Why Decentralised Gaming Could Be Vital For Cryptocurrency Adoption
Blockchain in gaming isn’t just a gimmick, it could play an important role in the growth of the ecosystem
In 2018, the video gaming market generated $131 billion in revenue, with mobile gaming accounting for more than both PC and console.
New technologies such as 5G, cloud computing, and virtual reality are ushering in a new wave of innovation in the industry, enabling developers to create visually-stunning experiences that are more immersive than ever before. These technologies could see revenues balloon to $300 billion by 2025, according to a recent GlobalData report.
There is, however, another, less heralded, technology transforming the market: blockchain.
What Does Gaming On The Blockchain Actually Entail?
The blockchain is a decentralized, immutable ledger that records the ownership of unique digital assets. When it comes to gaming, its use might lack the immersive excitement of VR or the storytelling possibilities of AI, but its impact is arguably equally as profound.
In-game purchases generated a massive $88 billion in 2018 alone — at least 80% of the value of the entire gaming market
The last decade has seen an explosion in the number of freemium games — free to buy games with optional in-game purchases, such as Fortnite. And it’s easy to see why the model has become so popular among developers. In-game purchases generated a massive $88 billion in 2018 alone — at least 80% of the value of the entire gaming market.
This presents a significant opportunity for blockchain technologies and cryptocurrency. In the current model, when you make a purchase using in-app tokens — for example, a weapon for a game character — you never really own it. You could lose access at any time for any number of reasons. When that item is stored on the blockchain, you have exclusive ownership. You have the freedom to use their item as you see fit, and security that the rules dictating its use are immutable — for players and creators alike.
As a player, this immediately raises the stakes and makes you more invested in the game. You essentially gain joint stakeholder status. You’re incentivised to help improve the overall ecosystem, boosting the experience for others at the same time.
Why should a rare baseball card stored in a glass box be different from a rare baseball card stored digitally?
Another advantage for users is that they can sell on their digital assets once they finish with a game. Rarer assets may even increase in value. Items essentially become collectibles. And why should a rare baseball card stored in a glass box be different from a rare baseball card stored digitally? Indeed, the digital copy has an advantage in that it can’t get damaged and being far harder to steal. Blockchain’s immutable characteristics make it far harder for malicious users to hack a game to gain access to assets without paying for them.
How It Works
When we talk about blockchain in gaming, what we’re primarily talking about is non-fungible tokens (NFTs). Regular cryptocurrencies such as Bitcoin and Ethereum are fungible. This means that any particular unit of them is interchangeable with any other. They are all identical, in the same way that the rand or euro you have in your pocket is equivalent in value to any other of the same unit.
By contrast, each unit of a non-fungible token is entirely unique. It has attributes which mean it’s not equivalent to any other. This means that it has an inherent scarcity and is therefore collectable. Smart contracts today are commonly used to create what is known as a token. A token is fungible as each unit doesn’t need to be individually identified because each unit has the same value. A non-fungible, on the other hand, is an item where each unit benefits from individual identification. This could be a property deed, a concert ticket with an assigned seat, or a spaceship in a video game.
The best-known use of NFTs in a ‘game’ is CryptoKitties, in which unique digital cats can be bought, sold, and bred. Ownership is stored on the Ethereum blockchain, their existence is permanent, and a buyer has full ownership of them. Each has its own so-called ‘Cattributes’ and a genetic algorithm, so the buyer can know that the breed is unique.
Why It’s So Important
It’s not just that blockchain can be used to benefit gaming, though. The use of technology in gaming is also an important first step for the wider public to learn about the world of crypto.
Gaming was one of the first areas in which computing technology demonstrated its true potential to a mass audience, and the same could well be true with blockchain. It introduced the technology to the wider public and helped them acclimatise to its use. Microsoft Windows, for example, introduced Solitaire to familiarise computer users with the ‘drag and drop’ feature of the mouse. Similarly, Hearts was designed as a way to introduce people to the concept of networking, as they could communicate with other Hearts clients on a LAN.
Making someone feel something — whether delight, excitement, or hope — is how you make them understand something
Games deliver experience. Experiences inform how we see the world and shape what we believe in. CryptoKitties leveraged user excitement through accessible design, appealing aesthetics, and the correct balance of fun and utility. Making someone feel something — whether delight, excitement, or hope — is how you make them understand something. And with understanding comes belief.
The benefits that players see through the use of blockchain technology in a video game carry over into the real world. Once consumers grow accustomed to transparency and fairness — a provably fair election in a game, an immutable algorithm applied evenly to everyone — those become basic expectations, even beyond the industry. Players gain a working fluency in the underlying technology.
The Future
Decentralized gaming is already a big business. Digital trading card game Gods Unchained claims to have already sold more than 4 million cards through its limited “Genesis Sale,” which ended on 10 October. This generated over $4.5 million in revenue. Quidd, a digital collectible marketplace, raised $13m 2 years ago with the help of VC firm Sequoia Capital. Virtual Reality game Decentraland sold $24 million of its native MANA tokens in 35 seconds, with which players can then purchase a number of in-game parcels known as LAND.
The primary obstacle facing the intersection of blockchain and gaming is scalability. CryptoKitties proved so popular it caused congestion on the Ethereum network. There have been a number of advances since, with a range of scalability solutions put forward that should help the network as a whole, and gaming too. With so much room for growth, the field is only going to get bigger. And as it does and games begin to reach a wider audience, the normalisation of blockchain and cryptocurrency should continue apace.
What do you think of decentralised gaming and the potential role of Blockchain technology? Is it just hype or does it hold as much promise as some advocates believe? Feel free to reach out on Twitter with your opinion.
