A Brave New World in Ownership: VR, the Blockchain and Non-Fungible Tokens

A Brave New World in Ownership: VR, the Blockchain and Non-Fungible Tokens

In late 2017, Cryptokitties, an Ethereum-based game in which users both collect and breed new digitalised representations of kittens became a surprise mass phenomenon. At its base, the concept was simple – users buy unique representations of kittens, and combine these to procreate yet new unique kittens. 

Whilst the viral popularity of the game is a subject for discussion in itself, perhaps the truly intriguing aspect to the whole phenomenon was that it may have just been the world’s first successful introduction to Non-Fungible Tokens (NFTs). These are unique tokens which belong to the same family of underlying token but which, at the same time, each carry unique characteristics that therefore bring value to what they represent.

In other words, Cryptokitties opened our eyes to the potential offered up by a new world of digital collectibles that are underpinned by this specific class of NFT tokens which, in turn, guarantee uniqueness  (and therefore value), whilst the blockchain itself guarantees the user secured ownership of the asset. 

New World of Possibilities

As of writing, over one hundred start-ups out there are now thought to be engaged in a business proposition underwritten by NFTs. One of these is the CryptoCarz ICO, a project which is seeking to finance the creation of a virtual reality racing car game in which users can build and maintain their own models of car. 

The uniqueness of a car constructed by its owner is in some way provided by the uniqueness of the NFT which is used to construct it. The specifics are defined by the game’s developers. However, the general idea is that a measure of customisation is accommodated by the game, with that customisation now being tied to the underlying token against which the Virtual Reality digital asset is pegged. 

ERC721 Token

In the blockchain world, most of us are aware of the ERC20 token type – the classic, vanilla Ethereum-based token type that is associated with the vast majority of ICOs in existence today. 

A token which is ERC20-compliant ensures that it can be accommodated and manipulated by third-party platforms which integrate the necessary APIs to work with it. But ERC20 tokens carry one other major feature – they are fungible. In other words, if you have one token of WPR (Wepower), for example, and I have one token of WPR, we could – if we were so inclined – send each other our respective tokens. 

The net effect would be nothing. Since those two WPR tokens are endowed with the same set of identical properties, they are interchangeable – by extension, they both translate to the same value when that value is expressed in USD. 

With a ERC721 token, however, a developer can now define sets of unique characteristics that are associated with each individual token. By implication, there is no guarantee now that two ERC721 tokens from the same family will have the same value. 

For example, one CryptoCarz token may underpin the characteristics of a red, turbo-charged Ferrari-type model of car which can run from zero to sixty in under three seconds. But since this is an ERC721 token, this is the only token that can represent such a car on the CryptoCarz platform. As such, my red CryptoCarz Ferrari may become something of a collectible item. 

It is a fascinating concept – VR can now be tied to blockchain-based technology which guarantees the uniqueness of the assets which exist in that virtual world.

In other words, we could now be approaching a brave new world in which gamers line up to purchase a VR asset – a racing car, or beautiful house or spaceship or whatever – for the kind of money that people have up until now only been prepared to pay in the real world. It is yet another example of the unintended implications of blockchain technology that we are as yet only beginning to appreciate.