DOES Minecraft support NFTs?
The story behind Minecraft’s NFT ban and what it means for NFT market
Minecraft, one of the largest games in the world, released a controversial blog post simply titled “Minecraft and NFTs” on July 20th. In the article, Minecraft revealed its opinion on NFTs (non-fungible tokens) and blockchain, which may be seen not just as a rejection of NFTs, but also as a very comprehensive argument for why NFTs have no place in traditional video games. This is the most pertinent passage:
“Each of these uses of NFTs and other blockchain technologies creates digital ownership based on scarcity and exclusion, which does not align with Minecraft values of creative inclusion and playing together. NFTs are not inclusive of all our community and create a scenario of the haves and the have-nots. The speculative pricing and investment mentality around NFTs takes the focus away from playing the game and encourages profiteering, which we think is inconsistent with the long-term joy and success of our players.
We are also concerned that some third-party NFTs may not be reliable and may end up costing players who buy them. Some third-party NFT implementations are also entirely dependent on blockchain technology and may require an asset manager who might disappear without notice. There have also been instances where NFTs were sold at artificially or fraudulently inflated prices. We recognize that creation inside our game has intrinsic value, and we strive to provide a marketplace where those values can be recognized.”
This message sent a tremor through the NFT community and promptly wiped away investments totaling tens of millions of dollars. The reason it is such a huge deal is because over the past year, a number of Minecraft-related projects have released and sold NFTs. NFT worlds was the most popular example of the projects. This initiative made it simple for other developers to construct their own crypto games utilizing third-party Minecraft servers; all you needed to do was purchase their NFTs to get started developing our own metaverse.
According to NFT Worlds, over one hundred existing NFT communities and initiatives have already begun constructing full-scale metaverses using NFT Worlds. This blog had a negative impact on the NFT world. Since only after 24-hours after the blog. It dropped 65 percent to a floor of roughly 1 ETH and its token world also dropped about 70 percent wiping out about millions of dollars in market cap. All the projects that had anything to do with Minecraft are now completely dead. Or they have to do some radical pivot into another business.
The underlying reason for Microsoft’s restriction on NFT, most likely is a company seeking to minimize disruption while keeping an eye on their bottom line.
Minecraft earns over $400 million every year, with a significant portion of it coming from the sale of in-game skins and mods via their online marketplace. They also have their own in-game money, known as minecoin. Minecoins may become used to purchase items and have fun. Minecoins are already a high-margin enterprise, and Minecraft has already perfected its monetization structure. As a result, anything that may disrupt that, such as users selling their own stuff to other players. Implies less purchases from the marketplace! That would pose a risk to their business.
Minecraft is hardly the first major game developer to speak out against NFTs. I believe a large part of the credit belongs to Steam. Which prohibited blockchain games and NFTs before they were as problematic as they are now. Other prominent industry heavyweights are still toying with the notion rather than dismissing it completely. The Epic Games Store is
gradually approving a few web3 games, and Square Enix recently launched a new line of Final Fantasy NFTs. So the conflict hasn’t ended yet. But Minecraft taking a statement like this is significant. And lastly, it might change the path of what people expect the metaverse to become. Because it does not need the use of NFTs.