Blockchain gaming: opportunities and obstacles
Or how blockchain can play out in video games
Since its introduction in 2008, blockchain technology has been gaining momentum, infiltrating areas one by one. Esports is no exception. The video game industry is a fast growing and extremely profitable sector of the entertainment business that will continue to expand in the following years, reaching $222.6 billion in 2024, a +5.6% CAGR (2020 to 2024).
While being exceptionally progressive and easy on adopting cutting-edge technologies, the esports industry embraced the blockchain more than willingly thus presenting the world with blockchain gaming. In 2021 blockchain games became the dominant category in the blockchain industry. 49% of the industry’s usage comes from games and daily interaction has reached over 1.4 million Unique Active Wallets (UAW).
Blockchain gaming is an approach, where the digital items in the video games (collectibles, skins, characters, and weapons) are real-world assets, similar to stocks and bonds, in the form of non-fungible tokens (NFTs). For players, blockchain gaming holds many benefits. First of all, NFTs are stored on the blockchain, which ensures the owner control over the virtual assets and allows the sale of such tokens on different marketplaces. Another interesting feature of the assets on a blockchain is that they can exist beyond the lifespan of the game so the player won’t lose them in case the game features are altered or the whole title is shut down by the owner. Furthermore, when in-game items are tokenized, they become: interoperable between different game ecosystems and have multiple use-cases; immutable, so that nobody could temper or copy the item; possessed solely by one and only true owner with a permanent record that is verifiable on the blockchain.
Another concept that comes along with blockchain gaming is a play-to-earn model. The P2E has a huge potential and aims not only to entertain but to compensate the players for the time they spend in the game.
Back in 2017, the market went crazy about the blockchain game called CryptoKitties, where players could buy, breed, collect and sell virtual kittens with unique appearances. More recent and by far revolutionizing game is called Axie Infinity. It is a play-to-earn decentralized application (DApp) developed by Vietnamese studio Sky Mavis, where players also buy, raise, breed, trade, and battle pets called “axies”. Tokens are earned by completing daily tasks that include mini-games and PvP battles. Last year Axie Infinity reached a milestone, when its daily active user base increased from 20,000 in March, to more than 2 million by the end of 2021. This game has generated an immense impact on the entire industry by launching a governance token and community treasury that decentralizes the ownership and management of the game so that any decision-making power and cash-flow accrual eventually ends up with the player community, rather than the game developers.
You may reasonably ask why should creators and developers like blockchain games and how can they benefit? Well, the answer is pretty much straightforward — fees. Blockchain games create an absolutely new possibility for developers to create and run their own digital economy and charge a fee on all transactions within the game. The potential to monetize more players with P2E games is much higher, because the audience in such games is far more willing and ready to spend, driven by the beneficial aspect of the games.
Like any technology, blockchain has brought in gaming not only opportunities but some obstacles as well.
Hardcore gamers need more than just the ability to buy or earn collectibles. They are looking for interesting storylines, exciting battles, and a sense of competition. But with blockchain games, the developers might concentrate more on the in-game economy rather than entertainment aspects. The experience of obtaining an item could become a rather exhausting experience for a player and could take all the fun out.
To start playing blockchain games is not trouble-free. Yes, creating an account is an easy part. But then, the player needs to set up a crypto wallet compliant with the blockchain the game is based on and buy some crypto. For instance, if the game runs on the Ethereum blockchain, the player needs to buy ETH, and so on. Entering the game could be very expensive. In games such as Axie Infinity, you have to cough up large sums of money to purchase the axie required to complete quests and missions. Without these axies, you cannot play the game. Axie Infinity is not the only costly P2E game, there are others where you need to spend thousands of dollars in order to enter.
Another intricacy the developers can’t sort out is the so-called blockchain trilemma. It addresses the challenge the creators face while trying to develop blockchain games. The thing is, that decentralized networks can only provide two of three benefits at any given time with respect to decentralization, security, and scalability.
The most prominent issue among these three is scalability. With the increasing demand, the system can’t operate smoothly hence becoming horrendously slow. A simple action can trigger a cascade of actions and every single action needs verification by a blockchain. And gamers more than anyone are used to speed and don’t like any delays.
Blockchain has brought many novelties to the gaming industry both for gamers and developers: NFTs, decentralization, and P2E. It enhanced the sense of owning the digital in-game items providing them with real-world value. Although it would be unwise to run ahead and hope that many existing games are going to hop onto the blockchain train and provide players with all the crypto benefits. Many issues need to be solved, and questions answered. Nevertheless, the current trend shows that the adoption of blockchain in gaming is already taking place, so far forming probably not an army, but a significant group of fans and admirers. In the upshot, blockchain in gaming is like real money wrapped inside a game, it is appealing yet should be taken seriously.
