Blockchain and Crypto in the Gaming Industry
Gaming is one of the most popular global leisure activities. It is estimated that there are almost 3 billion gamers on our planet who play PC, console, or mobile games. According to annual statistics provided by Statista.com, the estimated gaming revenue netted during 2020 is more than $170 billion.
Regardless of the money, this entertainment industry is in need of a revamp and a change in direction. Gamers demand more and want their voices heard and opinions valued. Blockchain and crypto can push gaming onto a new path, which is more likely to suit Generation Z.
The Shortcomings of Today’s Gaming Industry
Popular games and new releases are usually quite expensive. A quick glance at Steam’s bestselling names reveals prices ranging between €39 and €79. We can surely do better than that, can’t we? To revolutionize gaming, the developers need robust and safe platforms to create and test their products. Gamers have the exact same expectations. They wish to use a secure method to buy and sell their in-game characters and acquired items.
No passionate gamer plays only one game. To be honest, how many do you play? With so many games and profiles lying around, there is one crucial but easily solvable problem. User-created profiles aren’t interoperable across different games. Luckily, blockchain and crypto are here to help.
Players devote many hours a day to building their online characters and obtaining precious items needed to progress within the game. All this valuable data is stored in centralized environments, like the servers of gaming companies and their personal electronic gaming devices. All centralized entities present a single point of failure and a constant attack target for hackers and scammers. Online gamers have undoubtedly noticed something else. They never gain actual possession of any of the assets in the games. The companies own them, you just use them, and as soon as you turn the game off, puff, it’s all gone. I say give more control to the players!
Consumers don’t have a big say in the future of their favorite games. It often happens that developers make abrupt changes or introduce new rules that players aren’t happy with. With current systems and platforms, there is nothing a player can do about it. But what if there was a transparent and open ledger where your voice mattered, and you had voting rights? Imagine you had a great idea that would make the game even better. How would you convey your message to the developers?
The Blockchain – A New Engine for Gaming
Blockchains allow game developers to create their projects on safe, secure, and encrypted platforms. This technology relies on public-private key combinations and decentralized systems. They are un-hackable because they don’t rely on a single online server to store valuable data. These networks are distributed across multiple nodes and out of reach for thieves and penetrators. A centralized system, such as a private server of a gaming company, is vulnerable to DDoS attacks. During a successful DDoS attack, players can’t access or play their games because the servers are down.
The expandable nature of a blockchain is a natural remedy for DDoS attacks, which have no chance to weaken its systems. Issues such as identity theft or account hacking are eliminated since proof of ownership is permanently stored on the blockchain. For game developers, it’s a perfect solution to ensure that all their work can’t be undone or become restricted.
Blockchain technology has simplified in-game purchases. With traditional systems, the money is routed through third-party payment gateways, which charge fees for rendered services. Players also have to consider banking commissions, international payment charges, and currency conversions. Cryptocurrencies minimize the expenses, eliminate the middleman, and facilitate quick and cost-efficient purchases even for micro-transactions. Blockchain gaming firms have their own native tokens, which can be used for in-game transactions.
Gamers trust the blockchain to store their virtual assets. At the end of November 2017, the blockchain-based game CryptoKitties was released. Just 10 days after, cat breeders worldwide spent almost $7 million on virtual cats. That’s the proof we need that the new generations have faith in this system and are willing to invest in digital collectibles and exciting games.
The purchased collectibles aren’t stored online on potentially unsafe websites. They are kept on crypto addresses on the blockchain and protected by private keys. The players are the true owners of everything they purchased in the games they play. The data is recorded in an unchangeable public ledger and managed by the code of the underlying smart contract. The game developers and other players can’t manipulate the network to revert decisions or make changes they don’t like. Gamers receive complete control over their assets, and no centralized party or moderator can interfere.
The open-source nature of blockchain games provides developers with ideas and research material. Before they start creating their own games, they have the freedom to inspect the codebase of a crypto game to see how these smart contracts were written. The code of already released games can be used as a foundation for new projects without creating everything yourself from scratch.
In contrast to the standard gaming industry, the opinions of all community members matter in blockchain games. That’s because crypto relies on consensus, and rules can’t be forced on the community from the leading development team. Everyone is free to submit ideas. If the blockchain community agrees and reaches a consensus, the proposed changes will be made.
Most traditional games are the same. The players spend money purchasing the games and during in-game acquisitions of skins, weaponry, and other accessories. The companies make money, but the gamers reap no benefits at all. Blockchain-based games have introduced a new economy where the players get rewarded tokens for their progress. These tokens can, for example, be sold for fiat, exchanged for other cryptocurrencies, or redeemed for gift cards. Who would have thought that playing games even at an amateur level can earn you money?
What Are Some Popular Blockchain Games?
Let’s now look at some good examples of blockchain games and their popularity in the gaming communities.
CryptoKitties started the entire blockchain and crypto games revolution. The game was released at the end of 2017 and is based on the Ethereum network. It allows players to create, buy, sell, and breed different crypto kitties available over a decentralized marketplace. Since its release, more than 1.5 million players have spent around $40 million on purchases in the game. During 2017/2018, the CryptoKitties smart contract was responsible for 30% of all the transactions performed on the Ethereum blockchain.
Decentraland is another Ethereum-based game introduced in 2017 following an Initial Coin Offering (ICO) conducted by its team. The ICO reached its hard cap within a few seconds of going live and raised $24 million. Decentraland is a strategy game where players buy and sell parcels of land. All landowners own NFTs or digital certificates proving ownership. MANA is the name of the native Decentraland currency that facilitates all deals between buyers and sellers.
Spell of Genesis
Spell of Genesis is the first mobile game developed on a blockchain. It combines two genres into one game: A Point-and-Shoot gameplay mode where players also trade cards. The developers created an in-game currency called BitCrystals, which netted $300.000 during its ICO stage. The aim of the game is to raise a strong army by trading cards to fight your opponents. Spell of Genesis is an interoperable game, compatible both with Bitcoin’s and Ethereum’s blockchain.
The Sandbox is the blockchain’s response to the popular game Minecraft. It allows players to create and own their own characters and virtual lands. Digital ownerships are guaranteed thanks to unique NFTs, which can be sold and purchased on the in-game marketplace. This animated game has its own cryptocurrency known as SAND. The Sandbox made headlines in March and April 2021 after it was announced that the Winklevoss Twins and the gaming company Atari purchased pieces of its virtual land. The total market capitalization of the game’s native token is over $1.6 billion.
The Gaming Industry Invests in Crypto and Blockchain
Many gaming giants have realized the potentials of crypto and the blockchain space. They have found several ways to invest in this new technology. The South Korean video game producer, Nexon Co, released a statement confirming the purchase of 1717 bitcoins valued at around $100 million in April 2021. This was a strategic move to protect shareholder value and guarantee the long-term liquidity of company funds.
The Chinese Gaming brand The9 has taken a different route. They invested $6.7 million and purchased 2000 bitcoin Avalon Miners with a total hashrate of about 100PH/S, but The9 isn’t stopping there. According to the company, a new agreement has been finalized, increasing their stash of bitcoin miners by another 12.246 units.
The Asian entertainment giant Atari is making a comeback and trying its chances in blockchain gaming. This is the brand that developed Tetris and Pac-Man in the 1980s. In October 2020, Atari released its proprietary ATRI token, which raised $1.5 million during a pre-sale event. The Atari token is based on the Ethereum blockchain and will have a real-world use case. It’s going to become the in-game currency of choice in several Atari games scheduled to be released.
Atari has developed a new and hybrid PC and console unit they have named the Atari VCS console. It’s clear that the company’s vision was to combine modern technology with a retro look just by looking at the new box. It’s fully equipped for blockchain support and cryptocurrency use in online gaming. As the company stated, this is just the beginning of Atari’s focus on blockchain and crypto gaming.
The early adopters and developers of blockchain-based video games have proven a few things. It’s possible to create thrilling games for the masses, generate profits, and allow players to become the sole owners of the assets they invest in. Old models, in which the companies make millions of dollars in profits, aren’t as attractive anymore.
The blockchain has features that guarantee both security and profitability for the players and game developers alike. Gamers are searching for a sense of community belonging, and the blockchain provides just that. Community voting and consensus mechanisms ensure that your ideas will be heard and adopted if enough support is on hand.