Powered by blockchain technology, decentralized finance (DeFi) has revolutionized the finance and banking industry, taking the focus off traditional banking systems and placing it on consumers. Digital, unregulated currencies that don’t involve intermediaries or governments have made transactions faster, cheaper, and more accessible. But blockchain’s impact is not limited to finance. Its use cases are spread across multiple industries including health, entertainment (Metaverse), and gaming.
Blockchain gaming is expected to be generating $301.53 billion in revenue by 2030. This growth rate has attracted many investors into the space, which is almost as popular as the cryptocurrency market. In this post, we look at the impact of blockchain technology on the gaming industry. We also review possible future opportunities for expansion and some things that might stand in the way of this progress.
As mentioned, blockchain technology has many use cases. But inarguably, its primary application – cryptocurrency – is the most impactful. The digital currency has fast proven to be the answer to many problems experienced by conventional gaming transactions. Integrating blockchain into game development and execution has produced the following benefits:
One example is the online casino industry. When players deposit their money at high roller casinos, they need to know that the large sums of money they are transacting are secure. The last thing you want to tell a high-value customer is that you lost their money. Blockchain-powered networks are significantly less vulnerable to fraud and data loss than traditional systems.
Among other things, this is due to their decentralized nature. Data is dispersed across many independent networks to prevent unlimited access to user data. This feature has helped raise the trust profile of casinos and secure player funds.
Data points in the blockchain are recorded and verified at different nodes. This allows for a level of transparency previously unachievable through traditional transaction methods. If a gamer owns in-game assets or tokens, their ownership is irrefutable and all transactions they make cannot be tampered with or manipulated. This, along with security, has made gaming more trustworthy.
3. Faster, Cheaper Transactions
Crypto transactions are also faster and cheaper. In fact, unless you are using a commercial exchange, wallet-to-wallet transfers are typically free. This is because these transactions do not involve third parties and are free of government regulation. If gamers have funds in their crypto wallets, they can transfer them immediately and at little to no cost.
Crypto wallets are interoperable. Say if you play poker at an online casino and LoL on your PC, you do not need to create different accounts to fund your gaming. Blockchain technology allows for cross-platform transactions that make it easier to move across different games.
5. Improved Access
On a wider scale, digital currencies have made gaming more accessible to players everywhere. This is especially true for players in the developing world or in jurisdictions with different currencies than their operators. Because crypto is universal, anyone can use it.
NFTs (Non-Fungible Tokens)
Non-fungible tokens are transferable digital assets. Digital currency, they have heavily influenced the gaming environment. Unlike fungible tokens, NFTs are unique and distinct, which makes them ideal for representing virtual possessions like utilities, collectibles, and in-game assets.
NFTs are also verified and tracked through blockchain and Ethereum’s smart contracts. This means that their ownership and transaction records are secure and cannot be manipulated. Because of this, the ability to own gaming items of long-term value, and the fact that NFTs are interoperable between games on the same blockchain, blockchain has opened an entire gaming market of peer-to-peer asset trading.
Play to Earn
Blockchain has also allowed players to monetize their strategies and gaming skills. Blockchain gaming allows gamers to win digital rewards or currencies by playing top games. This play-to-earn model is preferable to traditional gaming where players previously earned bonuses and rewards only usable within the games they were playing.
Cryptocurrencies and digital tokens have real-world value. So if a player does not want to use their reward to enhance their gaming experience, they can trade or use them elsewhere. This incentive has helped draw more people to gaming, creating a secondary economy around online gaming.
The esports market is currently worth $1.3 billion and its position within the gaming industry is growing by the day. In addition to making gaming more mainstream, esports has elevated the position of professional gaming in the economy, allowing many people to earn a living through competition.
Unfortunately, planning and executing esports tournaments presents multiple challenges, including bandwidth limitations, high costs, and unverified rewards. Blockchain has helped address these problems. Through decentralized networks, the technology has fostered transparent and immutable event data tracking and efficient reward, team, and prize pool management.
Thanks to blockchain, winning gamers are automatically verified, paid, and the rewards are automatically and permanently recorded. This trust is helping the industry grow even faster.
Limitations of Blockchain Technology
But despite the significant role blockchain has played in the gaming industry, its full implementation is hindered by some challenges. Some of the factors standing in the way of blockchain gaming include:
1. Technical Barrier
The primary obstacle to blockchain adoption is that its infrastructure is complex and energy-demanding. Integrating blockchain into a gaming platform calls for a sizable investment of resources and time. It also requires advanced technical expertise – developers must navigate intricate systems like decentralized storage, smart contracts, and consensus mechanisms. This can prove challenging for game developers, who might require specialized training.
2. Steep Learning Curve
The technical complexity of blockchain systems can also make them difficult to navigate for players. In traditional gaming, gamers need only to download an app or log onto a site, create an account, fund it, and start playing. They do not need to understand the technology powering their experience. In contrast, to play a blockchain-based game, players must create digital wallets, manage their access keys, and use complex decentralized market spaces to trade. This can scare away casual or unfamiliar players.
3. Limited Game Selection
The technical barriers also contribute to fewer game developers willing to venture into the sector. This and the fact that blockchain gaming is relatively new mean that the sector is still small. Moreover, the limited availability of games presents less competitive opportunities for professional gamers.
If the adoption of blockchain technology becomes widespread, networks may struggle to manage the high transaction volumes. This can significantly reduce transaction times and increase transaction fees, ultimately harming the gaming experience.
5. Regulatory Uncertainties
Blockchain technology is not regulated uniformly or even completely effectively across different jurisdictions. This creates uncertainty for developers over future legal and compliance policies.
Wrapping Up: What Does the Future Hold?
Blockchain technology has had a significant and undisputable impact on the gaming industry. Through digital currency, secure systems, and NFTs, it has revolutionized monetization, asset ownership, professional esports competition, and other aspects of gameplay. Sadly, problems of scalability, ease of use, and regulatory anxiety threaten the ability of blockchain to gain mainstream acceptance across the gaming landscape. Addressing these challenges is sure to unlock more applications of blockchain.