the video, the host talks about how in China at internet cafes during the World of Warcraft days, they would grind to create characters that are geared out (remember that the majority of raid gear was bind on pickup meaning you could not sell it on the WoW auction house) and then sell those characters to people from the US (I can't remember if you had to sell your account that holds the character). Then Toto talks about Diablo II and Counter-Strike as other examples and how you have to go through hoops to sell stuff to make money and how Blockchain solves that.

My counterpoint to that is, sure, you had a way to grind away doing something and then sell it to someone in the US. Now look at my earlier posts in this thread for how you get an NFT, you buy it from the marketplace possibly for thousands of dollars. There has been no mention of earning an NFT by playing (grinding away) the game (such as, a rare NFT drop from a boss) in either Project Zircon or Symbiogenesis. It's understandable why you can't just get an NFT by defeating a boss, you know why? Because you need to do a transaction fee to get the NFT onto the Blockchain. Why else have the NFTs only been available through a marketplace? There's no grinding to get an NFT, only money, from a marketplace that is external to the game, which was why I brought up the idea of an NFT managed fund, the financialization of the NFT marketplace.

At 11:40 of the video, Toto says:

I understand, hardcore users. If you don't want to get into this then there's so many games out there nowadays. By the way, these are the exact same hardcore users who said free-to-play back in the day will never work, it will never work on console, it will never work on the PC. (Cites Fortnite, Apex Legends and Call of Duty Warzone as examples of F2P games)

"Hardcore users" you now have more knowledge about Rent and how the f2p (live service) model has to survive via rent which is unearned income. That rent usually comes in the form of gacha or lootboxes and, you should look up how many times Square Enix has launched a free-to-play mobile game in the West only to shut it down in less than 12 months because they didn't make enough money to keep the game running.

Since the quote is more specifically talking about free-to-play in Consoles and PC. We've seen that live service games do work on PC and consoles, but it runs into the exact same problems as Mobile where only a few live service games take up everyone's time and money and then those players are unlikely to play any other live service game. It then becomes more difficult to compete, because you have to outcompete someone like Epic that is making millions and millions of dollars in microtransactions from Fortnite and uses that money to keep their live service content rolling.

From 15:20 to 21:15, they talk about Axie Infinity (Watch the Line Goes Up video above where I timestamped the Axie Infinity section if you don't know what it is). I don't have much to say but to remind you how you could become a "Serf" in that game by having a "Lord" lend you their Axies because the NFTs were too expensive to buy outright, you work for that lord by "playing the game" to earn whatever you needed to obtain income and then your Lord would take a cut of your income i.e. rent aka unearned income, it's not passive income. If Web3 play-to-earn games with Feudal systems really take off, then you know what to do, don't be a Serf.

At 23:51 of the podcast video, Toto says:

I forgot to mention one big selling point to your earlier question about the features of web3 gaming and that's decentralization. So, in theory, in the end the users take over the game from the game developer right if you look at the video game space, mobile game space, PC game space nowadays, these games are extremely centralized. You know, if you look at Minecraft for example, you can model the game, you can have your own server and you can have all of these things. But still, Microsoft the actual owner of the game still has the thumb on the game right, so they can turn off turn you off immediately if you're doing things that they don't like. So, the idea of a blockchain game is making it interoperable interoperability with other games for example also you can take your NFT from one game and if it's inside the same platform for example you can use it in another game. One of the companies that I angel-invested in recently is doing that right, so they have a platform, they have totally different games but you can take your character from one game and as an NFT and put it in a totally different game inside the same platform and the idea is that over time the original game developer that you always need even in web3 gaming so there always has to be some somebody that starts the game a company usually gives up their control, their ownership of the game over time right so and then the gamers who own the game now like completely decentralized in the theoretical world can do whatever they want with the game right, so they can change the UI, they can the change the look of the characters, they could change the direction of the story, etc. That is extremely powerful, and you can only do this with the power of the blockchain. That's the only way you can do it properly.

That sounds nice in theory... don't forget about post #7 in this thread for the terms of service for Symbiogenesis, article 22 titled: Ownership of Intellectual Property rights. Who owns the IP of Symbiogenesis in the end? Square Enix does.

There's no way a platform owner is going to allow someone to do things with the IP that they own. Here's a very simple example, who is going to be responsible when someone decides to change the appearance of a character that it ends up being offensive or infringes another company's copyright? Who actually has ownership of the IP in that scenario?

You can also see from the quote how restrictive the NFTs are, they can only appear inside games that belong to the platform, you can't take your NFT to a different game of a different company.

That's all I am going to be quoting from the 37-minute podcast video. You can go watch the video, the main reason I went to watch it was to find out if there was something about Web3 I didn't know about that would change everything... and there really wasn't. But that's me saying that, you still need to watch the video yourself to come to your own conclusion.