With more than 3 billion gamers worldwide, the gaming industry does not need to validate itself anymore. But what’s interesting is how this sector has started to form an intersection with the crypto scene - Particularly NFTs and the Metaverse.
A recent report shared by Yahoo Finance estimates that the blockchain gaming market will hit $104.5 billion by 2028, growing at a CAGR of 68.2%.
One of the factors that helped crypto gaming garner much traction in a short time was the fact that both crypto and gaming have the world as their audience. For instance, in 2022, the top five countries had a total mobile gaming app download volume of approximately 56 billion. This list included countries from Asia (China, India), North America (United States), South America (Brazil), and Europe (Russia).
Similarly, the digital asset industry has witnessed tremendous growth in recent years, spurred by the rise of Decentralized Finance (DeFi), NFT gaming, and Metaverse ecosystems. Between 2021 and 2024, global spending on blockchain solutions could triple; from US$6.6 billion to 19 billion.
The Perfect Match: Crypto Takes Gaming to New Levels
Crypto gaming is empowering users with options to earn NFTs by playing and winning a game. This is not a new phenomenon in games, as various sorts of in-game tokens have already existed in games.
What’s new is that the tokens earned in games can now be seamlessly exchanged for stablecoins, fiat, or other types of digital assets through centralized or decentralized exchanges.
Transitioning to the larger picture, Forbes references an estimate from Coinmarketcap that the global gaming token market is worth nearly US$13 billion. The multi-billion-dollar size indicates a healthy flow of gaming tokens, which reflects a strong economy developing around crypto gaming.
Some top tokens in the list include the likes of ApeCoin (APE), Decentraland (MANA), and Sandbox (SAND).
Global Tech Leaders Keen to Leverage Decentralized Gaming
The untapped potential of decentralized gaming has made it lucrative for global tech leaders to leverage the space to its fullest. For instance, South Korea’s Wemade has raised US$46 million from Microsoft, whereas Wemade is a popular game developer who has been aggressively developing blockchain games recently.
With all the recent developments, signals are clear. Blockchain gaming is set to have a thriving and engaging future.
Play-to-Earn: The New Incentive for Gamers
The merging of crypto and blockchain tech with the digital gaming paradigm - at large - has resulted in several interesting business models to incentivise gamers in a new way. The models present players with an opportunity to earn in-game rewards in the form of digital collectibles.
Gamers can earn cryptocurrencies or NFTs by completing diverse in-game activity-based tasks such as looking for hidden treasures, battling other players, or completing missions.
More importantly, they enjoy full ownership of these in-game rewards, such as virtual currencies, avatars, weapons, and more. And as these assets have real-world value, gamers can trade them for fiat money.
Interoperability of In-Game Items
In some crypto gaming platforms, the in-game items are interoperable. As such, players may bring in-game assets won from one blockchain game to another blockchain game or choose to sell them in open marketplaces.
Transparency, Quantifiability, Programmability
Moreover, because NFT games run on a blockchain, ownership is transparent and easily quantifiable. This transparency also extends to financial transactions, as the programmability of the NFTs helps platforms to earn their share on each transaction seamlessly.
Multiple opinion pieces published in reputed industry publications have advocated for decentralization as the future of gaming. After all, several factors keep decentralized gaming at an advantageous position over Centralized gaming.
Segueing into the specifics, gamers are the exclusive and permanent owners of all in-game assets in decentralized gaming. In alignment with this, decentralized blockchain games, known for offering enhanced levels of security, transparency, and trust, also provide participants with increased freedom.
The traditional gaming industry revolves around a few big players, like Nintendo and Ubisoft. The decentralized gaming space aims to open it up for all types and sizes of game developers and make the industry more democratic, equitable, and inclusive.
Decentralized gaming is globally accessible for developers with its code and data present on blockchains. For players, decentralized gaming is empowering. It offers more choices. Players are more in control of how they want their game to play out.
A decentralized gaming paradigm is set to redefine the gaming landscape and significantly improve the user experience.
Enhanced Levels of User Experience
Unlike traditional games, blockchain games could significantly elevate the in-game experience. After all, not only do blockchain games provide players with the liberty to join and leave games as they wish, similar to traditional games, but they also offer an added level of flexibility and personal asset control. These are elements unique to blockchain technology, offering a key differentiation.
Given this potential for heightened player freedom and asset control, competition among platforms could intensify. This could result in better earning opportunities, an enhanced gaming experience, and an increased demand for experienced blockchain developers. It essentially presents a win-win scenario for both developers and players.
Atari, a traditional leader in the world of gaming, launched Atari X in May 2022 for the same reason. Its decision was aimed at creating a blockchain ecosystem that seamlessly integrates community, gaming, and utility.
Challenges and Opportunities
While the intersection between gaming and crypto is nothing less than a launchpad for newer innovations to take off, there are challenges on the road too.
Many crypto games working on the P2E model still pose a high barrier to entry, where players need to buy multiple NFTs from the platform to get started.
Potential Breaches or Hacks
There could be security risks if platforms are vulnerable and codes are not adequately secure. Consequently, players might end up sending tokens to unintended recipients and fall victim to scams or lose their assets during a breach or hack.
One of the biggest hacks in the history of blockchain breaches is that of a gaming platform. It happened when US$625 million in ethereum and USDC stablecoin was stolen from the Ronin Network, affiliated to the Axie Infinity Blockchain gaming platform.
User experience issues, common in emerging fields of virtual technology applications, could also arise.
Platforms that lack user experience standards frequently suffer from poor engagement rates despite having robust branding pursuits to back them up.
For instance, despite having a market capitalization of US$1.18 billion, data from DappRadar’s report showed that the Ethereum-based metaverse platform Sandbox had only over 600 users in a day.
Intriguingly, Sandbox’s rival Decentraland had a mere 30 daily active users, according to one of the data aggregators. However, another source referenced figures from Decentraland’s Github Catalyst Monitor, indicating over 500 active users on the platform.
Although the platforms refuted these claims, many experts cited unpleasant user experiences and inadequately capable interfaces as reasons behind such low engagement rates.
Inclusive Model for Growth
Despite these drawbacks, the opportunities that crypto games present to us are enormous. The P2E model can open up new avenues for financial inclusion, where developers would directly benefit from their products, and players receive rewards for the time they spend gaming.
Advantages of Building a Community
Decentralized gaming platforms are excellent places to build a community that has its self-sustaining economy with funds flowing healthily between the developer and user communities.
The Future of Gaming and Crypto
The future of crypto gaming looks promising from multiple viewpoints.NFT gaming would expand further with a range of new styles and genres. Metaverse experiences will incorporate NFTs to reward their digital inhabitants. P2E gaming will consolidate further. New earning models would come into play.
Newer avenues will open up to monetize and build on in-game assets. Since the community plays a significant role in crypto gaming, it will find its natural ally in social media platforms worldwide.
There are games in the crypto world that also serve as hybrid social media platforms. Here, players can create innovative game characters and assets of their preferences.
Reality Chain - for instance - has come up with a multi-chain social gaming metaverse on the Octopus Network. The players can ramp up their social and gaming lives through a solid combination of non-immersive, multiplayer 2D & 3D experiences.
Technology-wise, AR and VR technologies would play a decisive role. Experiences will become better, more immersive, and more interactive.
The incorporation of AR and VR is fast-growing in the gaming market. The realm of crypto gaming follows the trend. According to publicly available numbers, the global market size of AR & VR gaming will cross US$31 billion by the end of 2023. And by the end of 2027, the market will surpass US$52 billion.
The presence of blockchain would make the gaming world more democratic, equitable, and inclusive. With this shift, power will stay in the hands of the users without having to compromise on transparency and trust.
Although the degree of success will always vary with the levels of security and user experience the platforms would offer, it is true that crypto has already started revolutionizing gaming and will continue to do so with increased fervour and resilience.