How Blockchain Gaming Is Revolutionizing the Gaming Industry
The Impact of Blockchain on Gaming: A New Era of Play photo
By: Natali

The Impact of Blockchain on Gaming: A New Era of Play

Table of Contents

Blockchain is an integral part of gaming, as hundreds of thousands of people are already playing decentralized games. However, there are still millions of people who don’t know about the new segment. And I’m here to change it!

Contrary to general video games, typically supervised by the developing team, blockchain games are decentralized and provide actual ownership of assets to the players. They can even make governing decisions there!

Today, you’ll discover how blockchain-based gaming can become a valuable income source for gamers yet remain profitable for developers and investors.

What Is The Blockchain Gaming?

Unlike centralized online games, blockchain solutions give players more freedom. There are four core elements of this new approach:

  1. Decentralization. These games have no authority point, as the community makes most governing decisions. It improves transparency and fairness, as players directly impact the game's administering.
  2. Actual ownership of in-game assets. They are represented as tokens, that players can own and trade somewhere elsewhere.
  3. Play-to-earn (P2E) model. Here, players earn tokens by reaching in-game goals.
  4. Greater security. Blockchain improves the game’s security, so cheating in those games is almost impossible.

But how does it benefit gamers and developers? What are blockchain games' advantages and drawbacks? Will blockchain gaming get the same ROI for investors as classic online gaming? Keep reading!

The Growth of Blockchain Games

Blockchain gaming wasn’t a surprise for the industry. It was a gradual evolution that started in 2017. Its success demonstrated the blockchain's potential in creative industries. Other huge projects launched in 2018 and 2019; we know them as Solare and Axie Infinity. Today, they are known as a classic blockchain game trio.

As of middle 2023, this market surpassed $2.5 billion in investment. Investors saw the perspective and have started to invest there. The number of active gamers has experienced exponential growth, with DappRadar reporting over 1.2 million unique active wallets (UAW) in March 2022.

Even more traditional game developers have started to think about crypto opportunities. Some games unlock crypto as one of the payment options, while others think about how to implement NFTs into their workflow.

Benefits of Blockchain in Gaming

As I previously said, blockchain unlocks many new opportunities for each party involved. Here, gamers can get actual ownership of in-game assets. They don’t need to invest the money, as many games here are P2E.

Blockchain can ensure that gameplay is fair. It’s nearly impossible to hack those games. Except you develop a quantum computer in your attic 😅

On the other hand, developers get new revenue streams such as in-game asset sales, transaction fees, and revenue sharing from P2E models. Blockchain's unique features, such as actual asset ownership and P2E mechanics, can significantly increase player engagement and retention. Thus, developers may get a more stable income source with blockchain in gaming.

Popular Blockchain Games and Their Mechanics

CryptoKitties was the first mass-adopted blockchain gaming service. Even after five years, it is still trendy. Here, users can purchase, sell, and spawn digital cats. Each kitten is a separate NFT on the ETH chain. Players can create their cats with different traits. Some tokens are sold for $100,000+, attracting collectors and investors.

Axie Infinity is another popular P2E game. It’s like Hearthstone but in the crypto world. It allows players to fight axies, little creatures with unique abilities. As you can figure out, each Axie is a separate NFT.

Gods Unchained is another great Hearthstone alternative in the crypto world. Players collect and sell cards representing gods, creatures, and spells from various mythologies here. Players then use these cards to build decks and battle other gamers. Each card is a separate NFT; you can sell it on external marketplaces.

The Technological Backbone of Blockchain Gaming

We should understand the science behind this phenomenon while asking questions like “What is a blockchain game?”. The prevalent technologies to achieve this freedom of choice for their users are smart contracts, level-2, tokenization, and different framework solutions. Smart contracts are self-executing deals that perform after parties meet predetermined terms:

  • Token management. These contracts define the ownership of in-game assets.
  • Game mechanics. They encode the game’s rules to ensure fair gameplay.
  • P2E mechanisms. These contracts can track whether users fairly meet certain milestones.

Tokenization is the process of converting gaming assets into actual tokens. These are multiple token types in crypto games:

  • NFTs represent unique in-game assets.
  • Utility tokens serve specific functions.
  • Cryptocurrency acts as a medium of exchange.

As blockchain in games matures, it will be crucial to scale those games to new bandwidth capabilities. Thus, we will see more layer-2 solutions and custom frameworks.

Player Empowerment and Monetization

NFTs are an essential part of blockchain video games. They show that the user actually owns the asset. It contrasts with classic games, where players rent in-game items from the developer. Users can trade NFTs to acquire new items, enhance their characters, or hold tokens as valuable collectibles.

It unlocks new ways to earn money with P2E and asset rental. You can modify existing tokens and create new ones using blockchain and gaming tools. You, as the asset owner, don’t even need to sell your token, as you can rent it for a specified time to other users.

Challenges Facing Decentralized Gaming

Crypto technologies are changing the way we play. However, there are some challenges that we, as the community, need to solve before this gaming becomes mainstream.

The first question is the scalability problems. Most networks can't handle a lot of deals at once. Even the fastest chains can work with 10,000 transactions per second. It’s enough for the modern crypto gaming market, but it will be considered a poor bandwidth in the future. Traditional online games can process millions of transactions per second. Blockchain developers must scale up their solutions if they want to conquer them.

Another considerable point is the token access. Blockchain games are gaining popularity because players can earn tokens just by playing the game. Later, they can take this token on a third-party exchange. Developers must create sustainable play-to-earn models that benefit players and developers alike.

The Future of Blockchain in the Gaming Industry

I think that blockchain will have a great future in the gaming industry. We will see more blockchain in gaming as cryptocurrency becomes a solid payment option like PayPal or Venmo. At first, there will be blockchain solutions in traditional gaming. It shows the benefits of crypto games to the general audience. Later, they try more and more blockchain games until it becomes a common gaming practice.

However, to achieve this bright future, blockchain gaming should resolve its greatest challenges, like scalability and interoperability. Developers should understand that they should stick to the law of all jurisdictions where they will launch the project. It includes data policies and security.

We may even see the convergence of real-world and gaming experiences. Blockchain gaming can blur the lines between the real world and gaming. Future developments may see the integration of augmented reality (AR) and virtual reality (VR) technologies, creating immersive experiences that blend the physical and digital worlds.

Wrapping Up

Answering questions like “What is a blockchain game?” it’s safe to say that it’s an innovation that revolutionizes the gaming industry, ushering in a new era of player empowerment. Here, all parties will get innovative monetization models: gamers get the money from P2E gaming solutions, while developers and investors achieve increased in-game item sales and huge fan bases. People will recommend these games to other geeks as a way to relax and earn some money in the process. Blockchain technology facilitates decentralized autonomous organizations (DAOs), enabling players to participate in decision-making processes related to development, rule management, and resource allocation, promoting a more community-driven gaming ecosystem.