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Online gaming has exploded in recent years, in no small part due to the huge leaps in technology. Not just the technology used to create the games themselves, but also technology from other industries that have been integrated into games. Gaming and fintech have now brought their worlds together, and many companies are creating innovative solutions to build more immersive gaming experiences. In 2023, the blockchain gaming industry market size was estimated by Crypto.com to be $3 billion, and projected to have grown to between $65 and $90 billion by 2030.
How has cryptocurrency risen in the gaming industry in the last few years?
New monetization models
Crypto has provided games with whole new mechanisms for trading, buying, and selling. Those include:
Play-to-earn (P2E). Play-to-earn games are a type of video game that rewards their players for in-game achievements. Typically that means earning in-game rewards, but play-to-earn games give rewards with real-world monetary value. This combines the worlds of NFTs, crypto, DeFi to give gamers an in-game experience that reflects real-world value.
Ownership and wealth creation. Some games have begun building off P2E mechanisms and allowed players to go even further. With the real-world monetary value of their rewards, or simply their own money, they can buy, sell and trade virtual items. Through NFTs, users can own virtual properties, items, and land, which they can lease or sell to generate wealth. This wealth creation and ownership allows users to turn gaming into a lucrative activity.
Global accessibility
Cryptocurrency allows for seamless cross-border transactions. This allows players from different countries to participate in a gaming economy, such as the ones listed above, without delays, conversion fees, or transaction waiting times. International gamers can interact together with transactions that are safe and swift no matter what part of the world they are playing in.
Using crypto coins and the blockchain also reduces the security risks with transactions in and around online games. All blockchain transactions are recorded on a decentralized ledger that cannot be edited once written, thereby reducing fraud. The decentralized nature of blockchain means that hacks and malicious attacks are difficult to achieve.
Decentralized development
Game development is a lengthy, technical process. The process is driven by the development team, not by the players, and so a new sub-category of decentralized gaming has emerged whereby digital assets, and play and game data, are stored in blockchain networks and made widely accessible. Some can be completely decentralized and open-access, while others will still go through a central team to keep it moderated and safe. The latter kind will often use decentralized autonomous organizations (DAOs) as a mechanism for players to vote on significant developments and changes. The ability to vote is earned by acquiring governance tokens through the game, much like the crypto tokens mentioned above.
Challenges
While cryptocurrency is rising in online gaming, there are possible issues:
- Price volatility. Cryptocurrencies are susceptible to price fluctuations, which can impact in-game economies and the opportunities for creating real-world wealth.
- Regulation. It’s a good thing when crypto is regulated: but how and where it is regulated can sometimes be convoluted and unclear. Some jurisdictions do not allow crypto trading or owning, and others have blurred regulatory frameworks for certain uses of crypto, such as in gaming. There is also the irregularity of rules across different geographies, therefore inhibiting the ability of gamers to send or receive digital currencies or tokens across borders.
- Scams. Crypto scams are sadly still common, and the same is true of gaming. Combined, the two industries need to be fully cognizant of the potential for scams, hacks, and frauds playing their games and trading their coins, and ensure that their users are educated and their security is up to date.
- Scalability. As transaction volumes continue to increase with popularity, there will be a need for improved scalability. The blockchain will have to be able to cope with a high volume of microtransactions efficiently at peak gaming times.
Gaming’s new frontier
Gaming is working hard to break barriers with new technology to create unique user experiences. Adding in crypto, however, provides an entirely new mechanism for immersive adventures that include an in-game economy that can break the barrier of the game and become a real-world economy. Regulations have not yet caught up to this trend, and users will also be cautious to engage fully if they are not able to see and understand safety precautions. However, decentralized finance using blockchain technology has allowed finance to enter virtual worlds in amazing ways - and will continue to shape gaming in years to come.
