Video games have often showcased some of the most innovative technological advancements, from the first pixelated computer graphics to the expansive virtual worlds that immerse modern gamers.
Through the integration of blockchain and cryptocurrencies, video games are once again at the forefront of new innovations that promise to transform the very meaning of competitive gameplay.
Web3 technologies are pushing us into a new era of gaming, and it’s one that’s full of opportunities, not only for video games developers, but also players, who are now being incentivized in ways that simply weren’t possible before.
The most intriguing thing about blockchain games is that they span basically every genre of gaming, from trading card games like Axie Infinity, to exploration-based games (LandRocker), first-person shooters (My Pet Hooligan) and RPG games (Ember Sword).
In-Game Assets Are Changing The Game
Perhaps the most novel concept introduced in blockchain games is decentralization, which takes the form of crypto and non-fungible tokens. NFTs in particular are a “game-changer” for video games, as they are the key development that enables players to own in-game assets such as characters, virtual land, skins and weapons, and participate in new gaming economies with real-world value.
As the video game industry shifts to player-owned assets, it’s having a radical impact on the gaming experience, enabling players to share in the value of the games they play for the first time. With NFTs and crypto, players have a way to monetize their gaming endeavors by earning rewards and selling their hard-earned assets, meaning they have a safe way to “cash out” their financial investment in any game.
NFTs are unique, verifiable digital assets that can represent anything in video games, and because their ownership is always recorded on the blockchain and they can be traded freely between two parties using smart contracts, they have tangible financial value. In one of the earliest play-to-earn games, Axie Infinity, some NFTs (which represented monsters with unique attributes) would sell for hundred, if not thousands of dollars.
In Axie and other play-to-earn games, players can buy and sell their in-game assets at any time, and this has created an explosion in the number of decentralized marketplaces for blockchain games. A quick look at the gaming section on OpenSea reveals thousands of virtual assets currently listed for sale.
It’s also possible for NFT owners to rent out those digital assets instead of selling them, giving new players the option to enter the most competitive play-to-earn games with a low initial investment. Platforms such as IQ Protocol were built specifically to cater to this niche audience. This development has led to the rise of new investment opportunities in games, where those who can afford to do so can purchase large numbers of in-demand video game assets and utilize them to earn a passive income.
CARV Protocol’s Banana exemplifies the use of in-game assets. This simplistic, click-to-earn game is integrated with the Telegram messenger and built upon the TON blockchain, and it involves users collecting NFT bananas that have different levels of rarity, ranging from common and rather uninteresting yellow bananas, to less common, black-and-white zebra-style bananas, and extremely uncommon gold and holographic bananas.
Players collect Banana NFTs to earn the privilege of tapping on them as many times as they can in a short space of time to earn PEELs, which is the game’s native cryptocurrency. Using those earned PEELs, players can then buy more bananas or alternatively just cash out and swap them for USD Tether tokens.
Evolving Infrastructure
While tokenized assets play a vital role in enabling blockchain game economies, the infrastructure itself has also been boosted with innovations such as the Layer-2 network zkEVM. So rather than building a game on the notoriously slow Ethereum blockchain, developers can instead choose an L2 leveraging more secure cryptography, or even a dedicated gaming blockchain such Oasys, which processes the gameplay mechanics far more efficiently to ensure fast transactions and user privacy.
Blockchain gaming also means newer dynamics, with improved transparency and fairness. For instance, Supra, the decentralized price oracle, has created a decentralized VRF service, which is uniquely able to generate verifiably random numbers for luck- and chance-based games that require true randomness. As another example, GameSwift has created a blockchain development platform for Web3 games that streamlines the development cycle, enabling novice developers to start creating play-to-earn games.
Potential Pitfalls
The promise of Web3 games is clear, but there do remain some pitfalls that the industry has not yet overcome. The major challenges have to do with the scalability of blockchain games, the user experience, which leaves much to be desired in some games, and the regulatory requirements in certain countries.
Scalability is perhaps the biggest concern that must be addressed, as it’s questionable if any blockchain would be able to handle the incredible level of traffic generated by high-end AAA games such as GTA or Fortnite, which attract millions of players each day.
As blockchain games attract more players, the number of transactions they need to support increases, and that can put networks under immense strain, as we saw with the rise of Crypto Kitties, which brought the Ethereum network screeching to a halt some years ago. Fortunately, many of the new blockchain gaming-focused chains are better able to meet these demands. TON for example, has supported the growth of games like Hamster Kombat, which claims more than 200 million global users.
The blockchain gaming industry also has an image problem it needs to deal with. Because the earliest blockchain games were more focused on the economics, at the expense of the gameplay, games that utilize digital assets have a reputation for being somewhat basic and dull to play, meaning they don’t provide much appeal to traditional gamers. Fortunately, projects like My Pet Hooligan are demonstrating that it’s more than possible to build high-quality games that live on the blockchain. Meanwhile, the likes of Banana show us that it’s possible to build games that leverage tokenization as an essential aspect of the game, rather than just bolting it on top.
The Convergence Of Blockchain & Gaming
Those challenges persist, for now, but the blockchain gaming industry is forging ahead anyway, and the sector is clearly beginning to mature. By integrating crypto-based economies with their games, developers are exploring new opportunities to monetize their games and share some of that value with their players, and in the long-term, it promises to be a winning combination.
The rapid rise of the blockchain gaming sector shows that the future of video games is almost certainly going to be decentralized, with a focus on inclusivity, transparency and fairness. In turn, that will mean more rewarding experiences for gaming audiences.
Blockchain gaming’s progress is encouraging, and as more developers realize that they must create games that work for everyone – not just themselves – in-game assets and rewards will eventually rise to become part and parcel of the gaming experience in every genre.
