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We’ve previously written about crypto and blockchain in gaming and the impact that these can have on creating wealth in virtual worlds.
In this blog, we’re detailing the journey of blockchain’s impact on the gaming industry, from the early days of NFTs in games to new playing models, and how the industry might look going into the future.
Blockchain in Gaming
How does blockchain work in gaming? Blockchain technology enables secure, decentralized systems for ownership and transactions that the gaming industry can use to enhance user experience and investment in their game. Players can own assets and trade or sell them across platforms, and transfer that to real-world wealth. Blockchain also helps to enhance the transparency and trust behind gaming systems, enabling decentralized governance for games and their ecosystems.
2014 - 2017
Huntercoin is an open-source cryptocurrency. It was first launched in 2014 and is considered the first game to run on blockchain. It was designed to test multiplayer blockchain usage and the concept of mining cryptocurrencies through human effort. Users collected coins in the game by completing tasks and competing against other players. This virtual world is where 80% of Huntercoin crypto can be found and bought.
In 2017, CryptoKitties was released. CryptoKitties was a game based on the Ethereum blockchain. It still runs today and allows users to buy, breed and collect virtual cats. It has been cited as DeFi’s first foray into gamification. In December 2017, a large volume of transactions done through CryptoKitties congested the Ethereum network. A BBC news article from the time reported on the slowed-down transactions on Ethereum: “Some people are concerned that a frivolous game is now going to be crowding out more serious, significant-seeming business uses.” Today, CryptoKitties makes fewer than 100 sales a day. A large part of the popularity of CryptoKitties was its novelty. As the relationship between DeFi and gaming grew, more companies began to move into the space.
Play-to-Earn Models Arrive
The gaming industry’s use of blockchain changed when play-to-earn models arrived on the scene. Although that’s not exactly accurate. Play-to-earn models can be seen even as far back as the 1980s - games with ecosystems managed by players that allowed for trade, accumulation of wealth, or selling of their services. The difference was that the wealth existed entirely within the system, was overly complicated, and the supply and demand fluctuated a lot. Fake goods using cheat codes were common, causing hyperinflation.
Play-to-earn models started in this way, but can now be seen as virtual wealth creators supported by the blockchain. Play-to-earn (P2E) games allow users to earn rewards of real value by completing tasks, competing against others or progressing through levels. The rewards are unique and can include skins and virtual land, all in the form of NFTs, which players can buy, sell or even rent out, creating wealth that can be brought into the real world. Using blockchain capabilities, NFTs can be traded and sold for fiat currency, 24/7, globally.
COVID-19 and the NFT art boom
In 2020, when we were all locked down in our homes and even more chronically online, NFT interest began to pick up. In 2021, it became the year of the NFT. Art creators, sellers, and collectors were pushed into the digital space by physical and trade limitations created by the pandemic. With new advancements and openness to digital payment solutions, NFTs from the art world experienced a surge in interest. The world-renowned auction house Christie’s sold the NFT digital artwork Beeple’s Everydays: The First 5000 Days for $69 million. The sale also marked the first time Christie’s had allowed a work to be sold in cryptocurrency.
After this huge boom came a significant drop-off. NFT artwork was discussed, dissected, and disassembled. Popstar Justin Bieber bought the Bored Ape NFT for $1.3 million in January 2022. By the end of 2023, it was valued at around $59,000.
But NFTs are not just artworks. Now that the NFT universe had risen in public interest and play-to-earn models had begun, it started to expand into the gaming world, where its impact was felt significantly.
Metaverse, NFTs and virtual worlds
NFTs stepped out of digital artwork and into the world of games. It’s now possible in the Metaverse, utilizing blockchain technology and NFT capabilities, to buy, rent or sell goods. There are high streets in the Metaverse where you can buy luxury brands like Yves St Laurent. It also became possible to tokenize real-world assets, such as real estate.
This had a huge impact on the gaming industry. It became possible for gamers to buy properties in virtual gaming worlds, win assets, and translate wealth created into the real world. Blockchain turned NFTs into a mechanism for games to create virtual wealth.
The future
What is in the future for blockchain and gaming? Blockchain allows players to have full ownership of assets, so this will likely create entirely new gaming economies that will continue to expand. The technology also promises to increase player empowerment and decentralized gaming environments. It remains to be seen how decentralization in gaming will work, with more and more power going into the hands of players rather than game creators. As blockchain technology innovates, it will also allow for improved speed, lower costs, and games played on a larger scale. With this, wider adoption and more innovative gaming experiences are on the horizon.
