The crypto industry didn't need this, especially at a time when it's trying to catch its breath after the devastation caused by the liquidity crunch affecting prominent lenders like Voyager Digital, BlockFi, Celsius Network and Babel Finance.
The prices of cryptocurrencies that had fallen are stabilizing. Unfortunately, it is another sector of the industry, and not the least since it is non-fungible tokens or NFTs, which has just suffered a severe blow.
Mojang Studios, the developer of Minecraft, one the most popular video games, has just banned NFTs and Blockchain technology, because they are, claims the company, against its values of inclusivity.
"To ensure that Minecraft players have a safe and inclusive experience, blockchain technologies are not permitted to be integrated inside our Minecraft client and server applications nor may they be utilized to create NFTs associated with any in-game content, including worlds, skins, persona items, or other mods," Mojang, acquired for $2.5 billion in 2014 by software giant Microsoft (MSFT), said in a statement.
Who Will Be Affected?
This decision is a blow for the monetization of NFTs. Video games are indeed considered a natural destination to draw a business model for this buzzword at the start of the year.
Minecraft, launched in 2009, is a global phenomenon. Its open sandbox gives players free rein to create worlds and experiences and craft all manners of buildings. It is particularly popular with children.
As the Mojang says, an NFT is a unique, non-editable, digital token that is part of a blockchain and often purchased with cryptocurrencies like Ether, the second largest cryptocurrency. It can be associated with any form of digital asset such as a JPEG or a GIF. Its purchase provides the token that states the ownership of the original digital file.
The Swedish developer says it made this decision after receiving feedback from some community members. In addition to banning NFTs, Minecraft will prohibit the use of in-game content such as worlds and skins for the purpose of creating “rare digital goods.”
Currently, Mojang allows game server operators to charge for personalized experiences, which has led to the proliferation of NFTs within Minecraft. The video game allows internet users to create servers so that a defined community of players can play online together in personalized virtual worlds. Mojang's new policy targets one aspect of this feature.
The NFT Worlds project, a platform that uses Minecraft to create decentralized virtual worlds where players can buy and resell virtual items in the form of NFTs, is impacted by the decision. The prices of their NFTs vary according to their level of scarcity.
The first consequences of Mojang's decision were quickly felt as the floor price of NFT Worlds' NFT collection fell by at least 60% following the announcement.
"We're working to get in contact with the right decision makers within the Minecraft policy enforcement team as well as the general Minecraft studio to understand the details of this policy change," NFT Worlds reacted in a message posted on Twitter. "In the event after the above conversations we come to the conclusion we can continue to operate, the show goes on as it's been."
"However, if we're truly banned because of the risk" of a lawsuit "by Minecraft/Microsoft from innovating on top of the Minecraft ecosystem we move forward, we pivot."
Speculation
NFT Worlds has not removed its content on OpenSea, the Amazon of NFTs, as of time of writing.
Mojang pointed out that banning NFTs on Minecraft was to ensure players have a "safe and inclusive experience". The use of NFTs generates artificial models of rarity and excludes players unfairly, the studios argued.
"Some companies have recently launched NFT implementations that are associated with Minecraft world files and skin packs," Mojang said. "Other examples of how NFTs and blockchain could be utilized with Minecraft include creating Minecraft collectible NFTs, allowing players to earn NFTs through activities performed on a server, or earning Minecraft NFT rewards for activities outside the game."
"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," Minecraft's developer criticized. "NFTs are not inclusive of all our community and create a scenario of the haves and the have-nots."
The company is also concerned that NFT projects created by third parties are scams and/or influence players to purchase virtual items at artificially or fraudulently inflated prices.
"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," Mojang said.
Despite the ban, however, the company leaves the door open to a possible change of position in the future.
"We will also be paying close attention to how blockchain technology evolves over time."
