Crypto-Native Games — Offering New Opportunities For The Development of Future Crypto Applications

The rapid advancement and adoption of Blockchain tech in several spheres have even piqued the interest of the video gaming industry in cryptocurrency and its applications. Crypto-native games offer several use-cases for gamers, such as players can earn while they play, essentially disrupting the traditional online gaming market.

Cryptocurrencies have been an incremental innovation, fundamentally disrupting several industries and paving the way for newer ways to do things that were not possible earlier. It’s functionality spans various domains, such as Decentralized Autonomous Organizations (DAOs), smart contracts for legal agreements, permissionless DeFi (Decentralized Finance) for traditional financial vehicles, etc.

Image source — Unsplash.com

While these incremental improvements to existing applications are noteworthy, cryptos’ most interesting applications lean towards creating new opportunities offered by Blockchain technology instead of merely improving upon existing ones. For instance, the same applies to other technologies like smartphones, PCs, and the World Wide Web. Their longest-lasting and impactful applications were the ones that enabled users to do new things instead of doing the older things better. For example — social media v/s newspaper websites, interactive TV v/s the internet, etc. One such affordance of the crypto technology is the crypto-native games, which offer players more significant opportunities than typical video games.

Key Statistics

The following statistics highlight how the gaming industry is set to shape in the forthcoming future.

  • Video games have rapidly advanced in the past few decades. A Statista report predicts the global gaming market will reach about USD 270 billion in value by 2025, pegged at about USD 178 billion in 2021.
  • The Blockchain Game Alliance (BGA) recently released a Blockchain Game Report, which mentions that over 804,000 unique active users logged in to Blockchain-based games in July 2021. It indicates that while the crypto space is full of speculative activity driving up volatility, the gaming segment is expanding its user base quickly.
  • The report also says that Binance Smart Chain (BSC) saw the highest number of 658,000 unique users in July, becoming the most used Blockchain protocol for gaming. BSC’s native play-to-earn games like the battle game, CryptoBlades, attracted the most traffic with 350,000 daily users.
  • According to recent research by Newswagg, the crypto gaming industry had market revenue of $321 million in 2020, having higher than 41.9 million gamers owning crypto. Out of these, 38% were millennials aged between 21–36 years old, comprising the biggest age group. It further noted that when compared to 5% of all Millenials, 55% of Millenial gamers owned crypto, which means that crypto gamers were more likely to own cryptocurrency than others.
Global Gaming And Crypto Owners — (Source: Triple-A)

The above chart shows the number of gamers that hold crypto owners. The same report highlighted that 80% are interested in using cryptocurrency for gaming purchases, while 67% of users hope that for opportunities for cryptocurrencies to be used in gaming.

When Does Blockchain Come into The Picture?

The centralized nature of traditional video games means that players don’t own the in-game collectables they have earned. So, if they stop playing a particular game or the game’s servers get compromised, their progress in the game may get lost forever. A relatable example played out earlier this year when the hugely popular game Massively Multiplayer Online Role-Playing Game (MMORPG) Rust’s servers in France caught fire and were destroyed. As a result, many players lost their saved data which the gaming company did not back up offsite.

Such incidents help make a case for Blockchain-based gaming models, which are decentralized and where external circumstances do not lead to gamers losing their hard-earned in-game items or progress. As the digital economy matures, these items will undoubtedly hold real-world value.

According to former CEO of Machine Zone, Gabe Leydon, people are spending a significant amount of money on games. When they quit a game, the money vanishes, taking away their investment. He envisions a gaming space where people spend the same amount but can sell what they bought when they stop logging in. He says that it will change how people look at the world of games. It will not merely be a spending activity but become an investing one.

Some Notable Names Making Inroads into Crypto Gaming

Axie Infinity, Gods Unchained, and CropBytes are few popular crypto games that allow players to use virtual products to achieve in-game objectives and earn money. Other prominent players planning their entry into the crypto gaming space include the following.

  • Japanese video game firm Taito, best known for classics like Bubble Bobble and Space Invaders, recently partnered with Celer Network and Next Gaming to bring its old-school arcade puzzler- Bust-A-Move, to the Blockchain. In this offering, sports competitors can battle in competitions with cryptos or real money at stake.
  • Atari, the pioneer of home console video gaming, recently announced its foray into the NFT world. They announced the creation of a dedicated division for Blockchain to be named Atari Blockchain. They further said in a press release that the division would focus on the immense possibilities of Blockchain-enabled games.
  • PlayStation maker Sony is working on The Six Dragons, an anticipated RPG set to release later this year on the PS5 platform. It features more than 300 items and over a billion randomly generated dungeons that players can keep, sell or trade to strengthen their in-game characters.

Crypto-Native Games — A Platform for Future Crypto Application Design?

For those who accept that games are a crucial indicator of new technologies, it follows that the coming years will see crypto applications that have their roots in current crypto-native games. It will serve as a classic case for the exciting application of new technology, offering new opportunities rather than incremental improvements. Crypto native games offer the following:

  • They give players traceability and ownership: Players can own their in-game items, trade them for other things, gift them to other players, or sell them for real money. While users can technically do that right now, Blockchain technology can pave the way to make the system secure and legal.
  • They help create digital goods with absolute scarcity: Crypto games are based on Blockchain, allowing games to have scarce items. The scarcity is fully transparent and gets enforced in code. For example, a game might only have 500 legendary swords, which cannot be changed because it’s coded onto the Blockchain. Hence, when you get one, it will always be rare.
  • They serve as a record of ownership: Each Blockchain asset has its owner and transaction history recorded on an immutable ledger. It means that players can easily check the past details of the item, such as who used that item before, how long it got used, etc. Imagine owning the same gun used to win a world championship or the first legendary sword dropped in a new game; the possibilities could be endless.
  • They unlock new business models: Traditional games monetize through skins, subscriptions, and premium currencies. Blockchain gives developers alternative means of monetization, like taking a percentage fee of marketplace transactions, direct sale of in-game items, or sale of tokens that offer permanent benefits to the token holder. Eventually, one can expect more innovative models, like in-game land ownership or social economies built on games.

Games are relatively low-stakes but technically demanding environments that allow developers to explore usability and scalability problems early in a technology platform’s lifecycle. The compliance and security concerns in games are less critical when compared to the “serious” financial or commercial applications, which allows for faster iteration loops. So, while a layperson might dismiss a platform with many games as frivolous, a trained eye will recognize that it is a state serving as valuable testing grounds. For example, you might have seen numerous mobile interaction patterns having their roots in mobile games like Angry Birds, Cut the Rope, and Doodle Jump.

It may be wrong to assume that games which leverage Blockchain to a small extent cannot be successful, and only crypto-native games can achieve commercial success. An example of such a game could be a traditional mobile shooter that includes a crypto wallet integration or a DeFi app gamified or has weapon skins that can be bought using crypto. They are helpful and innovative integrations, but one wants to understand the long-term applications of Blockchain, the focus must only be on the crypto-native games. These games unlock fundamentally new mechanics rather than making incremental improvements to existing games. They offer sandboxes, which are microcosms of the future integrated digital worlds, to visualize how the mechanics play out. Finally, they are considered to be the most well-positioned for the long term to leverage the unique new ownership models and incentive mechanisms unlocked by the Blockchain.

Final Words

What makes the playing experience of crypto-native games unique is that almost every item in the game uses the innovation opportunities Blockchain technology provides, and most importantly, it is decentralized. This means that the players genuinely own their game assets, and they can trade them with other players freely, use them across game universes, and sell them for real-world value. Furthermore, crypto-native games make the classic case of upcoming technology offering new opportunities rather than new products of incremental value.

References

  1. Derek Lau (2021, January 06). “Blockchain game design: analysis of opportunities and design challenges.”

https://medium.com/@xderek.lau/Blockchain-game-design-analysis-of-opportunities-and-design-challenges-a2d53a1d9236

2. Toptal Research. “Unblocking Blockchain- Gaming Is the Tipping Point for Mass Adoption.”

https://www.toptal.com/insights/future-of-work/Blockchain-game

3. David Hollerith. (2021, August 18). “Data: Blockchain-based gaming booms with help from Axie Infinity, outpacing NFTs, DeFi.” Yahoo Finance.

https://finance.yahoo.com/news/data-Blockchain-based-gaming-booms-outpacing-nf-ts-de-fi-174617791.html

4. Mik Mironov. (2021, May 30). “Blockchain and NFTs are turning gamers into Investors.” VentureBeat.

https://venturebeat.com/2021/05/30/Blockchain-and-nfts-are-turning-gamers-into-investors/

5. Triple-A. “Cryptocurrency information about the Gaming industry”

https://triple-a.io/crypto-ownership-gaming/

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