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Blockchain Use Case in Gaming Industry

What is Blockchain Gaming?

It’s an approach where the video game digital items (collectibles, guns, cosmetic skins, etc.) are real-world assets such as stocks and bonds in the form of non-fungible tokens (NFTs). Since NFTs are stored in a public and decentralized ledger, the blockchain, they give consumers the "right to send" and put the NFT under the control of their virtual assets. Blockchain gaming enables interoperable player profiles. Cryptographic traders and investors have public addresses that can be used to trade between various blockchain networks. Building games on the blockchain allows players to carry their own public addresses from one game to another.

Examples of Blockchain Games

Blockchain-based online multiplayer games have unleashed the potential of distributed ledger technology as the underlying infrastructure. This not only guarantees the uniqueness of the various assets in the game but also maintains the value proposition. One of the most successful examples of modern blockchain games is CryptoKitties. Launched in 2017, CryptoKitties will allow players to buy, breed, upgrade and trade virtual kittens on the Ethereum blockchain. After the great success of CryptoKitties, several blockchain developers have come up with similar concepts and projects, including CryptoBots. CryptoBots is another multiplayer online game where you can buy robots to improve your skills and compete with other players. With CryptoKitties, you can create unique virtual kittens. Similarly, CryptoBots allows you to create robots with your own skills and abilities.

There are usually two ways to apply blockchain in the gaming industry.

  • The whole game is based on blockchain. Blockchain developers can run games from the blockchain instead of relying on a centralized server.
  • The game can be run on a centralized server, but there is a blockchain-based platform for managing tokens, digital currencies, and collectibles.

An example of the first type is Taurion, a game based on the XAYA blockchain. The whole game is based on XAYA and there is no centralized server. In short, running a massively multiplayer online role-playing game (MMORPG) on the blockchain helps developers and players overcome various limitations of centralized servers. Soccer Manager Elite is another blockchain-based game on XAYA. In this game, you can own, organize and play online football.

A few other examples of blockchain-based games include:

  • Decentraland (virtual reality platform)
  • Cryptokitties
  • Gods Unchained
  • My Crypto Heroes
  • Cheeze Wizards
  • Crypto Space Commander

The State of the Gaming Industry Today

Today, most online games follow a centralized model. This means that all relevant data is stored on a server that is completely controlled by the game administrator. Data typically includes account information and server history, recording and storing all events and in-game assets (collections, items, cryptocurrencies, etc.) collected by the player. The database is owned by a single company, so players do not have actual ownership of their accounts and items. Centralized servers also have many limitations and vulnerabilities, including:

  • Server breakdown resulting from technical problems
  • Hackers attacking the system
  • Shutting down during gameplay
  • Baseless banning of accounts
  • Lack of accountability in in-game transactions
  • Unfair tweaking of the game economy to the detriment of players

Given that most online games use this central server model, much of what happens is in the hands of centralized gaming companies and administrators.

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Blockchain-Driven Trends in Gaming

Some major trends in the gaming industry have only been technically made possible by the advent of blockchain. These are asset tokenization, NFT, and play-to-earning [encryption] models.

  • Tokenization

Blockchain development technology has brought about the tokenization of assets. In other words, digital and physical assets can be tokenized and sold in the market. This also applies to the gambling industry. Play to sell assets such as skins, coins, diamonds, weapons, tools, and even characters as tokens. The player who purchases them becomes the owner of the item, and all sales and transfers of ownership are recorded and securely stored on the blockchain. In addition, each player can track the usage of digital assets and verify their authenticity.

  • NFTs and digital collectibles

The NFT phenomenon has attracted the attention of many celebrities and athletes. Blockchain is the technology that made it possible to introduce this concept. These are blockchain-based non-fungible tokens that represent unique in-game items. Players can buy, sell, and collect them, but they cannot duplicate or exchange these tokens. NFT games are not new. The NFT epidemic actually started in 2017 with a blockchain game called CryptoKitties. Here, players can buy, breed, collect and sell digital kittens with unique looks and features. It sounds like a 21st-century Tamagotchi version that kids in the 90 are absolutely loved.

  • Axie Infinity

Another blockchain game, Axie Infinity, is about to step on a cat's paw. Axie Infinity's daily active user base went from 30,000 in April 2021 to over 1 million in August. According to the July 2021 Blockchain Game Report, Axie has become the most valuable NFT collection to date with over $ 1 billion in trading volume. In this game, players buy, breed, exchange, and fight competitions using pets called "axies." Another interesting news is that an American company called Polygon recently launched Polygon Studios. The studio has $ 100 million in funding to build NFTs for the gaming market and assist developers. As one can see, NFTs and blockchains have many benefits, but digital trading games are probably one of the most common use cases.

How Will Blockchain Technology Impact the Gaming World?

This heading introduces some of the most common ways blockchain technology can impact the gaming industry.

  • Real ownership
    As mentioned earlier, in blockchain-based games, players have permanent ownership and full control over the in-game assets. Each asset is typically represented by a unique non-fungible token (NFT) that looks like this: the ERC-721 token. The assets can include game cards, skins, gear, and characters. However, you can link to all blockchain tokens managed by the distributed network, regardless of asset type.
  • Decentralized marketplace
    Gaming companies have the power to control the drop rate and profitability of their games. You can also lock or bind in-game items to make them non-tradeable. In contrast, games built on blockchain networks allow the creation of decentralized marketplaces. Doing this eliminates the need for trust between players while providing censorship resistance. All players are free to buy, sell and trade in-game assets peer-to-peer.
  • Streamlining payments
    Blockchain and smart contracts possess specific capabilities that can cut costs and hasten financial transactions. They can facilitate all kinds of payments, not only for transactions between players (peer-to-peer) but also for transactions between players and developers.
  • Gaming multi-universe
    Blockchain and smart contracts possess features that can reduce fees, and speed up financial transactions. They can facilitate all kinds of payments, not only for transactions between players (peer-to-peer) but also for transactions between players and developers.
  • Fair playing ground
    Depending on the implementation, blockchain allows the creation of open-source, decentralized, and transparent game servers. In such cases, the mechanics of the game can only be changed if the majority of the network votes for it. In addition, the decentralization of the blockchain prevents hackers and scammers from interrupting the game because there are no single points of failure.
  • Unlimited gaming
    If the game resides on a central server, developers can abort the project or end the game at will. With blockchain gaming, however, players can keep playing when the developer leaves. The game will survive as long as the blockchain network is running. In some cases, new developers will take over to further improve the project.

Blockchain is Changing the Gaming Narrative in Multiple Ways

According to blockchain experts, implementing blockchain in a game is easy due to its liquidity and the fact that players are accustomed to tokenization. In addition, many games allow users to purchase in-game items for both virtual and real money, so experts agree that blockchain is the best way to track these transactions. Blockchain technology is setting the intersection between cryptocurrencies and video games. Blockchain resolves several challenges that have always been there leaving gamers frustrated.

  • Fortifying games with extra security
    With blockchain, it will be harder for hackers to break into the data on the server due to the strength of the blockchain's decentralization and the highly effective data encryption methods. This creates a safe environment for both game entrepreneurs and developers, increasing productivity. Hackers cannot break the distributed blockchain network, no matter how experienced they are as blockchain experts because there are no servers to damage. There can only be breaches when there are loopholes in the code.
  • Enhancing the ownership of In-Game Assets
    By introducing more transparency and regulation into gaming, blockchain technology will also help in-game asset ownership. The actual digital ownership that allows players to trade and profit on rare items is one of the most important elements of blockchain gaming. Blockchain-based games use smart contracts to handle all transactions. Smart contracts run with pre-programmed parameters and are irreversible. Therefore, when you launch a blockchain-based game, in-game assets acquired using smart contracts will be immediately transferred to the player's public address account. Apart from that, smart contracts operate without the involvement of central authorities. You cannot change the public address where your in-game assets are stored. Nor can you personally replace the ownership of these assets. They remain the property of the player who owns them.
  • Control Over Favorite Video Games
    Gaming built on the blockchain is immutable. This ensures that the game programs and their series used on the Internet will not change in the future. This allows you to download and install different versions of video games from anywhere without jeopardizing your gaming experience.
  • Trading resources and earning incentives
    Game players and blockchain developers can use blockchain to create resource-rich games and apps, update game versions, and win awards through blockchain game mining technology.
    This allows you to collaborate and earn tokens while creating an immersive user experience in your app.
  • Improving payment methods
    Cryptocurrencies are very secure and private. In the gaming industry, there have already been several cases of major network breaches, including the disclosure of customer credit card information online and sales on the black market. The blockchain gaming application uses local crypto tokens or other similar tokens to make payments, improving the transaction experience. Cryptocurrencies that work with video games can also work to improve player payment options. Collaboration with crypto companies such as Twitch and Stream can be traced back several years in the history of cryptocurrencies and video games. Steam and Twitch are some of the popular social media platforms and the fact that they are experimenting with cryptocurrency payments may indicate that there is a future for cryptocurrencies combined with video games.

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How can Blockchain Benefit the Gaming Industry?

The following are some benefits of the blockchain gaming industry.

  • Asset ownership
    Blockchain can streamline and protect ownership of in-game items. This is one of the most important NFT use cases today. Each asset is typically represented by a unique non-fungible token (NFT) that looks like this: ERC-721 token. Irrespective of the kind of assets, things of value can be linked to blockchain tokens managed by distributed networks.
  • Transparency
    Blockchain developers can create an independent economic system in-game. Due to the decentralized structure, some transparency is an additional benefit.
  • Giving power back to the people
    Including blockchain makes the game more democratic. By introducing voting rights according to the number of tokens, developers can make decisions that players find attractive.
  • Better payments
    Lastly, by using the blockchain instead of centralized servers, games can reduce transaction time and costs.

Limitations of Blockchain in Gaming

Although blockchain technology has opened up a whole new horizon for the gaming environment, there are still important challenges to overcome. Some of them are:

  • Scalability
    Scalability is one of the key limitations of blockchain, as centralized networks tend to be much faster than blockchain. Blockchain tends to be much slower than centralized networks and can prevent games from rolling out globally.
  • Demand
    Demand for blockchain games is significantly lower than traditional games due to the scalability issues faced by developers.
  • Centralization
    Not all blockchain-based games are completely decentralized. Some of them use ERC-721 or other blockchain tokens, but they actually run on a central server. Therefore, blockchain games are not always decentralized. Some games use a central server to distribute tokens.
  • Maintenance
    When it comes to maintaining blockchain games, developers often struggle to raise money.
  • Resources
    Due to the small group, blockchain game developers find it difficult to compete with large centralized game developers.
  • Substitute products
    Blockchain games are mostly created by small independent blockchain developers. These teams may struggle to compete with the giant gambling companies in the centralized world.

Conclusion

Blockchain can reshape the game world as we know it and could mean the end of the exclusive rules of a few game publishers and developers. Online gamers tend to weigh digital items sold as in-game tokens against traditional purchases that are not worth their own money. We may have to wait a few more years before blockchain becomes widely used in games, but in the future, we can expect a more transparent, safe, and democratic gaming environment. Ethereum remains the most used blockchain in the game. Meanwhile, blockchain app development companies and developers are developing their own platforms, protocols, and networks specifically designed for NFTs and crypto games. These are Flow, WAX, Polygon, Enjin, and so on. To conclude, a blockchain developer working with others along with a group of developers will shape the future of the gaming industry. As a result, cryptocurrencies and video games have the potential to transform the entire gaming industry in many ways.

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