Like all things related to cryptocurrency, NFT critics abound. But what the naysayers fail to weigh is the technology's potential. The NFT collectibles market likely won't grow any larger than the traditional art market, but leveraging blockchain technology for play-to-earn gaming platforms has the potential to mint billions and open up a new, job-creating, economy-boosting investotainment avenue.
NFT Gaming Explained
What Are NFTs?
NFT stands for non-fungible token, meaning each one is unique. Increasingly, they're becoming a profitable aspect of the blockchain and crypto landscape. Legally speaking, authorities rate NFTs as digital assets and tax them accordingly.
What Does Game-Fi Mean?
Game-fi is a portmanteau of "gaming" and "finance." Most titles in the category incorporate NFTs, and players can earn money to play, aka play-to-earn gaming.
How Do Developers, Publishers, and Distributors Make Money With NFT Games?
There are several NFT gaming models. Some charge players an initial fee to participate. Others legally skim commissions off the top of each transaction. Thanks to smart contracts, developers can also set up resale and royalty payments that funnel back to them for the duration of an NFTs lifespan.
How Do Players Make Money With NFT Games?
Players can make money in play-to-earn games by selling and trading NFTs during gameplay and on outside exchanges. Some games are also starting to experiment with ownership models.
What Is Investotainment?
Investotainment is the act of investing money in entertainment markets and opportunities. Increasingly, it's becoming a smart financial choice as blockchain gaming is growing exponentially.
NFT Gaming Legalities To Consider
NFT gaming startups should consider several areas of law, including intellectual property, online privacy, anti-money laundering, know your customer, and various registration considerations.
Intellectual Property
Intellectual property law plays a significant role in NFT gaming. Since smart contracts can be programmed to istribute royalties long after the initial sale, interesting deals can be set up.
Anti-Money Laundering / Money Transmitter Laws
There are a slew of state and federal laws pertaining to money transmitting and money laundering. Many apply to the NFT gaming world. For an overview of state money transmitter regulations, check out our list of state blockchain laws.
Online Privacy Governance
Online privacy is always a concern these days. For starters, all businesses that want to make their digital products available in California must follow the state's slew of online privacy laws. Additionally, European compliance requires adherence to the General Data Protection Rule, which is exceptionally comprehensive.
Contracts and Agreements
As is the case with any business venture, contracts and agreements are of paramount importance in the game-fi world — perhaps even more so. Since the legality and enforceability of smart contracts are still being tested, having traditional backups is highly recommended.
Due to the nature of the crypto marketplace, it's wise to work with an NFT gaming lawyer who understands the industry's current landscape.
Registration Regulations
Depending on how a game-fi platform is structured, you may need to register with various state and federal agencies.
Connect With an NFT Gaming Attorney
The Kelly Law Firm works with individuals and businesses on all manners of cryptocurrency, blockchain, and NFT gaming issues. Get in touch today.
