The crypto space is the most fascinating and fastest-growing industry under the sun! If you take a second and zoom out of the current bull run, crypto truly changed our perception of data, financial services, property, and so much more in the last years. Industries worldwide are waking up to the potential of blockchain technology and are trying to incorporate it into their core services and products.
One line of business, in particular, stands out in this context: the gaming industry! Let us explore the reasons for it and why crypto gaming is growing at such an insane speed!
First of all, let me introduce you to some numbers regarding the gaming industry in general. In 2020 the global gaming market was valued at 173.70 billion USD, including 2.7 billion active gamers worldwide, and is predicted to reach a valuation of 314.40 billion USD by 2026. In the last couple of years, gaming turned into serious business. Tournaments across different games are watched by millions of people and include millions of USD in prize money.
Especially during the Covid-19 pandemic, the gaming industry experienced an unexpected boom. Several big game producers claimed a massive growth in revenue from sales and an active user base.
But now, let us dig deeper into how traditional gaming works and why crypto gaming could revolutionize this standard!
1. Traditional gaming
In traditional gaming, developers own all digital assets like XP, skins, characters, weapons, etc. Everything is stored on a centralized server and confined to the game itself. There is no such thing as actual ownership over in-game assets for users. It is impossible to put those assets to work for you and generate profits or transfer them to another game. E.g., in-game coins such as the coins you have when you’re playing mobile games like CandyCrush have no value beyond the game’s scope. One could think of the current gaming standard as isolated islands in the ocean without any possibility to bridge over to one another.
Furthermore, the community cannot create an alternative version of the game because of a central authority taking care of all decisions (the developers/the producing company). It is hard for users to engage with any important decision regarding game development, upgrades, and so on.
2. How does crypto gaming work?
On the other hand, combining traditional gaming with blockchain technology and decentralized infrastructure disrupts the whole gaming industry as we know it. And it is not difficult to understand why!
Crypto gaming relies on a distributed ledger, the blockchain, making it possible to trade game products or assets for cryptocurrency. And the most crucial aspect of it is Decentralization. Why? Because it enables gamers to buy or sell in-game assets from other gamers and generate profit through it! It gives in-app purchases real value! In contrast, assets are typically bought from a central developer-owned store in traditional games, which makes the developers rich and not the players who play them.
But the advantages of combining gaming and crypto do not stop here! There is no central server running the game/app, so there is no way to shut it down completely. Furthermore, the game life cycle does not depend on a central authority or server anymore! Nobody can take away your assets by turning down the servers. All data is stored in a transparent and comprehensible way on the underlying blockchain.
Crypto gaming makes it possible to transfer in-game assets from one game to another, as nothing is bound to just a single game anymore.
3. Earning money while playing
Like I already mentioned, thanks to the characteristics of decentralized blockchain technology, users can finally earn money through selling in-game assets to other players for cryptocurrency. Every time a player buys an asset, they indirectly increase the value of the game economy.
At this point, NFTs and FTs come into play. Non-fungible tokens are a great way of turning assets into unique and scarce tokens. Users can easily transfer and sell/buy them via blockchain. NFT gaming platforms like Axie Infinity also give gamers access to NFT markets to buy and sell one-of-a-kind NFTs. The crypto game market can comprise both NFT and FT assets. While FT assets can be scaled to have high liquidity marketplaces and thereby be used for utility/consumables assets in the game, NFT assets can be used more for their rarity, which usually has high value but low volume transactions.
Furthermore, a new type of blockchain gaming that combines decentralized finance (DeFi) features with gaming is gaining traction (GameFi). For example, players can collateralize their game assets to take loans or borrow an asset for an in-game activity to yield more assets.
The possibilities are truly endless!
As you can see, crypto gaming is here to stay and could transform gaming as we know it today. Blockchain’s value to gaming lies in the ability to create a micro-economy within a game, allowing players to own and sell in-game assets. Combining gaming with NFTs and DeFi services will open up various opportunities for users to generate profit. Crypto gaming is not just about entertainment but real business!