Blockchain Gaming Explained: Key Concepts and Benefits
Since the Bitcoin boom made blockchain popular, the technology has been largely associated with the financial industry. However, proponents of blockchain technology have always emphasized the far-reaching applications of blockchain beyond decentralized finance and facilitating cross-border transactions.
One of the powerful but lesser-known applications of blockchain technology is in the world of gaming. The merger of blockchain and modern gaming technologies will give users control over their gaming experience while also introducing new opportunities to earn as they play through in-game assets. In this post, we will discuss blockchain game development, exploring the intersection between both worlds, the benefits of this clash, and what the future could look like.
- Blockchain games are built either partially or fully on decentralized systems, powered by distributed ledgers, smart contracts, NFTs, and tokens.
- Blockchain games can enhance game security, create robust in-game economies, and promote the interoperability of modern games.
- Regardless of the technical, legislative, and scalability challenges of crypto gaming, this technology is in a good position to transform the modern gaming industry.
What is Blockchain Gaming?
Blockchain gaming refers to the incorporation of blockchain elements in video game development. This includes games that have their core code written as smart contract commands directly on the blockchain or games with a hybrid architecture.
While the ultimate goal of blockchain gaming is to have games with their logic run entirely on smart contracts, the latter is more common. Most games today are written primarily in off-chain code, but they incorporate elements of blockchain technology such as crypto wallets and blockchain tokens. These blockchain technologies allow the creation and movement of blockchain-powered digital assets, tokens, and currencies.
Connection of Blockchain Technology and Gaming
The worlds of game development and blockchain technology present several overlaps that have allowed the fusion of both technologies. Thanks to this overlap between blockchain and gaming, video games can be built either entirely on the blockchain or include elements that are built on blockchain technologies, leveraging concepts like smart contracts, cryptocurrencies, and non-fungible tokens.
As a result, many game publishers are learning how to create a blockchain game that delivers the best of both worlds. Below, we outline some of the connections between blockchain technology and modern gaming and how these connections are feeding into the blockchain gaming trend.
In-Game Assets as NFTs
In-game items have been a de facto standard in modern games for a long time. As gamers level up, complete quests or make purchases, they acquire assets such as skins, avatars, weapons, vehicles and so on, that elevate their gaming experience. In regular video games, assets and currencies are stored on proprietary central servers controlled by the game publisher.
The existence of assets within traditional games presents a viable opportunity for blockchain technology which is considered a new standard for digital asset ownership. An overlap between traditional game development and blockchain technology allows the creation of in-game assets as non-fungible tokens with more value beyond their utility within the game.
NFTs have their proof of ownership stored on the blockchain, which makes it easier to verify and transfer ownership. This technology will allow players to earn money when they play and give in-game items real-world value, marking a new era of digital ownership.
Distributed Ledger
As a distributed ledger for storing data, blockchain allows modern game developers to create new gaming experiences for players by transforming how in-game data is stored, used, and transferred. Blockchain technology in gaming allows the storage of in-game items and other game data on decentralized databases where they’re more resilient and free from centralized control. In fact, decentralizing control in gaming will give gamers true ownership of game data and lead to the creation of secure and more robust games.
Smart Contracts
Blockchain technology is also facilitating the introduction of in-game transactions that are validated and controlled by smart contracts. Game rules and codes governing transactions in games can be written as smart contracts on a decentralized system. In addition to speeding up game development and reducing manual intervention, smart contracts will enforce the consistent application of gameplay rules dependably and consistently. Besides, smart contracts authenticate in-game activity, ensuring providers can’t rig the game and gamers can’t cheat the system.
Crypto Games vs Traditional Video Games
Regardless of recent advancements in blockchain technology, the traditional gaming ecosystem has dominated the modern gaming landscape for a long time and will continue to do so for many years to come. This traditional model operates in a closed ecosystem where game developers have full control over game servers and all data associated with them. The company determines how the gaming ecosystem works and gamers have no real control over anything.
With blockchain games, game data, and assets are stored on the blockchain. Not only does this add an extra layer of security, but it also impacts game administration significantly. The decentralized nature of crypto games creates a robust open ecosystem where players are encouraged to participate actively.
Many blockchain games are governed by collectives or Decentralized Autonomous organizations where consensus is reached as a community. Consequently, players get to play major formative roles in shaping the ecosystem.
Blockchain games are also characterized by an active in-game economy. Unlike traditional video games where assets purchased or earned by players have no actual value outside the game and are not really owned by users, the blockchain model allows users to own game items, sell or transfer ownership, or even use them in other games or blockchain-powered virtual worlds. This incentivizes participation in the ecosystem and encourages players to play more.
Benefits of Blockchain Games
Blockchain gaming is considered the next frontier of video game evolution because it comes with a lot of benefits over regular games. Little wonder this niche has seen a significant boom in popularity over the past decade, with up to 20 million daily gaming-related transactions across various blockchain protocols. Here are some of the major benefits of blockchain games:
- Security
- In-game economy
- True Ownership
- Interoperability
- Transparency
Security
Blockchain adds an extra layer of security to video games. The technology secures data using cryptography. Blockchain data is also stored in a distributed ledger system which is inherently more secure than the central database of a traditional video game.
That’s not to say that blockchain games are unhackable. If there’s anything we can learn from the hack of the Axie Infinity video game in 2022 where the platform lost up to $600 million worth of cryptocurrency, it’s that blockchain games can also be targeted and hacked.
Still, blockchain games are generally more secure compared to traditional games with a single point of vulnerability where player information, game data, and transaction details can be stolen relatively easily.
In-game Economy
The integration of blockchain technology into the world of gaming has kickstarted what is commonly described as an in-game economy revolution. Cryptogames reward players for playing, and not just in the form of delightful entertainment. The rise of blockchain in gaming has given rise to a sub-genre of lucrative play-to-earn games, which reward players with crypto tokens for playing or participating in any other blockchain gaming activity.
Players also get to earn and trade assets in the form of NFTs with real-world value. Unlike traditional games where the points you accumulate have no real value outside the game, the tokens you earn from playing blockchain games can be converted to real money. You can use them to purchase stuff within the game or withdraw them into your crypto wallet if you want.
True Ownership
Blockchain games did not start the in-game asset trend. Long before blockchain games became a thing, players were able to own assets within video games. You could pick up objects for defeating bosses, earn new weapons by completing quests, or purchase a new skin for your character. However, these in-game assets were only useful for leveling up within the game.
Assets in traditional games are also not really owned by players. If the publishers were to shut down the game, all the assets you have accumulated would be gone. Blockchain gaming gave in-game currency and other gaming assets real value.
Blockchain games allow players to own unique digital assets, with proof of identity stored on the blockchain as NFT. This opens up a new world of opportunities where players can trade in-game items to earn money either within the game or through secondary sales on marketplaces.
Interoperability
Interoperability is another big benefit of blockchain gaming. The blockchain creates an interconnected ecosystem, unlike the closed systems of regular games. Blockchain-based games are often designed to interact seamlessly with other blockchain games and platforms.
This expands the potential uses of game assets beyond just one game. Imagine being able to take your favorite skin from a game like Fortnite and using it in Valorant because you own it and it isn’t tied to one game. It is a huge step towards creating an interconnected metaverse.
This is the kind of interoperable future that blockchain games promise. Instead of the gated login system used by conventional video games where users have a separate identity for each game, crypto games will allow players unrestricted access, using their blockchain wallets (which store all their gaming-related assets) as a universal entry pass.
However, it’s important to note that this vision remains mostly aspirational. Today’s blockchain gaming landscape is still fragmented with different protocols and disconnected ecosystems. Full interoperability between different games is not yet a widespread reality, and it will take time to develop cross-chain infrastructures capable of supporting it on a large scale.
Transparency
Blockchain-powered online gaming platforms have started advertising themselves as provably fair. With a traditional platform, players simply had to take the words of the software publisher as the truth since there was no way to tell what was really going on in the game background. Blockchain games allow players to peer under the hood and verify game algorithms and gameplay rules to ensure there’s no tampering. Every transaction or action in a blockchain game is recorded on the blockchain, which is accessible to anyone and unalterable.
Some blockchain games also run on governance systems where players get to participate in decision-making regarding the gaming platform. When you earn cryptocurrency in such systems, the tokens aren’t just in-game currencies, they represent a certain vote weight that assigns governance rights to the individuals that hold them.
Challenges of Blockchain Games
Despite the numerous benefits of blockchain games and their rapidly growing popularity, the idealistic future promised by this technology is still a long way away. There are still some technical and non-technical factors that may create roadblocks for blockchain gaming. Some of these challenges are highlighted below:
- Technical limitations: Crypto games tend to be more technically complex than traditional games. Up until recently, blockchain itself was a niche subject discussed by geeks in Discord channels. While the concept has grown more mainstream in recent years, incorporating this technology into games will still require some technicalities that many people will be unfamiliar such as setting up crypto wallets or using NFTs are in-game currencies.
- Regulatory concerns: As far as legislation is concerned, blockchain technology is still an unfamiliar territory in many countries. The use of cryptocurrencies and NFTs as a medium of exchange and investment is still under scrutiny by regulatory bodies. The uncertainties surrounding crypto legislation can make a full-scale in-game economy largely impractical at the moment.
- Scalability: Scalability remains a massive issue for every system built on blockchain technology. While there have been some improvements in recent years with the introduction of more energy-efficient and affordable solutions, most blockchain systems will still struggle with the high transaction volume that’s likely to characterize blockchain games, especially as they grow even more popular. Crypto games will be restricted to distributed ledgers that can guarantee high transaction speed and low fees even on a large scale. At the same time, modern video games tend to have huge computation and latency requirements that most blockchains today are simply not ready to handle.
- Connectivity and Disconnected Ecosystems: Although interoperability remains one of the biggest benefits of blockchain games, we’re still a long way away from truly interoperable crypt games. Today’s blockchain landscape is characterized by many fragmented protocols and disconnected layers. Until more robust cross-chain infrastructures are built, achieving true interoperability and portability of gaming data will be difficult.
Real-World Examples of Best Blockchain Games
Since Axie Infinity kickstarted the Web3 play-to-earn games evolution in 2020, there has been a meteoric rise in blockchain gaming projects. Many blockchain companies are building games either fully on the blockchain or using traditional infrastructure while incorporating blockchain-powered elements. Examples of these blockchain games include:
- CryptoKitties: CryptoKitties is remarkable because it is one of the earliest attempts to create a blockchain-based game where players can earn real currency. This game which was launched on the Ethereum blockchain network in 2017 involves collecting and breeding digital cats as NFTs.
- Decentraland: Decentraland is a 3D game allowing players to create their own virtual world on the blockchain. In this virtual space, players can walk around, interact with other players, and buy and trade assets in the form of NFTs with real-world value.
- Alien Worlds: It is a strategic exploration game where users get to compete for the game’s native cryptocurrency called Trillium by participating in various activities such as completing quests or mining.
- Gods Unchained: Gods Unchained is a tactical card game built for lovers of the card game niche. In this game, players get to collect unique and valuable cards that can be traded in the game’s marketplace or directly between players.
The Future of Blockchain Gaming
It’s hard to conclusively predict what the future holds for blockchain gaming. However, we’re still a long way off from a fully blockchain-powered future. If anything, blockchain gaming will continue to grow at a steady rate alongside traditional gaming.
Although blockchain technology is still in its infancy, the blockchain gaming industry has already seen numerous exciting projects, especially within the last decade. They paint the picture of a prosperous blockchain future characterized by the widespread adoption of this technology based on its numerous benefits. It’s a win-win situation for both gamers and game developers.
But it won’t be smooth sailing all along. Based on current blockchain trends in the gaming industry, this technology will likely struggle to gain acceptance, especially by traditional gamers. Very few traditional game companies have announced interest in blockchain-related projects. A few of them that signified interests at the height of the blockchain boom seem to have slowed down or halted their plans entirely.
Of course, this only leaves plenty of room for smaller, more dedicated game developers experimenting with the technology with the goal of pioneering innovative solutions. With time and dedication, gamers, including old heads attached to the old systems of playing games, will eventually warm up to the idea of crypto-powered games.
Walk Into the Blockchain Gaming World with CrustLab
Blockchain-based gaming offers numerous benefits to both players and game publishers. In fact, these benefits are too vast to be ignored especially by anyone looking to venture into the game development world.
By working with an expert custom blockchain development company like CrustLab, you can create a successful and profitable blockchain game built-to-purpose for your target audience. At CrustLab, we combine software development expertise with our knowledge of blockchain technology to create truly remarkable blockchain games and other applications. Contact us now to learn more about our blockchain game development services.
FAQ
Blockchain in gaming refers to the creation of new gaming experiences for players by building games either partially or fully on the blockchain. Blockchain games can be built entirely on-chain or with a hybrid infrastructure that merges traditional game development with blockchain elements like tokens, wallets, and NFTs.
Yes, blockchain gaming is legitimate. Where there are still some legislation grey areas and concerns, the technology and economy associated with it are not outlawed in most places.
It’s hard to tell if blockchain gaming will one day overshadow traditional game development. If anything, both technologies will likely continue to exist side by side in the coming years. Yet, the future of blockchain is quite bright and its applications will soon extend beyond the current play-to-earn model, which is its biggest application today.
Examples of blockchain gaming projects include Axie Infinity, Decentraland, and CryptoKitties.