Exploring the Potential of Cryptocurrency in Gaming
Cryptocurrency and Gaming: Opportunities and Challenges photo
By: Natali

Cryptocurrency and Gaming: Opportunities and Challenges

Table of Contents

Today games are no longer considered techno-geek entertainment, as it was just 20-30 years ago. Almost every person with a phone or personal computer has at least one game they play regularly. On the other hand, there is a crypto industry that tries its best to stop being an industry just for tech geeks.

We all see many user-friendly crypto services helping people in finance, insurance, healthcare, and wealth management. Naturally, we start to see fascinating crypto services in recreation activities, such as gaming. And it will become even more common in the next 3-5 years. That's why we at Defiway want to explore the full potential of cryptocurrency and blockchain in gaming. And I want to save you time and explore it for you!

Let's understand what cryptocurrencies are in gaming

Cryptocurrency is a digital currency that doesn't have a centralized authority. Users run peer-to-peer transactions without any third party. Each transaction gets cryptographically encrypted and recorded into one big chain. No one can delete information from the blockchain.

When you use cryptocurrency, you are sending or receiving digital tokens encrypted by complex crypto algorithms that use the wallet address of the sender and receiver, public and private keys, and the number of tokens in the transaction.

The system encrypts it with the personal key of the sender and receiver to the long strike of code. Shortly after, it sends encrypted data to the computer network for verification. Those computers are often called nodes. They work together to verify the transaction and check that encrypted data fully matches the public keys of the sender and receiver.

When nodes verify your transaction, they add it to the blockchain, and it becomes stored on every node in this network. So you can't delete what you've done in blockchain, even if you want to, because you need to delete it in EVERY node.

And it becomes a pretty effective decision in gaming. There is no need to create a central server for different transactions. Those games can attract users worldwide because developers don't need to maintain the requirements of various payment providers: gamers can buy whatever they need with their chosen cryptocurrency.

Opportunities for Cryptocurrency in Gaming

Cryptocurrency can be beneficial for the gaming industry. But how exactly can you use crypto in your game if you are a developer? The easiest way is to use it for in-game purchases, as an additional payment method.

You can use cryptocurrency for virtual item trading or even give it as a reward for passing crucial in-game milestones. It will motivate users to use your app as much as possible to obtain, as-they-think, free cryptocurrency. They will think they will get it for free while they trade their time and become a free advertiser for your project.

The other common example of crypto in gaming is various marketplaces where users can buy and sell in-game items. You may also use cryptocurrency for game item authentication.

Cryptocurrency gives a chance to create player-driven economies, where users can create side-chains and manage their-own in-game economies, trading cryptocurrency inside and outside the game.

If you are interested in how to use crypto in the gaming industry but not in actual games, use it as a funding tool. That way your fanbase from other projects can support your new independent project. Here are the examples of successful crypto integration in gaming:

  1. Enjin. It's a blockchain-based platform that allows independent game developers to create, manage and monetize various in-game items in their game.
  2. Cryptokitties. It's a game where players can collect, breed and trade virtual cats using cryptocurrencies.
  3. Age of Rust. It's an adventure game where users can earn cryptocurrency by completing in-game quests.
  4. Gods Unchained. Blockchain-based trading card game, where all in-game currencies and items are stored on a decentralized ledger (record-keeping system contains multiple nodes).
  5. The Sandbox. It's the situation where the title speaks for itself. The Sandbox is a big blockchain-based virtual world where users can create virtual assets and trade them using crypto.

As you see, crypto can be a highly-beneficial tool for developers and users. But this industry it's not perfect, even when it seems to be. In the next section, I will discuss the main challenges of crypto gaming.

Challenges for Cryptocurrency in Gaming

Crypto-integration can be highly beneficial for the game industry. Since crypto is still a disruptive industry, crypto gaming will face multiple challenges until it becomes widely acceptable. Here are some of them:

  1. Adoption and user-education. Even in 2023, cryptocurrency remains an industry for tech-savvy people. If you want to attract more users, you should teach them crypto-basics. And it relates to any crypto project.
  2. Regulatory challenges. Crypto is still an underregulated industry, so it will get more and more regulations in the next 2-5 years, therefore you may need to modify some parts of your game till it matches new rules. And you, as a developer, should be prepared for it.
  3. Integration with traditional payment systems. There will be many users who will be afraid to use crypto even in a 5-10 years span. You should keep alternative payment options, which may create additional costs and challenges.
  4. Scalability. As more developers and users adopt cryptocurrency into their lives, more transactions will take place. It will create scalability challenges for many small platforms that need to rapidly increase their bandwidth.
  5. Volatility. Crypto is known as a high volatility asset, so it may create some uncertainty. The cryptocurrency value can fluctuate drastically, making it difficult to plan in-game purchases. Most crypto games will use stablecoins or other digital currencies with predictable prices.
  6. Security. To keep wallets safe all related parties should stick to the cyber security rules. Otherwise, users have a high probability of compromising their wallets.

So, we will see many failed crypto game projects. It does not necessarily mean that they are 100% bad, they just can't cope with challenges. As for mid 2023, the most infamous failed projects are War Riders, Huntercoin, CryptoSpaseX, CryptoKami, and BitCrystals.

They all faced the same problem: insufficient adoption. They were promising games, but they didn't attract enough users. That's why I believe adoption is the main challenge for any crypto game developer. So you can try to use cryptocurrency as a payment option for more classic and well-promoted games or do your best to promote a new game in the crypto community and attract users outside of it.

Blockchain Gaming

I already told you about blockchain gaming, but I want to have a deep dive into this topic with you. Blockchain gaming is a type of gaming that uses blockchain as its main tool. As an example, if GTA V added some stablecoin as a payment option, they wouldn't consider it a blockchain game. It still has the main server and single authority responsible for transactions and censorship in the online mode.

But if someone will create a similar game, where all crucial transactions/actions are automatically stored in blockchain, you can consider it a blockchain game. It can be built on any platform, but usually, it is something Ethereum-related because you can easily create custom tokens and sidechains. Players can trade virtual assets transparently and securely without any centralized authority.

After, they exchange those tokens for the actual Ethereum digital coin. It gives more freedom of expression both to developers and users. That's why most blockchain games you can see in the market are Ethereum-based.

The main benefit of blockchain gaming is decentralization and enhanced security. It is hard and almost impossible to hack a blockchain game because it doesn't have the authority or a middleman controlling the game. It creates a more transparent atmosphere, preventing possible fraud or cheating.

It helps build a supportive community gladly investing in the game and its ecosystem. Players can own their in-game assets because each is an actual token that users can change inside the in-game marketplace.

But each blockchain game in the next 5-10 years will face the same challenges. First of all, it's poor user adoption. Many gamers are not familiar with blockchain, so your task as the developer will be to introduce blockchain basics to them.

It's a challenging task both psychologically and technically. Also, every developer should keep an eye on regulatory changes and implement changes as soon as possible to keep law-abiding applications.

Future of Cryptocurrency and Gaming

We see how crypto has become a popular payment option everywhere. So, initially, we will see crypto games more and more. Firstly, it will be just another payment option in ordinary games. It will slowly but gradually attract new users to crypto and blockchain ecosystems.

As a result, we will see even more innovation and improved user experience centered on the actual player needs. It will lead to more intuitive interfaces and smoother transactions both in games and ordinary crypto apps.

But what about the regulatory side of blockchain gaming? Most modern crypto-laws are not some unexpected regulations, they are more like addictions to already existing acts. So the regulatory landscape becomes clearer, which leads to increased investments from big market names. And it leads to widespread crypto games adoption.

But it will become pretty hard to start your career as an independent crypto game developer. Thus, I recommend you start developing your project today when you still have a chance to become a big name in the blockchain gaming industry without large investments.

Summing Up

Cryptocurrency evolves increasingly popular as a payment option year by year. Eventually, we start to see it in the same role in various games. Players can use cryptocurrency for in-game purchases, item trading, or as a reward for reaching crucial milestones.

Once general users become familiar with crypto, they may start to look for blockchain-based games. It's a more advanced option, where games don't have one centralized authority or middlemen responsible for transactions and censorship. All rules are already pre-described in the game's code.

If you decide to develop your own crypto game, beware that you may face challenges such as tech complexity, slow user adoption, regulatory uncertainty, and sluggish user adoption. But if you are truly committed to it, all your efforts will pay off. There are still no corporations and big names in blockchain gaming, so you can easily create your tech empire!

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