Unleashing the Full Potential of Blockchain Gaming in 2024

Introduction: What is Blockchain Gaming?

Loved the era of video games?  I did. It was one of the most mind-blowing ways of getting entertained that kept us hooked day in and day out. With time, this has transformed and taken a new shape in the form of blockchain gaming (BG).  But what is blockchain gaming? It is a an ecosystem that employs blockchain technology to provide a secure, reliable, fair, and decentralized way of playing.

It is, in fact, the juxtaposition of gaming and blockchain technologies and one leveraging the benefit of the other. The relationship between a player and a creator is based on trust and unlike their traditional forms, these transfer the ownership of the assets earned by a player to the player himself.

This new way of getting charmed, fascinated, and absorbed has been the talk of the town since 2017. But the industry got real traction with the launch of the famous Axie Infinity by Sky Mavis studio. Things almost exploded in 2021 when it became really popular and according to a report by Blockchain Game Alliance, the number of game-based wallets went up by 25 times in the third quarter than they were in the beginning of 2021.

What are the Characteristics of Blockchain Gaming?

1. It uses crypto and Non-Fungible Tokens (NFTs) that the participants can use for buying assets. Once purchased, players can also sell and trade these assets with others In fact, cryptocurrency tokens and NFTs are a way of monetizing. Many games allow the purchase of real fiat money with crypto and NFTs.
   
   
2. Play-to-Earn (P2E) is another characteristic feature. Under it, players can “earn” crypto and NFTs for playing, completing tasks, and making level progressions. The publishers monetize themselves by earning a fee from the transactions made by the users.
   
   
3. Most of such on-chain systems provide larger-than-life immersive experiences, a feature that was absent from the traditional ones that we used to play.
   
   
4. Being based on blockchain, this technology is highly decentralized. There is no centralized authority that can control it. As it is built on-chain, it is immutable and hard to break into, thus imparting security to the overall blockchain ecosystem. The participants can mint NFTs on-chain and therefore, are their real owners. These being encrypted with cryptography are more secure than traditional gaming assets.
   
   
5. They offer a unique customization experience to the players as they can select and customize the assets like skins and weapons that they earn while playing. This makes the entire experience highly entertaining and engaging.
   
   

What is the Role of Crypto in Blockchain Gaming?

While the blockchain gaming industry has carved a niche for itself in a short period of time, the role of crypto in it cannot be denied. By using cryptocurrencies like Bitcoin and Ethereum, participants can earn rewards every time they play. Being a decentralized asset, crypto can be used to initiate and complete secure as well as transparent transactions. There is no role for any third party to play in such an ecosystem. Players can earn skins, NFTs, avatars, and other assets using crypto and then use these assets to trade with other in-game assets.

How Does the Blockchain Gaming Ecosystem Work?

This form of playing consists of several components which form its inherent part. Let us see them one by one:

1. Tokens: The distributed ledger technology that forms the basis depends largely on the use of crypto tokens (like we said earlier). The tokens form the foundation of the ecosystem as they facilitate the buying, selling, and trading of assets easily and with transparency.
   
   These tokens are used for digital transactions that are shielded from threats and attacks. These tokens act as both currencies as well as assets. The players can earn them by completing different levels or tasks. Being based on a secure decentralized server, the tokens make players the real owners of them.
   
   Developers don’t decide how a player can spend these digital currencies. Tokens like NFTs are immutable and cannot be messed up by malicious attackers.
   
   While acting as crypto is one aspect of the tokens, working as the governance mechanism for Decentralized Autonomous Organizations (DAO) is the other. When in this form, tokens can be used for voting on different proposals of a DAO. Depending on the players’ level of participation, they are given different voting rights.
   
   
2. Wallets: A wallet forms another component of this ecosystem. In contrast to the ways in which we used to play as children where we had no choice but to create multiple logins, wallets provide a compelling way to provide a universal identity for all. The players need to install these wallets on their devices and once they do so, they can play any game.
   
   
3. Smart Contracts: The third component is a Smart Contract which executes a predetermined set of code automatically once a certain set of conditions specified in the code are met. They play a crucial role in imparting openness, transparency, and security.
   
   As these are trustless (participants do not require any centralized authority to establish a trust system). By executing such a contract, buyers and sellers can reach a  consensus without using any third party. While using smart contracts has been rampant, some games employ a combination of both on-chain and off-chain code execution.
   

What are the Types of Blockchain Games Popular These Days?

1. Collectible and NFT Types: These are the the ones that are built on blockchain that allow its players to purchase digital media including NFTs and store the ownership record on-chain. The crypto-collectibles have value as they cannot be replicated and carry the characteristics of non-fungibility with them.
   
   NFTs could be in the form of anything you can conceive of in the physical world. They could be avatars, videos, weapons, skins, images, or memes.  NFTs impart more decentralization to the system. The players are the real owners. The top NFT games by market cap are Alien Worlds, Splineterlands, and Bomb Crypto.
   
   
2. Play-to-Earn Types: As we mentioned earlier, Play-to-Earn are those in which users can earn cryptocurrency by completing different levels and performing other tasks. The tokens earned by playing these can be converted into fiat money and also be used to buy other tokens, which makes users enjoy a win-win situation.
   
   
3. Game-based Events: Blockchain-based events and competitions are increasingly becoming popular. Organizing them takes off the overhead that is involved in a real-world event. Anyone can participate irrespective of time and location. Also, such events are not as pricey as their traditional counterparts.
   
   

What is GameFi?

It stands for Gaming Finance and is a unique combination of Decentralized Finance (DeFi) and gaming. The Play-to-Earn ones that we mentioned above are a part of GameFi, which is actually any activity that involves economic benefits for playing.

It includes everything from digital assets like NFTs, avatars, skins, and tokens to virtual land. It involves the creation of trustless finance protocols on which the overall systems are eventually built. Most of these protocols involve lending, mining, yield farming, and staking crypto tokens. Due to the playing aspect involved, these protocols are also called Game-first protocols.

Do Blockchain Gaming Patents Exist?

According to a SheppradMullin report by James G. Gatto, “A quick search of the U.S. Patent Office database (as of March 2019) shows 16,675 patents in class 463 (which is the U.S. Patent Office classification that includes video game patents).” According to the same report, the number of Blockchain Game and Collectibles Patents is a small number. By March 2019, this number was only 190.  

Despite only a small number of patents being filed by companies, the interest in them is gaining ground as developers and publishers are becoming aware of the fact that these systems can be patented.

IBM published a “Gaming Consensus Protocol for Blockchain” in 2020 for multi-games that allows it to work on blockchain use in MMO Gaming. It works towards finding a consensus mechanism where users can record on-chain transactions and get rewarded in return.

Recently, in March 2023, Sony Interactive Entertainment filed a patent titled “NFT Framework for Transferring and Using Digital Assets Between Games Platforms”. According to it, it strives to research the interoperability of NFTs across different consoles and headsets.

Earlier, in 2021, Sony had published another patent for the use of NFTs and blockchain in PlayStation Games. The technology employed would check the authenticity of digital assets like NFTs, skins, avatars, weapons, audio, and images.

What are the Benefits of Blockchain Gaming?

By far, you must have realized that the potential of playing on-chain is huge. There are a number of plus points that result from the amalgamation of these two technologies:

1. It lets players earn crypto tokens to buy digital assets like NFTs. These assets can be sold to others or moved across platforms.
   
   
2. Being on BC, there is very less probability of these assets being stolen or servers being crashed as was the case in Call of Duty in 2022.
   
   
3. Both the game’s and player’s security is ensured by being built upon blockchain. As there is the use of distributed encrypted ledgers, the users’ details can be kept safe and secure. This way, sensitive data including transactions is protected from third parties.
   
   Many of these also employ 2-factor authentication to make the systems more secure. As every node has a complete copy of what other nodes have, it becomes a hard nut to crack the system.
   
   
4. Transparency and immutability are other hallmarks of BG. The transactions made by users are fully transparent and it is very difficult for the malicious actors to change the underlying mechanism.
   
   
5. Allows easy buying, selling, and trading of in-game items. This is a win-win situation for users as they can not only receive items from others but can also gain by selling their assets.
   
   
6. The creation of Decentralized Identities (DID) for gamers makes their verification an easy process. The identities are unique and can be tested for their authenticity on-chain.
   
   
7. Players are the real owners. They can set the mechanics of the plays and can even change the rules by a consensus mechanism. No need for any centralized authority to get approval or setting rules.
   
   
8. Many of them are interoperable and are feasible on different distributed ledger networks, making it easy to transfer them from one platform to the other.
   
   
9. With the introduction of layer 2 scaling solutions, BG has crossed the barriers associated with traditional ones. With high transaction throughput and speed, these deal with network congestion problems effectively. For the games built on Ethereum, this is a certain advantage.
   
   
10. The biggest advantage is Account Abstraction, which is not yet explored efficiently. Generally, users have to rely on Externally Owned Accounts (by using private and public keys) to initiate the transactions in their wallets. If these keys are lost, you cannot recover them.
    
    Account Abstraction is an alternative to this. In this, a smart contract can do things for you, i.e. it can recover the lost keys for you and batch a pool of transactions. This means that the users need not immerse themselves in the different complexities involved in performing transactions. Abstract accounts help in seamless interaction across different dapps across different platforms.
    
    

Are There Any Cons?

1. This is a competitive niche and as the technology is evolving year after year, the number of games as well as platforms that serve them has increased manifold. This makes the competition quite stiff. Continuous upgrading and incorporating new features becomes absolutely necessary to stay in the race and maintain the user base.
   
   
2. Developers require different kind of expertise to develop the ecosystem. As the games evolve, the cost of development may also increase, making them hard to produce.
   
   
3. These are under the constant radar of regulatory agencies. Overall, the entire crypto niche is often frowned upon by established lawmakers and security agencies. They are constantly looking for ways to curb decentralization and take power into their hands.
   
   
4. Without adequate measures, the BG can suffer from the problems of congestion and over-use. Scalability, which we discussed above, is a must for an on-chain game to be adopted on a grand scale and run seamlessly under all circumstances. The developers have to figure out ways to solve the latency and lagging problems.
   
   
5. The underlying mechanism can be hard for the participants to understand. It involves the creation of a wallet on the user’s side and storing some crypto tokens in the wallet. With the wallet’s private keys, they need to sign every transaction that takes place on-chain. This can be a great put-off for those who are looking for a good user experience.
   
   
6. Some require an initial investment even before they can start playing. Axie Infinity is a good example in this regard.
   
   
7. Associated Risks: There is always an inherent risk of crypto tokens being hacked (though it is not very common), and players losing all their money.
   
   
8. You can lose the value of the token you are playing with as the crypto market is highly volatile. This can wipe off your assets’ value in a few seconds.  
   
   

What is the Future of Blockchain Gaming?

The future seems quite promising. The use of blockchain is on the rise and its usage in games is becoming even more frequent. The underlying feature of gamers being the real owners is what has captivated them the most.

As web3 makes progress in the coming years, the pie shared by the gaming ecosystem would keep on increasing. Big web2 companies like Sony and IBM (as mentioned previously) have realized its potential and have started incorporating various aspects of BG in their present use cases, According to Block Data, 2022, in spite of being a bear market, we saw an increase in fundraising for BG. In the future, we can expect more mainstream adoption.

As the interoperability of blockchains increases, the adoption would become more seamless. For this, developers would need to upgrade their existing technologies, whether it is how smart contracts are used or wallets are designed. They would continuously need to level up their knowledge and technical know-how.

FAQs

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Disclaimer

This article is for informational purposes only and is NOT a financial advice. We do not promote, in any form, any game, smart contract, wallets, defi, blockchain, blockchain firm company, cryptocurrencies or tokens mentioned herein. The content of this article is based on the information available up to the knowledge. You should be aware that investing in any web3 project or defi, or, game, or cryptocurrency or wallet or blockchain is subject to market risk and you MUST do your own due diligence (DYOR) before you put any money in any of the games, smart contracts or defi or blockchain companies or wallets or coins/tokens issued by these companies. 

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