Blockchain is no longer exclusively associated with Bitcoin; the technology has enabled new advancements ranging from NFTs to blockchain gaming. Some predict that blockchain games will revolutionize the gaming industry, but let’s dig deeper to discover whether their potential can live up to the hype.
What are blockchain games?
Blockchain games are video games that employ blockchain technology, often for in-game assets. Non-fungible tokens (NFTs) are utilized to represent in-game assets, enabling users to exchange weapons, skins, pets, and other items for tokens. These tokens may then be exchanged for real-world money.
All of these games have the same fundamental feature: decentralization, or at least a greater degree of decentralization than ordinary video games.
Similar concepts to NFTs have already existed in traditional gaming
In-game economies and virtual item sales are not a new concept to gamers. Runescape had Partyhats that sold for up to $18,760 in real world currency. Counter-Strike Global Offensive (CS:GO) skins are virtual cosmetics that make up a $50 billion dollar industry.
Virtual money applications were used in some of the earliest traditional games. Going back to the Runescape example, players could sell any in-game item for Runescape gold, which could then be sold for real world money (which was actually against Runescape’s terms of service). However, this goes to show how virtual economies have existed for a long time in the gaming world.
Games have progressed and merged with the internet to the point that in-game gold and things may now be bought using real-life (fiat) dollars. Transactions often take place outside of the game, much to the dismay of its designers.
Blockchain has the potential to create rules and fairness in in-game money and asset transactions, as well as connect them to the real world in practical ways. This might be especially advantageous for Fortnite’s free-to-play model, in which the bulk of gaming income is produced by in-game purchases (e.g., skins) paid by digital currency.
The success of Epic Games’ Fortnite may foreshadow blockchain’s potential in gaming. In 2018, Fortnite grossed $2.4 billion, making it the highest-earning game in history. In 2018, free-to-play (F2P) games accounted for 80% of all worldwide gaming income; on consoles, and in 2021, F2P games grossed over $75.9 billion in revenue.
Free-to-play (F2P) mobile games market revenue worldwide from 2018 to 2021
A second use is for structure. So far, blockchain games have been limited to one of two categories: decentralized or hybridized. In the first model, the game is entirely managed by a blockchain, which means that the creator cannot change the game in any manner without the community’s approval.
The game itself is still administered from a central server in a hybridized format, but its assets are sold via a decentralized marketplace. In any case, blockchain makes in-game assets as ownable as feasible, hence providing legitimacy and long-term worth.
As the gaming industry shifts its attention to in-game assets, blockchain can address a variety of associated issues, including the elimination of fraudulent products, the creation of scarcity, and the encouragement of additional purchases by making things transferable between games.
The challenges facing blockchain gaming in its current state
Blockchain gaming is, in reality, quite sluggish after years of development. When it comes to scaling up this burgeoning business and putting it on the same page as its conventional counterparts, speed is possibly one of the most essential issues.
Every gamer desires a high-quality, cutting-edge gaming experience that is free of speed and pace concerns. Unfortunately, most blockchain games today are still restricted to simple tasks like asset creation and trade.
Consider CryptoKitties or Axie Infinity. With millions of users and a market valuation in the billions of dollars, these two may be called blockchain gaming pioneers. However, it is clear that they continue to be very basic formats, enabling players to breed, trade, and combat in-game objects.
Even with this simplicity, there is still the problem of speed. The Ethereum blockchain has a block duration of 17 seconds, and games built on it are limited to advance at least three times per minute as long as the blocks are not full, adding further latency. Traditional video games have advanced to extraordinary levels of intricacy as a result of the blockchain world. If we don’t catch up, the future of blockchain gaming is in jeopardy.
Continuing on the scalability issue, blockchains need to be able to handle a large number of users, since most blockchain games utilize NFTs which will be earned and traded. Maintaining a blockchain game with hundreds of thousands, if not millions, of players requires massive transaction processing power.
For example, when CryptoKitties initially appeared on the Ethereum blockchain, it generated so much buzz that it overburdened the Ethereum network. This led to the Ethereum blockchain seeing an all-time high in transaction volume, greatly slowing it down.
Despite several adjustments, there is still no certainty that such an occurrence will not occur again. Decentralization is at the core of blockchain technology, but it is also the source of the transaction processing capacity bottleneck. As a result, finding a solution to this problem is crucial for the long-term growth of blockchain and blockchain gaming.
However, scalability should be less of an issue as the blockchain industry matures and new protocols come into the space.
One game that seems to be tackling these challenges is Arker: The legend of Ohm. Arker is a play-to-earn (P2E), turn-based strategy and RPG game. The game takes place in the imaginary kingdom of Ohm. Players take control of the main hero and their pet.
The aim of the game is to recover control of the old kingdom by fighting against opponents in Player-vs-Enviroment (PvE) and Player-vs-Player (PvP) battles. Players can join clans, engage in clan battles and guild wars to decide who leads Ohm’s realm.
So how does Arker deal with the scalability problem? For one, the in-game token “Arker” is built on the Binance Smart Chain, a highly scalable blockchain with an average transaction time of 3 seconds. This will prevent the issues that have been experienced by previous Ethereum-based games like Axie Infinity, which needed to build its own Ronin sidechain for scalability purposes.
Whilst the game is currently on Steam for PC gamers, Arker plans to expand to regular consoles, helping to bridge the gap between blockchain and traditional gaming.
Conclusion
Blockchain games are unlikely to compete with traditional video games at the moment. But it doesn’t mean the chance isn’t available. They have the potential to be a major industry in the future as technology progresses, so keep an eye on them.
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
Known for identifying cutting edge technologies, he is currently a Co-Founder of a startup and fundraiser for high potential early-stage companies. He is the Head of Research for Allocations for deep technology investments and an Angel Investor at Space Angels.
A frequent speaker at corporations, he has been a TEDx speaker, a Singularity University speaker and guest at numerous interviews for radio and podcasts. He is open to public speaking and advising engagements.