Cryptocurrency has grown in popularity exponentially in the last few years. During the same period, competitive gaming has been on the rise through the expansion of eSports. This parallel growth has led to both sectors intertwining and merging in many ways.
Through all of this, it’s become clear that the world of gaming and cryptocurrency both have a lot to offer each other. With tons of progress already being made on both sides, here’s a look at how much of an impact cryptocurrency is actually having on the gaming industry.
Play-to-Earn Games
Play-to-earn (P2E) games have been trending this year as a huge combining factor in gaming and cryptocurrency. These games allow players to earn cryptocurrency or other digital assets by playing games that are developed using blockchain networks. As a result of this novelty, they have attracted significant attention from both gamers and investors.
The games often cater to expansive in-game economies where players can purchase or trade digital items, characters, or even virtual land. The assets are often tokenized, meaning they are represented by digital tokens on a blockchain that can be traded in decentralized dealings.
On the other hand, this should not be confused with crypto casinos, another form of gaming that utilizes cryptocurrencies. These platforms combine the excitement of traditional online casino games with the economic benefits of blockchain technology and offer cryptocurrencies as a payment and payout method.
There is now a large array of online casinos accepting most cryptocurrencies, though most are run through offshore licences which makes them less restrictive. According to crypto writer Gary McLellan, these sites offer great added benefits like faster sign-up processes and better bonuses, factors that add to their appeal among gambling enthusiasts.
Advantages and Challenges of P2E Games
The key benefit of these games is that they give players the potential to earn an additional income while doing what they love. For players who live in regions with low economic opportunities, these incomes can even become the main income since players can trade the cryptocurrency they make for fiat currency.
What’s more, these financial incentives have created communities that are strong and engaged as players encourage and assist each other to earn a lot more. A lot of innovation in the world of gaming has been largely due to cryptocurrency.
The creation of NFTs as well as game design improvements can give their thanks to the integration of crypto and gaming - all because developers have sought new and interesting ways to keep players engaged with their game and their tokens instead of with competitors.
Unfortunately, there are challenges to P2E games as well. Firstly these games do have the capability to increase economic inequality since players who have better equipment and an abundance of resources are more likely to succeed and will have an advantage over players who don’t have the same resources.
This is actually sad in many ways since cryptocurrency was meant to act as a way of lowering income inequality and it is working toward that goal in other ways. However, another disadvantage to these games is that the games themselves do not have high-quality graphics. Many developers have been criticized for placing token generation over gameplay quality.
Players want to enjoy the game while they play to earn and awful graphics take away part of the enjoyment factor. Lastly, the legal side of P2E games is still unsteady. Many countries don’t yet have rules directly regulating these games and cyber criminals have taken advantage of this fact.
Non-Fungible Tokens (NFTs) in Gaming
In the last year, NFTs have become a very big part of the gaming industry, offering a new way to create unique and valuable digital assets. In essence, NFTs are digital certificates of ownership for one-of-a-kind items in-game like characters, weapons, skins, and virtual worlds.
Owning an NFT allows a player exclusive ownership of that item, and usually, each NFT is unique. Due to this, NFTs are able to create a sense of scarcity meaning that players will be able to buy, sell, and trade NFT ownership at a higher value depending on demand and supply.
It is a fascinating treat to have an NFT in a game as players who have them can even customize their gaming experience especially if they get really unique items. A lot of game developers have incorporated NFTs into their games like Axie Infinity's Axies or CryptoKitties' Cats.
There are some setbacks to NFTs like market volatility. The value of NFTs fluctuates very randomly which makes investment a very risky thing for a lot of players. When it comes to the environment, blockchain technology has also been under attack for the amount of energy consumed during data crypto mining.
Cryptocurrency Payments in Gaming
Cryptocurrency payments are becoming increasingly popular in the gaming industry, offering players a new and innovative way to transact using various cryptocurrencies, such as Bitcoin, Ethereum, or specialized gaming tokens.
Cryptocurrency transactions are often faster and more efficient than traditional payment methods and transaction fees for cryptocurrency payments are typically lower than those charged by credit card companies or banks.
Cryptocurrency payments can be more secure than traditional payment methods, as they are less susceptible to fraud. They can also be made from anywhere in the world, without the need for a traditional bank account.
Decentralized Autonomous Organizations (DAOs) in Gaming
DAOs are a relatively new concept that could potentially transform the gaming industry. They are community-governed organizations that operate on a blockchain and are governed by smart contracts, which are self-executing contracts with terms directly written into code.
In a DAO-based game, the community of players owns the game's assets and resources. They use tokens to vote on decisions about the game's development, governance, and treasury.
The up-side is that these games give players a significant say in the development and direction of the game and the use of smart contracts ensures transparency and accountability in the DAO's operations. A few popular games that use DAO tech include:
- Decentraland - A virtual world platform powered by a DAO that allows players to own land and vote on the development of the metaverse.
- The Sandbox - This one uses a DAO to govern the platform and its ecosystem.
- Alien Worlds - A play-to-earn game that uses a DAO to manage the game's economy and development.
Some challenges come with the combination of DAOs with gaming. Implementing DAOs in gaming can be technically complex and developers may have to use a huge amount of money to hire people with the required specialized skill set. A second issue is that DAOs are vulnerable to hacking attacks, as their smart contracts can be exploited.
Conclusion
The impact of crypto on gaming in 2024 is mixed. While there are clear opportunities for innovation and new revenue streams in the various new ventures like NFTs and DAOs, challenges such as regulatory uncertainty, market volatility, and potential for exploitation remain. As the industry continues to evolve, it will be interesting to see how crypto's role in gaming shapes up in the years to come.
