Blockchain & The Gaming Industry: Play to Earn
Blockchain technology, alongside gaming, has been among the fastest-growing industries over the last few years. The profits generated by the gaming industry are indeed astronomical.
Today, things look even better for the blockchain and gaming industries. There has been a clear improvement in decentralization and how distributed ledger technology is helping companies track information, register data and offer better services and solutions.
Some companies such as EY estimate that the gaming industry could serve over 2.7 billion consumers worldwide with $120 billion of forecasted revenue. Combining blockchain technology to solve many of the legacy issues faced by the gaming industry, can definitely onboard an even larger number of users.
Simply put, blockchain technology and the gaming industry can leverage each other. On this context, we analyze some of the basic concepts related to blockchain for gaming and how RSK is taking part in the expansion of this market by providing a complete end-to-end tech stack for blockchain and gaming enthusiasts.
Why Blockchain for Gaming?
The blockchain industry is helping the gaming space grow and expand. Blockchain is currently offering two main solutions to gamers: Non Fungible Tokens (NFTs) and smart contracts. There are many benefits related to blockchain for gaming. Some of them are related to NFTs while others include earnings for players.
1 – Earnings for Playing Games
We will discuss this topic in the next sections but this is definitely one of the main reasons to start using blockchain technology for gaming. A large number of players from all over the world get rewarded for the time they spend playing.
Although this could be very attractive for users, it’s not the only benefit related to blockchain for gaming. Having the possibility to earn money while playing is life-changing for many individuals around the world.
2- Blockchain Games Attract People from Outside the Crypto Industry
Despite most crypto-savvy users kowing what an NFT is, not everyone outside the cryptocurrency world knows what this term is all about. However, these users can have a first contact with the blockchain industry just by playing some of the most attractive games recently released. Everything without knowing they are using blockchain technology.
For many years, focusing on the underlying technology and cryptocurrencies such as Bitcoin (BTC) was a very common thing to do. However, things have become different with games that use blockchain technology. For instance, a person can start using a gaming platform without even knowing that they are using DLT. Thus, this helps the entire industry expansion.
3 – NFTs Implementation
As previously explained, NFTs are having a large impact on the gaming industry. Why? Because they are completely changing the conception of owning an asset in the virtual world. If you have never heard about NFTs, they are virtual representations (on the blockchain) of digital or physical goods.
An NFT could be music, digital art, in-game items and many many other things. The implementation of NFTs for the gaming industry becomes then crucial to understand why blockchain is expanding as the tech that helps the gaming industry to expand. Moreover, NFTs can easily be held on crypto wallets.
With NFTs, things change. Users become the real owners of their in-game assets. One of the main benefits of this is related to how they could use their items even if the game providers stop offering solutions to users. As we can see, this offers greater security to users at the time of planning their gaming strategies for the next few years.
4 – Decentralization
We also have to talk about decentralization in the gaming industry and how blockchain technology is making it possible for games to become decentralized. Most of the traditional games launched to the market are controlled by gamer providers. With blockchain technology, this changes completely. Users are not only able to own their assets, but they also get decentralized solutions. Rather than relying on a centralized company that controls the whole game, players can be sure that the future of the platform depends on the players themselves.
What are Blockchain Collectables?
As we now know how blockchain technology influences the gaming industry, we could move on with blockchain collectables and their implications for the whole sector. This is a term that is closely related to non-fungible tokens.
Digital collectables are NFTs that represent a wide range of things. They could be digital art, rare items from different game providers, a souvenir of a football match or even a post from Twitter.
Let’s now move on to an example. Back in 2017, with the expansion of the bull market, Initial Coin Offerings (ICOs) and Bitcoin reaching all-time highs, NFTs became a hot topic. In general, when investors see that some sectors of the market get saturated, they usually move to others trying to search for better returns.
At that time, the popular platform CryptoKitties was selling blockchain collectables represented as cards on the Ethereum blockchain. For several weeks, fees on the Ethereum platform were very high due to a large number of investors that wanted to buy and sell these crypto kitties. The whole blockchain collectable industry couldn’t rely just on cards being sold on the internet. As the whole crypto industry entered a bear market in 2018, developers focused on creating new projects and solutions for crypto users.
With the whole expansion of new blockchain networks and solutions, we have seen the NFT industry move forward as well. Companies started to offer blockchain collectables as a way to increase engagement and also gain media coverage. This was definitely a good marketing strategy for some of these firms.
Additionally, a good job was being done to increase the use cases of NFTs as well. For example, at the end of last year and the beginning of this one, NFTs became a hot topic. From cats, we moved towards blockchain collectables in a wide range of industries.
Jack Dorsey, the CEO of Twitter, sold his first tweet as an NFT earlier this year. The price for this NFT was $2.9 million and it was just the first of many other NFTs to be sold throughout 2021. Other blockchain collectables included art created online and other types of blockchain collectables. Opensea became one of the most popular platforms to buy and sell digital art. At the same time, other social media networks like Linkedin or Facebook saw the expansion of NFTs that were sold and purchased by users. The whole ecosystem has built an industry that continues to expand and that is promising to revolutionize a large number of markets.
What are Play-to-Earn Platforms?
The term play-to-earn (P2E) received a lot of media attention during the last few months. This is due to the large growth experienced by the whole gaming industry this year and its connection to blockchain tech. The play to earn model is now creating new opportunities for players to earn rewards when they play.
In simple terms, a play-to-earn game allows players to earn assets while playing their favourite games. This is possible thanks to the expansion of NFTs and a new gaming model that is expanding in the cryptocurrency market.
While in the blockchain and crypto industries we had different micro-economies (such as ICOs, DeFi and NFTs), now there is a new sector that is generating its own value: the gaming industry. Players get rewarded for their participation in these games as they engage with tokenized assets and data that is then stored and traded as an NFT.
When we think about games, we usually have in mind the most traditional types of games where there is usually a centralized company controlling the whole business model. With blockchain technology and NFTs, this is now controlled by users.
This is specifically useful for users in developing countries. P2E games are providing a useful income per month to users in these countries. The Latin American case is just one of these examples. Furthermore, with the COVID-19 pandemic and the jobs that have been lost due to lockdowns, P2E games could become a solution to a wide range of users located in different countries. The value of the game is now captured by players rather than by the company behind the game. This is certainly revolutionary.
Additionally, this P2E industry that is growing around gaming takes place thanks to NFTs. Users know that their characters and items will not disappear if a company stops offering support to players. Basically, users can level their characters up and later sell them as tokenized assets through different marketplaces. That’s a unique feature provided by the crypto world.
RSK Solutions for Blockchain Game Developers: RIF Services
RSK is also offering unique solutions for blockchain game developers and users of these new games and platforms. As the most secure smart contract platform, RSK has a wide range of solutions (RIF Services) that can be used for trading, managing and handling NFTs and game items, among other assets.
Nowadays, RSK is offering blockchain and technology solutions to individuals all over the world but with a large presence in developing economies, including Latin America. This could be very positive for those users that want to get engaged in P2E economies.
Thus, game developers can rely on RSK in order to launch their blockchain games and P2E platforms. Rather than focusing only on Ethereum, they can also rely on RSK, which is clearly expanding in many regions and providing other types of solutions to clients all over the world.
Crypto Spaceship, a massively multiplayer blockchain real-time strategy game, is one example of a game based on RSK capabilities. Additionally, RSK is already working on creating its own NFT marketplace.
Blockchain Gaming Examples
At the time of writing, there are several games that are currently running on top of blockchain technology. Some of these games include Axie Infinity, Sorare or SkyWeaver, among others. Let’s go over some examples.
Decentraland: One of the First Blockchain Games
Decentraland is perhaps one of the largest and most popular blockchain games currently in the market. This is also one of the oldest platforms in the market. Decentraland is known as a blockchain VR (virtual reality) world in which users can acquire land and engage in unique adventures. This platform was one of the first in the world to start using NFTs (LAND) and that promoted the idea of running games on top of a blockchain network.
This blockchain game works with a cryptocurrency called MANA. This is an ERC-20 token that is fully powered by the Ethereum blockchain, similarly to the whole platform. The token can now be purchased on a large number of exchanges and it can also be swapped on other platforms.
In addition to the MANA token, which is used as the in-game currency, there is also another token called LAND. LAND is a non-fungible token that represents virtual property (or land) on Decentraland. Users that own LAND can build virtual worlds such as homes, shops or buildings. LAND can be purchased in different marketplaces and secondary markets. Users can sell their LAND for MANA or vice-versa.
In the future, there might be other implementations coming to Decentraland that could capture the attention of many users. Finding a way to make Decentraland a P2E platform could be one of the best ways for this project to attract a larger number of users.
Let’s use an example to understand how this platform works. Coca Cola has partnered with an avatar creator called Tafi in order to create and produce branded virtual wearables. These virtual wearables would be tokenized and sold as non-fungible tokens. This is just one of the many ways in which companies can engage with these virtual worlds and platforms. Some of the NFTs include a unique Coca-Cola Bubble Jacket Wearable to be used on the Decentraland platform. Other NFTs have also been created in recent weeks.
Axie Infinity has been the latest game attracting the attention of players from all over the world. This is a blockchain-based NFT game that is paying users to play. The play-to-earn community that wants to enjoy a stable and revolutionizing game should look at Axie Infinity.
According to Token Terminal, the protocol revenue of Axie Infinity has been close to $300 million in the last 30 days. This puts Axie Infinity as one of the most promising projects in the blockchain industry, even ahead of already-established blockchain networks or crypto projects such as PancakeSwap, MakerDAO or Aave, among others.
The game consists in playing a cards game with other opponents and earning rewards for these “battles.” The project is powered by two different tokens: the Axie Infinity Shard token (AXS) and the Smooth Love Potion (SLP).
This is a strategy game in which users have to select a strategy to defeat an opponent. While playing the game, players will be able to train and level up their Axies. This would make the game easier for users, which will be rewarded over time.
Users get rewarded with SLP tokens. The AXS token is the governance token. As we see, the platform preferred to use two different types of tokens for their business strategy. Axie Infinity users can earn as much as 150 SLP tokens per day. The price of the token has fluctuated between $0.20 and $0.35.
This clearly shows how P2E platforms can change the lives of many individuals in some countries. At current prices, players could earn between $900 and $1,200 per month. Nonetheless, this would highly depend on the price of the token and how the project evolves.
One of the good things about this blockchain game is that it allows us to learn more about how P2E platforms could expand in the coming years and help game providers improve their games.
Sorare is the next platform on our blockchain games list. This is a fantasy football game that also relies on NFTs for users to send, receive and trade player cards from over 100 teams all over the world. Users can share their strategies, create new lineups in fantasy leagues and earn rewards for their progress.
This happens without relying on a single company and only using smart contracts. Data shows that fantasy sports are indeed a healthy business with a possibility to grow to $48.6 billion by 2027. All the trading cards that you use on this platform have been tokenized and run on the Ethereum network. You are the real owner of these cards and you can hold them or even sell them if you decide to do so.
The goal of the game is to create your lineup with game cards that represent real-world football players from different leagues. In order to win, cards will follow the official statistics of each match and give you points for goals and assists. The more your players score and assist, the better for you. If you are lucky enough, you will beat other opponents and receive rewards. Some of the teams that are currently available include Real Madrid, Paris Saint-Germain, AC Milan and many others.
One of the positive things about using this platform is that you would not only be able to play in your local league, but you will have the chance to select from different game options. You could choose regional leagues and other types of games (depending on your interests).
Those users with the best scores in their leagues will be able to win ETH rewards or even rare NFTs that could later be sold in the market. The solutions and possibilities offered by Sorare come after a $50 million Series A funding in which the development team behind this platform attracted the attention of high-profile investors and entrepreneurs.
Sorare has been expanding all over the world and onboarding new users on a daily basis. Additionally, it continues to get new league licenses from different regions so as to attract an even larger number of users. To start playing with Sorare, players can do so for free and do not have to transform cash into crypto if they do not want to do so.
The Current Challenges of the Blockchain Gaming Industry
When we talk about the blockchain gaming industry as a successful one, we only mention the positive aspects of it. However, we also need to take into consideration that there are some challenges that both blockchain and the gaming industry have to face.
When we talk about decentralized blockchain networks, we need to also think about the frictions that there are with decentralization, scalability and security. If we want decentralization, then scalability becomes the hot word: how to make decentralized blockchain networks scalable?
This is a debate that already has many years of discussion. If we think about blockchain games attracting a larger number of users to blockchain networks, how would they be able to handle millions of transactions? Are blockchain networks moving in this direction? How long would they take to adapt to the needs of the community?
Indeed, this could be a frustrating thing for many users that start in the blockchain world. As soon as they see that transacting an NFT could cost more than the NFT itself, then it becomes useless for these users. This is the exact reason why many games based on blockchain technology use layer 2 solutions (sidechains) to achieve high TPS outputs at minimal costs.
Solving the scalability problem is not the only issue though. There are two other challenges that the blockchain gaming industry will have to face in the coming years: blockchain games for mobile phone users and interoperability between blockchain platforms and games.
What’s Next for Blockchain Gaming?
We have seen how the video game blockchain industry has been expanding in recent years and how it has attracted a large number of users from all over the world. However, we should also understand the future of this industry and the impact that it can have on emerging economies. It is certainly true that blockchain games are attracting users that do not know how the crypto industry works. Despite that, these users are usually eager to learn and get educated about new technologies.
Furthermore, play-to-earn (P2E) is also allowing players to earn money for playing the games they like. This will probably keep on expanding in developing countries and help users get access to an additional revenue stream.
The future of the whole blockchain gaming industry is heavily linked to the ability of developers to solve some of the challenges mentioned in the previous section. Solving these issues could be one of the most important things for the blockchain gaming industry that is now among the most debated topics in the community.