How blockchain is changing the gaming industry

Is blockchain has a future in gaming? Let’s discuss its potential inside one of the biggest entertaining industries of this century.

Blockchain has applications in many industries, and the gaming industry is no exception. It is developing rapidly, but is still very fragmented, with many communication problems among the main participants.

Thanks to the modern capabilities of decentralized solutions, players can receive more rewards for their efforts in virtual worlds. And when players become more satisfied, the same happens to the rest of the industry, the process nurtures the industry as a whole. Blockchain technology can provide opportunities for interaction between players, game developers and others on mutually beneficial terms.

Let’s go back to the roots of blockchain games, covering all the basic concepts, and also look at the problems the industry faces these days.

Global gaming industry

There are 2.3 billion active players in the world, and this number is growing rapidly. We need to review our established understanding of this industry. This is not just a game anymore. Most games now offer consumers three different levels of involvement: gaming, viewing and creativity. Gaming studios are becoming universal entertainment companies, blurring the line between the gaming, media, telecommunications and traditional sports industries.

Not all games are the same, and not everything needs a blockchain. There are two types of games in terms of monetization:

• The “pay per game” model (i.e., players pay real money to access the game).
• “Free games”, which come in different forms, such as freemium, pay-to-win, etc. Monetization depends on how the game content is distributed among the players and how it affects the game balance.

In today’s gaming market, developers often use a combination of these types to attract users and keep their attention. The most common type is “Free Games” that have no barriers to entry. It is the most interesting among the projects on the blockchain, because it is based on a large number of microtransactions in the game universe. Projects rarely focus on one particular game, usually they solve problems with the infrastructure in general.

Therefore, when we talk about the implementation of a blockchain in a game, we should distinguish between two main areas: games created on a blockchain from scratch and the existing game infrastructure that uses the blockchain technology to solve existing problems.

Gaming with blockchain

This phenomenon was widely covered by the CryptoKitties project, a game about collecting and breeding digital cats. Etheremon is the same idea, but with Pokemons. Many similar projects are emerging in this area.

These games take advantage of basic features of blockchain technology, such as immutability and functionality, to create entertainment content. Such games should be seen rather as educational projects aimed at attracting people to the community. CryptoKitties is not about gameplay at all. It is also not about solving serious problems of the game industry, for example, a single point of failure, because the code is closed and belongs to the creators of the game. Therefore, if CryptoKitties closes, users will still own “something”, but it will not be a small kitten, and just an abstract bunch of tokens without service.

Of course, due to its pyramidal structure, the game is also suitable for convenient earnings for developers. All cats are unique, and if the cat is not unique enough for your taste, you can add some fashion accessories. The purity of cats bred in CryptoKities and their generation (their proximity to a parent cat called Genesis) greatly increases the value of the asset as the system grows. CryptoKitties uses a non-functional token ERC-721, which is important for unique collection items.

The most expensive cats were sold for over $100 000, and the total amount spent as of mid-April 2018 was over $23 000 000. CryptoKities also raised $12 000 000 from venture capital firms.

But let’s go back a little bit to the past, where all such games begin their journey. The first attempt to combine blockchain technology with games led to the appearance of HunterCoin back in 2014. It was a simple multiplayer online game, in which players collected coins in a virtual universe with several p2p battles for resources. It was mainly a “proof of concept” and had many drawbacks.

Spells of Genesis were next. This is a card game with elements of trade, which includes game aspects in the arcade style. At that time the card game market was already heated up by Hearthstone from Blizzard and many other competitors. Spells of Genesis broke into an empty crypto market, collecting 934 BTCs on ICO. That’s how a new wave of crypto games began, with dozens of projects appearing on the market from now on.

The next step was to create closed universes with an in-game cryptocurrency. There are only a few:

• Beyond the Void — RTS (real-time strategy) with elements of MOBA (multiplayer online combat arena).
• Lordmancer 2 — MMORPG (massively multiplayer online role-playing game).
• Skara — game development studio with its digital universe.

These games are digital universes with their own currencies to trade digital inventory and buy content. This approach, however, is a bit controversial. Introducing a blockchain into these types of games definitely offers some advantages, but as long as their currencies work in a closed ecosystem, they will not receive mass acceptance. They either need to look for partnerships with other games, or look for additional off-game uses for their coins.

We are now at the very beginning of this trend, bearing in mind a number of technical issues inherited from the blockchain ecosystem, such as scalability and speed. The set of available games is very limited. As the infrastructure develops, we will probably see a growing interest in embedding the blockchain in some game mechanisms to improve reliability, but we have not yet achieved this. First, we need ecosystems. So, let’s try to look at how we can use the blockchain in modern game infrastructure.

How can we apply blockchain technology in modern gaming industry?

Despite the latest innovations in the field of blockchain, the gaming industry has been actively developing for decades. This is a rather centralized area: the main resources are concentrated in the hands of leading game developers. There is a lack of trust in this area against the background of an oversupply of information.

These are the main problems faced by key players in the market:

• Players do not have the collective infrastructure to play any game they want, at a professional or amateur level. Only the best games have solid ecosystems.
• Brands spend huge sums of money on sponsorship and advertising, but still have no close connection to the generation of players in the 80s and 90s, characterized by a desire to be closer to digital technology.
• Game developers spend most of their total income to find the right publisher.
• Publishers are struggling to attract their target audience by throwing tons of irrelevant advertising at players.
• Players’ data is not kept secure due to lack of confidentiality, which negatively affects their results in tournaments.

With this in mind, let’s talk about the use of blockchain in solving these problems.

Payment options

One of the obvious implementations of the blockchain in games is the method of payment. Blockchain can be used for all kinds of in-game microtransactions: item trading, purchasing games, managing subscriptions — all with almost zero commission. Some projects try to create certain in-game cryptocurrencies solely for payment purposes, such as GameCredits. In fact, it’s just another wallet optimised for players.

Play-to-earn XP

Players spend a huge amount of time playing without any return. All they get for high scores in the leaderboard are a few stars, labels and new frames around their avatars. And even this is not stable, because game developers can turn off the server, change the rules or just clear the history in the next patch.

Blockchain can give ordinary players the opportunity to monetize their gaming efforts. Some projects, such as Game Machine (it’s worth mentioning right away that the project is most likely dead, as their GMIT token is traded on a single exchange unknown to the world, with purchase orders worth $25) and GLDFY (also not a very successful implementation), tried to give players the opportunity to “mine” the cryptocurrency on powerful gaming PCs. They used free PC resources while the users were inactive for mining in exchange for rewarding tokens and game items. PlayKey includes a revolutionary solution for cloud gaming. This project allows players with slow PCs to play the latest games using cloud resources. The service is based on a fixed monthly subscription. The project already has a running business with high server bandwidth, but now the introduction of blockchain solutions allows gamers with powerful PCs to rent out their equipment during downtime in exchange for tokens.

Players can also receive tokens for performing tasks. Developers can offer tokens for performing various actions (for example, installing software or earning game points). This model encourages mutually beneficial collaboration, where gamers are rewarded and developers can promote their games.

Some gaming ICOs, such as Bountie, promise to pay tokens only for winning, while others encourage all in-game actions. But the goal is always the same: to connect gamers with game developers.

Rating and reputation

Besides making money, players are looking for friends to play with. All game universes are struggling with an imbalance caused by a mismatch of skills players to their statuses. Accounts can be bought or hacked, and it means that the account of high level can be controlled by the player without corresponding skills. It is possible to solve this problem by keeping ratings on the blockchain, thus creating a global profile of the player in all game universes. Players will trust this setting and find the best game partners for professional teams or just for fun.

All data can be encrypted and stored privately for different game levels, which is very important for the training of professional teams. Professional gamers are afraid that strategies are not kept secret. As an example, Bountie provides sophisticated reputation mechanisms as described in its official whitepaper.

Digital game items trading

One of the main mechanisms of monetization in the current game ecosystem is the sale of virtual goods. The problem is that in most games, these sales occur only in one direction. You can buy a magic sword in a game, but you can rarely cash money, at least not legally. There are many secondary markets where players sell their virtual items and game accounts (however, this is always illegal and often prosecuted by publishers).

According to WAX, the main project in this area, 400 million online players have already bought in-game digital objects worth more than $50 billion. WAX was created by developers of a business called OPSkins, which is based on trading virtual skins for major games. The phenomenon of these skins became widely known with the release of Valve “Counterstrike: Global Offensive”. The project offers many opportunities to stand out by applying cosmetic improvements to your weapons. Some of these skins are worth thousands of dollars.

Placing all this on a blockchain guarantees the player the true ownership of virtual assets, allowing the exchange of items between games and game universes. This allows you to easily switch between games without losing your virtual treasures. Also it is possible to create parallel game universes, offering infinite possibilities for creation of games connected with each other.

In a sense, this technology makes digital objects as valuable as real, erasing the border between the real and virtual worlds. In addition to trading virtual objects, Blockchain also provides an opportunity to truly own and trade virtual lands in game universes. This function may not yet be real, but it will be possible in the near future. It sounds strange, but virtual reality can become more interesting and rich than the real world. With no sense of reality caused by automation, people can migrate to digital worlds in search of more diverse experiences.

With the help of a blockchain, users can create their own content in game universes and sell it in secondary markets. Nowadays, most of the funny additions are made for free by game fans. Now you can tie these assets to their creators, creating additional cash flow.

In addition to all this, a blockchain can add a property such as proof of rarity of the assets, which authenticates unique items and prevents duplication. This allows digital artifacts to acquire and add value through their uniqueness.

In addition to the WAX mentioned above, which was a pioneer in item trading back in 2015, there are other successful projects such as Dmarket and Enjincoin, both of which have raised around $20 million through their ICOs. Enjincoin has become widely known for its massive erdrops for Binance (BNB) token holders. About 10 other projects are trying to enter the field of virtual item trading using similar approaches.

Transparency in cybersports

Cybersport or, more generally, the entire competitive gaming market requires transparency to ensure fairness and prevent fraud. This can be compared to the prosecution of doping, which increases physical ability in traditional sports, but in this case the key parameters are programmed and hidden from the viewer. The logic of the game and the criteria for success can be implemented in a blockchain to ensure that the competition is fair and transparent.

Tournaments can be held at a blockchain using smart contracts for automated prize funds and payouts. There have been several high-profile scandals in the eSports industry involving teams or subcontractors who have not been paid after the tournaments. Eloplay planned to solve this problem by making payments for all tournaments in smart contracts, but their site seems abandoned since late 2017.

The gaming history can also be manipulated over a long period of time. Accounts can be hacked, stolen or duplicated. In the digital age, it does not matter who sits in front of the monitor; only the digital identifier matters. Therefore, reliable eSports platforms definitely require a blockchain that allows players to find teams and other players, practice games and hold tournaments. In addition, such platforms can monetize players’ eSports activity using various reward mechanisms. There are already several platforms that offer comprehensive blockchain solutions for the eSports market.

• DreamTeam deals with player selection and team management.
  Esports.com creates its own token on top of the existing infrastructure, using it as a payment and reward tool.
• GGRocket offered an alternative solution for regular players. It wants to create a coaching service where everyone can practice with professional teams to help players radically improve their skills. The project uses a cryptocurrency for a mutually beneficial relationship. Judging by the activity in the channel telegrams, this project has not lived up to ICO.
• Shiliz, in their own words, is a tokenized voting platform, giving fans the opportunity to manage sports and cyber sports organizations. It implements management procedures at a blockchain for cybersports.
• TwogNation is another example. They create an aggregator for the entire competitive gaming market by tokenizing these players at the blockchain. In a complex token economy, the platform tries to stimulate direct interaction between all market participants and players in a simple and mutually beneficial way.

There are also those who have tried to launch, but have not received adequate funding, for example, Zonex, which was going to provide an integrated infrastructure of eSports with an emphasis on tournaments.

As eSports turns games into a sport with a huge audience, traditional betting services are becoming more and more relevant in this area. Of course, betting mechanisms suffer from a lack of trust and efficiency. That is why several projects on the blockchain have come up with more reliable solutions. For example, Skrilla excludes a middleman, making the bets transparent. The company works only in Australia and has obvious problems with the integration of token in life, to find at least one exchange that trades SKR was not possible, and there is also a huge gap in roadmap.

Other notable blockchain projects in gaming industry

There are many other gaming platforms on the blockchain, which combine all of the above trends in a single platform. They effectively try to connect the main market players, excluding intermediaries.

• Refereum is a streaming platform where players can earn RFR tokens both for broadcasting their game and for activity. At Refereum you can buy a game for tokens and also offer your own development, but you will not have to pay a commission for adding the game to the site.
• Abyss is another project that also brings together gamers and developers using multi-layer referral programs.
• Crytek has launched its own Crycash token with economic incentives for token holders, as well as other gaming platforms.

Some projects work in the mobile market.

• Alax is a blockchain platform for mobile games for emerging markets, content creators and gamers.
• GameProtocol is a kind of crypto crowdfunding platform for small game developers. It directly connects the first indie game users with developers, excluding intermediaries.
• Xaya (formerly Chimaera) is a game studio and a platform for creating blockchain games. In fact, this project is trying to reconstruct the HunterCoin concept described at the beginning of this article. Xaya focuses only on games that use blockchain, such as turn-based games, in an effort to create decentralized autonomous universes in different environments.

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