What is Crypto gaming?

Updated: Jan 18

“The potential of blockchain and cryptocurrencies reaches far beyond the financial sector. Given the readiness of the gaming industry in its continuous evolution, especially in new technologies. […] Blockchain is becoming an essential part of game development and is set to change the global gaming industry.” - Binance CEO Changpeng Zhao

Some important concepts before we get into it.

Before we get into it, a few key concepts to understand are Blockchain and Web 3.0. These are enormous topics, however here’s a brief overview.

Blockchain: Blockchain is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system. A blockchain is essentially a digital ledger of transactions, that is duplicated and distributed across the entire network of computer systems. The Distributed Ledger means that it is almost impossible to change it as you would need to change every single record on every single ledger, ensuring its transparency and security.

Web 3.0: Web 3.0 enables a future where users and machines are able to interact with data and other parties via a system of peer-to-peer networks, all without the need for third parties. These interactions, ranging from seamless payments to data transfers will become possible with any individual or machine in the world without having to pass through fee-charging middlemen. Web 3.0 is forecast to fundamentally expand the scale & scope of both human and machine interactions far beyond what we can imagine today.

So what is crypto gaming?

A new gaming world is on the horizon. The news cycle is currently filled with stories about 'Bitcoin' and ‘Crypto’, but none of it that is really that helpful and the stories are just either trying to hype it up or bring it down. It's the technology behind it however is overlooked and that is the key concept that is going to bring about change.

A crypto game to the casual player may seem no different, but to the long-term player, game developers or anyone involved with the structure of the game, it is ‘game changing’. Usually the casual player is there for a few hours of fun and then they leave, however for the long-term player the structure of the game, the in-game items and stories are of interest to them.

The distributed ledgers associated with blockchain bring a number of benefits which are; fair gameplay, security and ownership. But perhaps the biggest evolution that blockchain has brought to gaming is the concept of ownership within the game and the introduction of NFT’s (Non-Fungible Tokens). These are a special type of token, that represents something unique and cannot be replicated.

These NFTs allow players to own their in-game items, (such as characters, locations and

abilities) and then trade these items with other players. Due to the decentralization of the game to allow users to own and create assets, there needs to be a form of value to incentivise creators to create assets and experiences within the game. As there is so much money in the In App Purchase' and 'Downloadable Content' market, there is huge potential for cashflow to come into the games and a great system of spreading this value around is through Cryptocurrency - this is where the name Cryptogaming comes in. The ecosystems that these games create are so large that they can create their own currencies and economies and they are able to use their own currencies that hold actual value in the real world. This means that you can quite literally run a shop in a game and it provide income for you in the real world! Crazy right!

This image below is from http://opensea.io/ where traders are selling land, a land package and a spider for Ether. At current prices 0.32 Eth is around £300. Yes those digital pieces of land are selling for £300, but if this game really catches on and is massive in the future, as the land is finite this may be worth quite a bit in the future!

As land is finite and the experiences are made by in game creators, companies that create games are actually buying land within these games so that they can create experiences for users within the other game. Gameception.

The above image is a land map in the game Sandbox which shows that Atari, Roller Coaster Tycoon and Pong have all bought land within the game.

Will it catch on?

From looking at a few of the games that are going down this route they are starting to go in the right direction. There are a variety of different game types, but the ones that I think will succeed will be the ones that are similar to the MMORPG Games like Word of Warcraft and RuneScape – open map games where you collect assets and level up to constantly improve your character. I put a good few months into RuneScape when I was younger, but nothing serious. These games are based around asset accumulation and character development in fictional worlds - which lends itself perfectly to the benefits associated with the blockchain platform that they are built on.

These games were, and still are, wildly successful. But imagine if you could create a game that is more immersive and has a functioning economy that can translate to the real world. Most people would think that this sort of concept wouldn’t work, but as there is a clear push towards immersive free roam games, VR and AR, I think that this is where games are headed.

In a very similar answer to ‘will crypto currency take hold?’ the answer is (most likely) yes. But the question is which one will become dominant. A dream scenario is to make a game that is some iteration of Ready Player One’s ‘Oasis’, with a huge user base and a real-life economy.

Obviously, that is a long way off; something more feasible is a World of Warcraft style game which runs in a similar manner. A lot of game manufacturers realise this, and they are all pumping out games that they want to the be the main game.

The land grab

With a background in business, owning a few crypto currencies and having ‘invested’ a considerable amount of time into gaming, I feel like I have some sort of experience behind me to give an answer.

At the end of the day crypto games all seem to be trying to make the next big thing and they offer a similar yet slightly different product. They want to be the game that everyone is on, the next World of Warcraft (see the image to the right), RuneScape or Minecraft that people would invest months of their time into.

I cannot see a gaming ecosystem where 100 different games exist; in order for the game to be successful they will need to have a huge user base. There will be space for a few, but their success will depend on their scale.

These games will need to operate with a functioning currency of value (their own cryptocurrency) in order to operate well, the ownership added in order to create a democratised game in Web 3.0 needs to be measured in some form. The payment systems also need to cut out handling and exchange fees, so one unified currency is needed. One issue here is that the game makers can quite literally print their own money.

Much like the ICO (Initial Coin Offerings) which happened towards the beginning of the crypto revolution - new companies creating a coin with a slightly different function hoping that it will catch on. The same seems to be happening with crypto games, where everyone is saying that theirs is the best and creating an associated currency. As the games are ownership-based, there is a large landgrab with people buying up land hoping that it will be worth something in the future. There are a few issues with this in my opinion, as the areas of the game are just being bought up by companies and very early-stage investors looking to make a profit. It’s a strange system where gaming is democratised... only to those that can afford it or were there at the very beginning.

This competition to have the best and most immersive game is of course fine, because variety in games and competition to make better products is great for the market. This is fine in the current market of console games where you purchase the game and play it, but these games are a one-off payment. This new crypto gaming model offers a free game where everything within it is owned by another individual. Especially when in game experiences and items come at a cost, it is unlikely that gamers will switch between games. That said, property is not the only asset in these games and items through the NFT’s also act as a large part of the games.

At the end of the day, the one thing that will decide the success of the game is how enjoyable the game is and whether people like it enough to invest significant hours into playing. My main worry is that crypto gaming is seen more of a money-making scheme than a game platform. It is widely known that the game will only succeed if there are people playing it. The in-game assets and currency only function if people want them, otherwise much like in real life there is no demand and the concept fails. If the developers can get this right though, we will be entering a new age of gaming.

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