The Virtual Game Items Industry Can Finally be Legitimized
Everything about gaming seems to be getting bigger and better. Every year, flashier graphics are combined with better physics engines, featuring more captivating stories and improved progression systems. However, this big-budget trend has meant the industry essentially survives on micro transactions and in-game item purchases. In fact, this model has been so successful that even indie developers often forego the price of the game itself, adopting a “Free to Play” but “Pay to Win” model.
The effect of this disruption is that gamers are making more in-game purchases. In 2018, the Candy Crush series passed $1.5 billion in revenue through mobile micro transactions alone. As the size of the gaming market expands, creeping towards a whopping 2.2 billion people next year, figures like this will only keep increasing.
To give some context, last year a cosmetic in-game item with no stat boost, the Ethereal Flames Pink War Dog courier in Dota 2, sold for over $38,000 in a private transaction. Coveted virtual items have the chance to match real world assets in market value.
So what’s the catch?
It turns out, micro transactions and in-game purchases are rife with fraud. Micro transactions aren’t only found in mobile games. Almost every variant of popular console or PC games will have some form of in-game ‘upgrade’ or ‘skin’ available for purchase. These can then be traded on a secondary market, creating another economic layer that can incentivize fraud. For every legitimate virtual item sold and downloaded, there are 7.5 virtual item purchases lost to fraud.
This number is even higher for countries without strong regulatory frameworks. In countries like China and Russia, over 50% of all in-game items were downloaded fraudulently. The methods for this fraud are varied:
- Credit card charge backs
- Fake or stolen credit cards
- Purchase brokers or in-app traders
- Hackers targeting game-servers to create duplicate items
- Phishing users for their login credentials
What can bring legitimacy to the virtual items market?
In a world where digital assets are increasingly gaining parity with real-world assets, one’s digital portfolio needs to be protected at all costs. Any investments gamers make into their game economies should stand a chance to not be devalued by fraud. This goes for digital currencies too; If a player spends months mastering their poker skills, they should rest assured that the winnings from their games won’t be devalued due to fraud.
This is where a blockchain protocol for gaming can completely revolutionize the industry. The security benefits of a platform like Host.Games cuts down all the avenues for fraud listed above. Auto-executable smart contracts for transactions ensures every payment and download is secure, immutable and completely transparent. Downloading an item? No longer do you have to worried about where it came from — the data is on the blockchain, and will be there forever.
When the entire gaming economy is tokenized and running on the blockchain, fraud can essentially be eliminated, giving in-game items their true free market value.
What exactly is Host.Games?
Host.Games is the only blockchain gaming protocol for emerging markets. With the ability to Host your own game, the newly created genre of ‘Host based games’ is going to pick up, giving gamers unparalleled control over how they transact and play games. The Host protocol will allow developers to create any genre of game, giving gamers the ability partake in blockchain gaming with all its security benefits.