Blockchain and Gaming: Potential, Obstacles, and Real-Life Examples

Who typically gets popular overnight? Mostly bloggers, TikTokers, and random meme guys. Technologies, in their turn, cannot yet boast of lightning-like success and immediate implementation, because we need time to study and test them.

The same happened to blockchain: the technology was introduced in 2008 as part of a proposal for Bitcoin but only hit the spotlight years later when cryptocurrencies became the new norm in the financial world and blockchain itself was finally perceived as a mature technology that offers solutions outside of the crypto domain.

Blockchain technology needed some time for farming to get more powerful and is now ready to transform the gaming field. Read on to discover the benefits of blockchain implementation in gaming, find out what obstacles blockchain games still have to overcome, and learn about real-life examples of blockchain-based video games.

Gaming industry today

The video game industry is already massive and continues to grow by leaps and bounds. The global gaming market is currently valued at $178 billion and is estimated to reach $314.40 billion by 2026, with a CAGR of 9.64% over the next five years.

The global COVID-19 pandemic has undoubtedly impacted the statistics. When people had to lock themselves in their homes, games quickly became one of the most popular activities. One report says that as of June 2020, during the lockdown, time spent on video games had increased by double digits across all regions. Latin American gamers are the leaders here, spending 52% more time playing video games.

Meanwhile, Mordor Intelligence predicts that the Asia Pacific region will hold the largest market share in the industry. Across all countries, South Korea, Japan, and China show the greatest potential for market growth in the coming years.

Here are a few other gaming trends:

• Cloud gaming is on the rise
• eSports are highly popular across the globe, but especially in the US and South Korea
• The number of smartphone gamers is increasing
• An interest in NFTs and blockchain games is growing.

The most played video games in the world by peak concurrent players (so far) are Fortnight, League of Legends, Crossfire, Minecraft, Counter-Strike: GO, and Dota 2. These are the giants of the gaming world that are impossible not easy to beat. However, blockchain provides some innovations that could potentially attract many players to crypto games.

Let’s see what exactly blockchain has to offer.

What blockchain brings to the gaming table

The blockchain technology that was primarily used to power cryptocurrencies has evolved into a revolutionary tech applicable to a variety of industries. Blockchain offers each sphere at least four unique features — decentralization, immutability, transparency, and enhanced security. These features could transform the gaming industry too.

Blockchain features and benefits for gaming

Typically, games are centralized systems. You know the phrase, what happens in Vegas stays in Vegas. Things here work in the same way: all assets, history, data, and game currency never leave the original game. Accordingly, all property rights remain with the developers.

Blockchain, in its turn, brings decentralization, especially when it comes to asset exchange. In decentralized games, items won or bought in one game can be sold and used in another. Meanwhile, the player will be the real owner and can even make a profit by reselling an item. The ownership is enabled through smart contracts. When a certain predefined condition is met such as purchasing the asset or completing goals, ownership of the digital asset is automatically passed to the player.

Blockchain also facilitates immutable transactions. For gamers, this means that their purchases and asset ownership data cannot be altered, replaced, or deleted.

Another blockchain advantage, and at the same time something that modern games lack, is transparency. To successfully complete missions, gamers need to buy various kinds of resources, such as equipment, cars, swords, and tanks. Many items are declared as rare and cost quite a lot. But how to check the rarity of an item and make sure it’s really worth the big bucks? In this aspect, blockchain is one step ahead of the competition.

Blockchain tokenizes gaming assets and allows the creation of decentralized markets. Since the ledger is open to everyone, information about a particular item and the process of buying and selling can be tracked. Thus, the transparency provided by blockchain increases gamers’ trust and helps them to make sure that they own an original and rare item.

Last but not least — increased security of data and payments. This is provided through robust and complex cryptography, smart contracts, and blockchain technology itself. Blockchain in video games can also prevent illegal digital asset trading.

Blockchain-driven trends in gaming

Several major trends in the gaming industry have become technically possible only through the introduction of blockchain. These are asset tokenization, NFTs, and the play-to-earn [crypto] model.

Tokenization

Blockchain technology has given rise to asset tokenization, which means that any digital or even physical asset can be converted into tokens and then sold on marketplaces. This can be applied to the gaming industry as well.

In gaming, assets like skins, coins, diamonds, weapons, tools, and even characters can be put up for sale as tokens. Gamers who buy them will become the owners of the items, and any sale and transfer of ownership will be recorded and securely stored on the blockchain. In addition to that, any gamer can track digital asset usage and check its authenticity.

NFTs and digital collectibles

The NFT phenomenon has caught the attention of many celebrities and athletes. Blockchain is the tech that has enabled the introduction of this concept. But what are NFTs in gaming? These are blockchain-based non-fungible tokens that represent unique in-game items. Gamers can buy, sell, and collect them, but cannot replicate or interchange these tokens.

NFT games are not something new. The NFT craze actually started in 2017 with a blockchain game called CryptoKitties. Here players can buy, breed, collect, and sell digital kittens with unique appearances and traits. Sounds like a 21st-century version of Tamagotchi which 90’s kids would absolutely love.

Axie Infinity, another blockchain game, is close to treading on cats’ paws. Axie Infinity’s daily active user base increased from 30,000 in April 2021 to over 1 million in August. According to the Blockchain Game Report July 2021, Axie has become the most valuable NFT collection ever, with over $1 billion in trading volume. In this game, players buy, raise, breed, trade, and battle pets called “axies”.

Another interesting piece of news is that an American gaming site called Polygon has recently established Polygon Studios. The studio will be building NFTs for the gaming market and has a $100 million fund to help developers.

As you can see, NFTs and blockchain have a lot to offer, but games that involve digital collectibles are probably one of the most common use cases.

Hunting for crypto

The play-to-earn (P2E) model is another popular trend. The question is: can you earn crypto playing games? Sure! As with any video game, players need to search for, buy, or win items, but in crypto games, they are tokenized and represented as NFTs. After receiving these items, players can place them on digital marketplaces, where they have the opportunity to exchange them for other non-fungible tokens or simply sell objects for cryptocurrency.

CryptoBlades, for example, works this way. In this NFT role-playing game on the Binance Smart Chain, players get rewarded with SKILL tokens for fighting monsters, defeating enemies, and completing raids. Afterwards they can trade their tokens, that is, characters or unique items from the game, on an open marketplace. They also have the option to stake their SKILLs and receive additional tokens as a reward.

However, there ain’t no such thing as a free lunch. In crypto games, an initial investment is usually required. Gamers need to set up a crypto wallet, purchase some amount of currency, and pay transaction fees.

What are the obstacles to blockchain games expansion?

Blockchain and cryptocurrencies have been hot topics for years. There are numerous successful pilots, implemented projects, and use cases. But what is holding back the mass adoption of blockchain in games? Well, there are several factors.

First of all, avid gamers need more than just the ability to buy or earn collectibles. They are looking for interesting storylines, exciting battles, a sense of competition, and just real fun.

Secondly, blockchain games are quite complex. The complexity lies not in the storyline, but in the system itself. To start playing, in most crypto games you need to create an account — this is the easy part. Then, depending on which blockchain the game is based on and which wallet the system uses, you need to set up a cryptocurrency wallet and buy a certain amount of crypto. For example, if the game runs on the Ethereum blockchain, you may need to buy ETH. If it is Binance Smart Chain, you will have to buy some BNB. Don’t forget about transaction fees too.

Gamers also hate game lags and network congestion. Unfortunately, this sometimes happens to popular games that run on Ethereum. This blockchain is notorious for its scalability issue, low throughput (only 13-15 transactions per second), and high transaction costs. These disadvantages make Ethereum unsuitable for large-scale use.

Meanwhile, gaming companies always aim to attract as many users as possible. Those who still want to develop their games on the blockchain, but are not completely satisfied with Ethereum, often choose one of these two options:

• If the game was initially built on Ethereum, and then became so popular that it could no longer cope with the large flow of users, the company may decide to migrate the game to another blockchain.
• The company can create its own blockchain and, again, move the game to it.

For example, Dapper Labs, the creator of CryptoKitties, faced network congestion when their blockchain game became extremely popular. Following this experience, the company created its own blockchain called Flow. While CryptoKitties is still working on Ethereum, Dapper’s new sports platform is built on the Flow blockchain.

Sky Mavis, Axie Infinity creators, in turn, were not satisfied with Ethereum’s transaction fees. They tackled this issue by moving the entire economy of the game over to the Ronin sidechain. This Ethereum sidechain was designed specifically for Axie Infinity players. It is still compatible with everything Ethereum has to offer, but the biggest change is that users no longer have to pay gas fees.

By the way, there is still a chance that Ethereum’s scalability problem will be solved. In the coming years, Ethereum developers plan to introduce sharding. If this upgrade shows good results, it is very likely that there will be more games on this blockchain. Either way, Ethereum already has worthy competitors such as Binance Smart Chain, Flow, EOS, WAX, and others.

Monetization strategies in crypto gaming

It’s not a secret that gaming is a highly profitable industry nowadays. One reason is that gamers are people who value virtual assets as much as real ones. Just take a look at the statistics in the US: 87% of players buy downloadable content here. Their purchases include in-game currency, cosmetic enhancements, and weapon upgrades.

In-game purchases are one of the most common monetization models. Unlike other types of games, blockchain allows you to create your own cryptocurrency and wallet. Gamers can buy in-app items and earn rewards in crypto, and the wallet can be used to manage all tokens.

In-game ads are another popular way for game developers to generate revenue. The main challenge for any gaming company is to figure out how to make ads less annoying (˃_˂). They can opt for rewarded advertising videos and surveys, for instance. If the user watches a video till the end or completes a survey, they receive some cryptos. And one more tip on advertising — it is best not to show ads too often, otherwise, the number of conversions may drop.

The introduction of NFTs is probably the most prominent monetization model that cannot be found in other games. Non-fungible tokens are unique and have real-world value. They can literally come out of the game and be put up for sale on open marketplaces. The NFT phenomenon not only helps game developers make money but also turns players into investors who can earn passive income by trading valuable tokens.

Blockchain game development: tech process and costs

If you’ve never worked with blockchain technology, blockchain game development will be quite a learning curve. But as soon as you understand the tech and try it in practice, you will see how it can open up new opportunities for your company.

So, how do you make a blockchain-based game?

• Explore blockchain technology in depth and analyze what it can bring to your game

You will need to study how the public blockchain works and find out what its pros and cons are, as well as understand how decentralization changes gamers’ experiences. Also, get a grasp of blockchain consensus mechanisms, hash functions, and cryptography.

• Study existing blockchain platforms and choose the most suitable one

Most crypto games are built on the Ethereum blockchain. Apart from reading the documentation for this platform, it is also highly recommended that you do some research on how successfully other games are running on this blockchain.

But in addition, it’s worth learning about other blockchain platforms such as Flow, Echo, EOS, Solana, and WAX. Perhaps one of them will be a perfect fit for your future game.

• Learn data structures, databases, and programming languages

Programming languages such as C++, Python, and JavaScript are familiar to many developers, but Solidity and Cadence — languages created specifically for blockchain — might be something new. When it comes to databases, be sure to dive deeper into how BigchainDB, MongoDB, LevelDB, and CouchDB work.

• Hone your skills in smart contract development

Smart contracts are one of the most vital components of any blockchain application, so a blockchain game developer needs to understand the concept of smart contracts and know how to code, test and deploy them.

• Know how to provide users with a highly secure gaming platform

Although blockchain offers increased security, there is still no technology that’s 100% unhackable. So, blockchain game developers need to do their best to create a truly hack-resistant environment. They should evaluate potential threats such as theft of private keys, code exploitation, and unauthorized changes to blocks, and completely eliminate these risks.

Developers also need to look into the security of endpoints for transactions, such as wallets and payment platforms. Even if the blockchain itself is flawlessly secure, a vulnerable wallet can create big problems for both game companies and players.

As a video game creator, you have one more option, which is hiring a professional blockchain developer. Such a team will advise on all aspects of blockchain technology implementation and build a gaming platform that is completely protected from disruptions and DDoS attacks.

When it comes to the costs of developing blockchain games, the numbers here can vary. The cost usually depends on the complexity and design of the future game, the technologies being integrated, the number of app versions and platforms (Android, iOS, desktop, and so on), and even the geographic location. Typically, prices start at $30,000.

What blockchain games are already on the market?

More and more gaming companies are deciding to merge games and crypto. Let’s see what’s actually coming out of this combination.

Splinterlands

Splinterlands is a collectible card game based on the Hive blockchain. In this game, players can earn DEC tokens and transfer them to other blockchains such as WAX, Binance Smart Chain, or Ethereum.

Currently, the game features over 283 cards of four types of rarity: common, rare, epic, and legendary. The cards are compatible with third-party trading platforms like Open Sea, Monster Market, PeakMonsters, etc.

The game has over 310,880 users, making it the most frequently played blockchain game.

Decentraland

Decentraland was launched in 2017 but remained a small game until recently. What eventually made the game popular? The NFT craze. These days, it is the fastest-growing blockchain-based virtual world. Gamers can create an avatar, explore and trade land parcels, go to virtual concerts and galleries, and literally live inside the game.

The game has its own currency called MANA, which is an Ethereum token. MANA is used to pay for virtual plots of land, as well as goods and services in the Decentraland world. Back in 2017, virtual plots cost about $20 apiece. Now, prices can range from $6,000 to $100,000.

The number of users is growing as well. At the beginning of 2021, Decentraland had an average of about 1,500 daily active users, but by March, 10,000 people were playing the game.

Age of Rust

Age of Rust is a dark sci-fi adventure game powered by the Enjin blockchain. The game offers stealth mechanics, NPCs, AAA graphics, and the opportunity to hunt for 20 Bitcoins — the top prize of the entire game. But winning this crypto money is not gonna be easy. In total, 3 seasons of this game are planned, with the first one including about 40 hours of gameplay. It can take a huge amount of time (possibly even years!) to receive the main reward.

At the same time, this is not the only chance to earn something big here. The second-largest prize is 4 BTC, and there are more than 35,000 small awards that players can try to win.

Nine Chronicles

Nine Chronicles is a fully open-sourced RPG game that has its own main net powered by the player community. Gamers themselves really rule this game as they are the ones who choose how to play. The game is based on Scandinavian mythology, but your character is a cat. The blockchain community, like the real world, is obviously very fond of kittens.

Since the launch of early access in October 2020, over 500,000 NFTs have been created and 80,000 NFTs sold. In August 2021, Planetarium, the company behind Nine Chronicles, announced that its game had successfully raised $2.6 million in a round led by Animoca Brands.

REVV Racing

REVV Racing is a play-to-earn game running on the Polygon blockchain, a protocol for creating and connecting Ethereum-compatible blockchain networks. This arcade racing simulation game was developed by Animoca Brands and became part of the REVV Motorsport ecosystem along with F1 Delta Time, Formula E: High Voltage, and MotoGP Ignition.

In REVV Racing, cars are NFTs and all game sessions and transactions are recorded on the blockchain. For players, this means they can enjoy a 3D racing game and at the same time have the ability to win, buy and truly own items such as cars, car parts, and trophies in the form of REVV tokens.

Lost Relics

Lost Relics (previously Forgotten Artifacts) is a free-to-play action-adventure RPG based on the Enjin blockchain. This game also allows you to earn NFTs through gameplay: they can be found in dungeons or dropped from monsters and treasure chests, and then you can trade them with other players on Opensea and Enjin’s open market.

There is another cool feature — gamers can propose new items. Once they are developed, they can be used in the game and then, again, traded on the marketplaces.

The Sandbox, Blankos Block Party, The Six Dragons, Forest Knight, My Crypto Heroes, and Faraland are also popular crypto games, and there are more. Thanks to the popularity of NFT, cryptocurrencies, and blockchain, the number of blockchain-powered games is growing rapidly and we will still see a lot more cool gaming apps.

Future of blockchain in gaming

Looking at each game mentioned, we can see that both the number of players and the value of the in-game items are rapidly growing due to the popularity of NFTs. According to Reuters, the NFT market in the first half of 2020 was $13.7 million. In the second quarter of 2021, it reached $2.5 billion, which is truly insane growth.

Now gamers can earn in-game items that have real-world value, and later even make a profit by selling them. Who doesn’t like the idea of playing and making money?

At the same time, blockchain games should not be limited to collecting items, so developers still need to figure out how to make crypto games more fun. Generally, people love to play games that make them feel cool. They like winning challenging battles, climbing to the top of rankings, or simply surviving an impossible mission. They enjoy adrenaline-pumping exciting moments and well-thought-out storylines. Blockchain games are lacking these things, so there is space for improvement and further development.

Blockchain developers also need to continue to work on improving protocols and solve existing problems such as low scalability, high transaction costs, and energy consumption. Otherwise, the popularity of crypto games could just fizzle out.

Conclusion

Blockchain has brought many innovations to the gaming industry: decentralization, a play-to-earn [crypto] model, NFTs, and real ownership of in-game items. While blockchain games are still in their infancy and some of the hurdles will take time to overcome, the technology has the potential to grow and can carve out a niche in the gaming field.

Ethereum remains the most used blockchain in games. Meanwhile, game development companies are introducing their own platforms, protocols, and networks created specifically for NFTs and crypto games. These are Flow, WAX, Polygon, Enjin, and others.

If you don’t wish to be an ordinary NPC in the background of the gaming world, be sure to reach out to our dApp developers. They are 2 in 1 — professionals that know the blockchain development process back to front, and avid gamers who are constantly on the lookout for gaming trends. We will help you build a crypto game that future players will absolutely love!