Press Start to Go: How Crypto is Revolutionizing the $108 Billion Gaming Industry

Digital currency has been a part of the gaming universe for years.

Blockchain technology is often talked about in the context of things like banking, supply chain, healthcare, and agriculture. Indeed, Bang Joon-hyuk, the chairman of South Korean gaming giant NetMarble, said that “blockchain with objectivity, reliability and security will be applied to all industries in the future.”

With blockchain technology exploding across so many financial and technical spheres, it can be difficult to keep a finger on the pulse of everything that’s going on. Some major innovations have managed to fly ‘under the radar,’ so to speak.

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One such industry that has been largely neglected by the mainstream conversation around blockchain is the $108 billion-dollar gaming industry. And we’re not just talking about CryptoKitties.

The relationship between blockchain and gaming is blossoming and for a good reason.

Blockchain and Gaming Might Just Be a Perfect Match–But Why?

Blockchain is the technology that powers most cryptocurrencies, like Bitcoin. To understand why blockchain has the potential to play such an integral role in the future of the gaming industry, we have to understand what blockchain actually does.

It’s quite possible that at some point, some extended family member or co-worker has wasted 20 to 30 minutes of your precious time trying to explain how blockchain works, so here’s the tl;dr: blockchain is a public record of transactions. That’s really it.

There are a couple of important things to know about this public record: one, that it’s basically impossible to falsify transactions or change records that have been stored on a blockchain in the past as it’s un-hackable and immutable. Two, that blockchain is ‘trustless.’ This means that you don’t have to place your trust in any single entity (like a credit card company) to ensure that your money is safe.

It also might be helpful to know that it’s possible to store other information besides transaction data — like a game ownership certificate, for example — inside of a blockchain. Just like transaction data, that ownership certificate is un-hackable and trustless. In other words, you don’t have to rely on a centralized platform like Steam to keep track of your data.

Why do these aspects of blockchain make it such a perfect match for the gaming industry? There are a few reasons.

In-Game Goods Will Play a Major Role in the Future of the Gaming Economy

The truth is that virtual money has been an integral part of the gaming universe for years; games like World of Warcraft allow their players to either earn the game’s native currency (i.e. virtual gold coins) by completing in-game tasks or to use real-world cash to fill up the pockets of their virtual selves; the digital currency can then be used to buy goods and services in the online world.

Some players spend hundreds or even thousands on outfitting their avatars or owning pieces of virtual property; a man named Jon Jacobs made $635,000 by selling off a virtual resort (‘Club Neverdie’) that he owned in a game called ‘Entropia Universe.’

Up to this point, gamers who have invested their hard-earned cash into the virtual worlds they occupy are at the mercy of the game’s operators. Errors or hacks could leave them robbed of thousands of dollars; the lack of clear legislation to delineate what ‘ownership’ really means in the world of in-game property often means that players have no recourse when bad things happen.

Blockchain Will Enable Players to Truly Own Their In-Game Assets

“My vision is for gamers to be able to truly own their character, their weapons and their resources,” wrote Morten Rongaard, CEO of reality gaming group Reality Game Clash, in an article for Newsweek. “They should be able to trade, sell and buy securely using the blockchain. That is instead of taking a risk on platforms such as Steam, where so many users have lost money and have spent thousands of dollars building up a profile that they don’t even own and have no control over.”

Rongaard added that blockchain technology could allow players to be able to securely sell their avatars to one another, or even make their avatars interoperable between blockchain-based games.

In other words, blockchain would make it possible to truly own in-game objects and currencies. Every possession would be recorded on an immutable ledger–impervious to hacking and error.

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Compared to the traditional online gaming sphere, there aren’t actually very many blockchain-based video games at this point in time. One of the most prominent blockchain games currently operating is Decentraland. “Their virtual world is decentralized, meaning there is no organisation in place to rule over the users of the platform,” wrote a representative from digital growth agency “When you understand what their VR world is that has no rules, it really gets exciting.”

“Decentraland auctioned off virtual land after their ICO, giving a use case for those MANA tokens picked up during the token sale. Land was pretty tough to get but what you were buying was virtual real estate where you can build ANYTHING you like, without being governed…now that land can be openly traded on the Marketplace, it’s not unusual to see it selling for tens of thousands, if not hundreds of thousands of dollars.”

Blockchain Could Bring More Cash for Game Developers

Blockchain also stands to benefit the people responsible for creating the virtual worlds in which so many people choose to spend their time and money.

Currently, the most popular way to buy a video game involves a ‘middleman’ — such as the Steam Platform, Apple’s app store, the Google Play store — you get the picture. Each of these platforms charges its own commission on each of the products that are sold through them. This means higher prices for players and lower profits for developers.

There are a host of blockchain-based platforms aiming to address this issue. Estonia-based aims to “[create] a fair ecosystem for the future of games distribution”. GameCredits “lets gamers and developers buy and sell games and in-game items faster, safer and more privately than with credit card.”

Other platforms seek to unite the global game development community and facilitate the creation of new games as well as the sale. One of these, GameStatix, describes itself as “a decentralised, social platform for the co-creation of PC games that recognises, encourages and rewards user contribution, whilst giving game developers access to a global pool of talent to efficiently generate, curate and promote their content, well before release.”

Of course, piracy is a big problem in the gaming industry–platforms like the Pirate Bay have made it easy for millions of players to download ‘bootleg’ versions of games and tools to falsify game keys that allow full access. However, if game keys are blockchain-based, it would be much more difficult (if not impossible) to falsify them to unlock full access to a particular game.

Blockchain and Gambling Go a Long Way Back

The unhackable and trustless qualities of blockchain also make it a great fit for the gambling industry. In fact, online Bitcoin casinos have been around for years; nowadays, there’s even a company manufacturing ‘real-world’ crypto gambling machines.

“The records on the blockchain are secure and immutable, so they can’t be changed by the platform operators – even if they had dishonest intentions,” wrote fintech writer Matthew North in an exclusive email to Finance Magnates. “This means that payouts can be proven by tracing the transaction back to the blockchain in case of a dispute. However, if a gaming platform is truly decentralized using a distributed ledger, disputes will be rare.”

North added that smart contracts (a kind of technology used by some blockchain networks to automatically send payments based on a set of defined conditions) make it possible to create ‘open source’ gambling platforms: “using the blockchain, gambling platforms can publish a smart contract to show their payout algorithms are truly random. These smart contracts can then be audited by an external party or other developers before launching the platform.”

Blockchain networks that have prediction markets capabilities, like Augur and Gnosis, also make it possible to create trustless betting platforms.

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Of course, not all blockchain-based games are so complex or so glamorous. CryptoKitties, which is essentially an Ethereum-based version of Neopets, has turned into a multi-million dollar ecosystem.

In any case, the gaming industry is ripe for disruption, and blockchain might just be the golden ticket.

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