Blockchain and Games are a Perfect Match

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Blockchain and Games are a Perfect Match

Public and institutional interest in crypto has reached an all-time high in 2021 with increasing adoption rates, which has resulted in a surge in cryptocurrency market capitalisation. Along with it, this has also been a year of big names in traditional and digital industries deciding to change their existing corporate and technical strategies to include blockchain technology and digital assets such as cryptocurrency.

Blockchain and digital assets can revolutionise the gaming industry as they offer several unique benefits to developers regardless of the type of video game they are creating. They also open up a new world of opportunities for the development of new types of games that would not otherwise be possible or viable.

Perhaps most importantly, there are many ways in which these new types of blockchain games can benefit players, from NFT distribution models to play-to-earn (P2E) games that incentivise players with the chance to win cryptocurrency rewards.

Video Games: Progress and Pain Points

Video games are a relatively old format compared to the modern incarnation of digital assets on the blockchain. Studying developments in the gaming sector,  technically and creatively, reveals a trend of historical and contemporary parallels to the crypto sector. As a result, it seems almost inevitable that the two sectors would converge.

Early home and arcade video games were short compared to those released today and one way they attempted to make up for this, apart from a thumb-numbingly high level of difficulty, was a scoring system and leaderboard. As games took a short time to complete, they tended to loop back to the start upon completion so a way that players could prove their skill to others was by earning a high enough score to enter their name on the leaderboard.

These systems had their share of flaws, but they were the best we had at the time. Leaderboard entrants were often limited to three or four characters to represent themselves due to memory constraints. Another issue was that if a system was unplugged for too long, the system’s memory containing all of the leaderboard entrant’s identities and scores could potentially be erased permanently. Also, the record of a score was only saved to a single machine, meaning that players could only compete or share with other locals.

Technological advancements have helped to solve problems of previous generations, and have even improved them. Internet and cloud technology means that player rewards such as game scores are saved online, and can be shared with other players worldwide. 

We also now see video games created by developers who offer players finely detailed and curated worlds to get lost in, many of which are also multiplayer. These games reward players in digital assets, which have value within the game exclusively. They can range from currency which can be used to buy items in the game, to the items themselves, which can often be used to communicate or show off to other players.

Blockchain is the next generation for video games

Each generation of technological advancement brings with it solutions to existing video-games problems, as well as new experiences which would never have been possible. We believe that just as the internet was a pillar of recent generational advancements in many industries including gaming; blockchain and digital assets will be the building blocks for the next one.

When blockchain gaming was conceived, the vast majority of games were created by cryptocurrency enthusiasts, for cryptocurrency enthusiasts – rather than video games. One of the first examples, CryptoKitties, is a trading game based on unique NFT minted collectibles. By minting NFTs on a decentralized blockchain for sale, the creators of CryptoKitties have maintained full creative and financial control over their revenue stream.

For collectors, they have the opportunity to acquire digital collectibles which, as they are NFTs, are embedded with a public blockchain record that can be used to verify both the creators and their history. Furthermore, as this information is stored on a distributed network rather than a centralized server, the record is permanent and immutable, as well as preventing the risk of loss via server failure.

Like the high scores of the early arcade days, however, these assets can only be shared with local players. Not local in terms of geography, but terms of the game world of choice. This is because the majority of online video-games data is stored by the developers or publishers on discrete, private, and centralized servers – and these servers are not designed for easily transacting information. This issue is called data siloing.

Storing sensitive data on centralized servers can be risky as they are often a prime target for attackers, and the personal information of players has been known to be compromised as a result. Distributed networks are much more difficult to compromise due to the complex data encryption, and algorithms associated with data storage and transactions.

Developers of video games (as opposed to blockchain collectible games) can use distributed networks to enhance their games with player reward mechanics. The rise of play-to-earn games which award players with cryptocurrency for participating is one example of that. Another is NFTs, which provide a means for rewarding players with non-fungible tokens representative of in-game digital assets.

Blockchain, Digital Assets, and the metaverse

Blockchain architecture such as Ethereum, unlike private centralised servers on the internet, is designed with interoperability in mind. This means that applications built on these blockchains can be interoperable with each other if the developer so chooses.

The interoperability between digital worlds and platforms is a defining attribute of the ‘metaverse’. The metaverse is currently an idea rather than a usable service or product, and it is being conceived and developed most prominently by blue-chip companies such as Nvidia and Facebook. Facebook recently even changed its name to ‘Meta’ to reflect its new corporate priorities.

It may be a while until these metaverse pioneers realise their vision, as the whole practice of creating discrete worlds which are also interoperable requires a lot of agreement between different companies and stakeholders before any kind of universal standard is established. This vision paints a picture of a ‘metaverse’ in which players can transition seamlessly between digital experiences, and take their digital assets with them.

The value of digital asset NFTs appreciates beyond the realm of collectibles and has tangible applications in the metaverse, where they can be applied and shared across different platforms. more than one digital world or experience. Imagine purchasing an NFT of a piece of art, or a costume, and sharing it with people worldwide across different applications and platforms.

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