In a remarkably brief span, blockchain technology has completely transformed our perspectives on financial transactions, data storage, and decentralized, secure communication. Through groundbreaking innovations such as NFTs and the Metaverse, blockchain has ushered in a world of captivating possibilities within the gaming industry, which stands as one of the globe’s most popular and lucrative sectors.
A recent report from Dappradar reveals a staggering 2,000% surge in blockchain-based game participation since the first quarter of 2021, attracting an impressive 1.5 million gamers worldwide. Technologies such as Web3, the Metaverse, and NFTs have assumed pivotal roles in blockchain gaming, granting players true ownership of in-game assets.
The play-to-earn model is gaining significant traction, harnessing the potential of blockchain technology. However, despite the profitability of blockchain gaming, the market continues to grapple with certain challenges. This Cryptopolitan guide delves deeper into the world of blockchain games to evaluate if they are really decentralized.
What are blockchain games?
To gain a comprehensive understanding of blockchain gaming, it’s crucial to delve into the fundamental concepts that underpin it. At its core, blockchain gaming is built upon the principles of blockchain technology. This technology is characterized by a distributed public ledger that operates without the need for a central authority. The hallmark feature of blockchain, its inherent decentralization, sets it apart as the key differentiator between blockchain games and traditional gaming, which heavily relies on centralized server infrastructure.
The transformative potential of blockchain in the gaming industry became evident with the rise of non-fungible tokens (NFTs). NFTs are distinctive digital assets or cryptographic tokens securely recorded on a blockchain. These tokens empower gamers to establish unassailable ownership rights over specific in-game assets, such as character skins and unique items. What makes NFTs particularly revolutionary is that they grant players absolute control and sovereignty over their assets, thanks to the decentralized nature of blockchain technology.
Furthermore, the flexibility provided by blockchain extends to the trading and monetization of in-game assets. Gamers can freely engage in asset exchanges with other players, fostering a dynamic marketplace within the gaming ecosystem. Additionally, these assets can be sold for cryptocurrencies, adding a new layer of economic value to virtual possessions.
Perhaps the most distinctive feature of blockchain gaming is its ability to create a heightened level of connectivity between different games and virtual universes. Unlike traditional games, where in-game assets are confined to their respective environments, blockchain enables players to seamlessly utilize their assets across a diverse array of gaming experiences. This interoperability enhances the player’s gaming experience and opens up exciting possibilities for cross-game collaboration and asset utilization.
Decentralization of Blockchain games
Interestingly, while blockchain technology is thought to bring full decentralization, there exists a paradox between the promises of “decentralization” and “trustless ownership” and the practicalities of game development in the world of blockchain gaming.
The truth is that the vast majority of crypto games can be best described as “partially decentralized” at best. While they may bear the branding of “Web3,” in reality, many still operate under the influence of “Web2+” elements. This means that while game assets may indeed live on-chain within a blockchain network, critical components such as game logic, state, and storage continue to reside off-chain on centralized servers.
This apparent discrepancy between the ideal and the reality stems from several factors. Firstly, the current state of blockchains in 2023 is still characterized by a fundamental limitation – their processing speed.
Blockchains, including Layer 2 solutions, are not yet equipped to handle the immense volume of transactions that video games demand. As Ludens, the CEO of Lattice, points out, attempting to build a fully on-chain game today is akin to developing video games on a computer from the 1980s. The inherent constraints of blockchain technology hinder the creation of complex on-chain games.
Moreover, developers grapple with a set of challenging trade-offs when incorporating blockchain into games to ensure accessibility to non-crypto audiences. This is a vital consideration because not every player is comfortable navigating the intricacies of a cryptocurrency wallet. In response to this dilemma, some developers have devised hybrid solutions.
For instance, Aurory’s development team implemented a system known as “Syncspace,” enabling players to store their assets in Aurory’s custody while retaining the option to transfer them into their Solana wallets if they desire greater control. Julien Pellet, Aurory’s infrastructure technical director, explains that “Syncspace” serves as the platform’s UX (user experience) strategy, acknowledging that not all players are prepared to manage the complexities of a crypto wallet. In making this trade-off, Aurory sought to broaden its reach and appeal to a wider audience of non-crypto-native Web2 players.
Nevertheless, there exist passionate communities of “degenerates” (often referred to as “degens”) who remain committed to the vision of fully on-chain “autonomous worlds.” These autonomous worlds are conceived from the ground up by players themselves. Some groups have even taken it upon themselves to modify existing games to establish collective, cooperative environments where everyone enjoys equal “victories.”
While the road to creating autonomous worlds or fully on-chain games is fraught with challenges, these early efforts are indeed impressive, reflecting the unwavering enthusiasm and commitment of certain segments of the blockchain gaming community.
Major trends in blockchain gaming
Blockchain-based games have firmly entered the mainstream, catalyzing substantial revenue growth and ushering in a plethora of opportunities within the blockchain gaming industry.
In essence, these trends represent the vanguard of blockchain gaming, unlocking new dimensions of ownership, earnings potential, and economic participation for players, while redefining the traditional gaming landscape.
Non-Fungible Tokens (NFTs): NFTs, which originated in the early days of blockchain gaming, remain a linchpin of the industry today. Their significance is so pronounced that even traditional gaming companies are venturing into the NFT arena. Essentially, NFTs represent tokenized versions of real-world or digital assets, spanning a wide spectrum from art to music. Within gaming, NFTs predominantly manifest as in-game cosmetics like skins or gameplay items, which players can purchase and genuinely own, even beyond the confines of the game world. The NFT owner exercises full control over these assets, which possess real-world financial value and can be exchanged or sold for currency.
Play-to-Earn Models: The advent of play-to-earn models in blockchain games has revolutionized player incentives. In this paradigm, gamers engage in gameplay with the potential to earn rewards in the form of cryptocurrency. Beyond purchasing NFTs, players can also generate in-game assets through their gameplay efforts. For instance, as a player acquires valuable in-game items such as skins, cards, or virtual land, the accumulation of assets grows. Consequently, these assets appreciate in value, offering players the opportunity to sell them for cryptocurrency or real-world currency. Notable examples of successful play-to-earn games include Axie Infinity, Gods Unchained, and Thetan Arena.
Gaming Economy Tokens: Blockchain technology has facilitated the emergence of a novel gaming economy model, characterized by blockchain-powered games having their own fungible tokens. These tokens serve as the in-game currency, tradable within the game environment and accessible via external channels like cryptocurrency exchanges. This approach eliminates the reliance on in-game purchases, democratizing access to in-game currency for all players. By leveraging blockchain in gaming, in-game assets shift from being owned by gaming publishers to being held by the gamers themselves. This transformative shift enables gamers to exchange their assets on open marketplaces for cryptocurrency or fiat currency, effectively monetizing their gaming time.
Benefits of blockchain gaming
Secure in-game transactions
With the proliferation of digital wallets like MetaMask, players can engage in secure buying and selling of crypto tokens and in-game assets using digital currencies. This enhanced security ensures the protection of players’ valuable assets and investments.
Interoperable gaming profiles
Through the utilization of their unique public addresses, players gain the ability to seamlessly conduct transactions with their cryptocurrencies across a multitude of games. This interoperability allows assets to traverse different gaming universes, providing players with enhanced flexibility and a wealth of new opportunities for asset utilization.
Absolute ownership of in-game assets
Players enjoy genuine ownership of their in-game assets, freeing them from reliance on developers who can unilaterally terminate a game at any point. This ownership empowers players to retain control over their hard-earned assets.
In stark contrast to traditional games, where developers hold unilateral decision-making authority, blockchain games place some power in the hands of players. This decentralization, although partial, empowers gamers to actively participate in decision-making processes, influencing the course of the game.
Creation of rare in-game assets
Leveraging smart contracts proves immensely advantageous in crafting unique digital collectibles that possess substantial market value. These in-game assets are brought into existence as a result of specific types of interactions within the game. Notably, examples like CryptoKitties have demonstrated how distinct cat breeds can command higher prices, illustrating the potential for rare and valuable in-game assets in the blockchain gaming ecosystem.
Challenges associated with blockchain gaming
While blockchain-based gaming platforms bring forth groundbreaking innovations, they also introduce certain challenges that may give players pause.
Blockchain gaming frequently incorporates cryptocurrencies as integral in-game assets or currencies. Yet, the unpredictable nature of cryptocurrency markets can result in significant volatility, leading to sudden and unforeseeable fluctuations in the value of virtual assets. Gamers who invest time and resources in these assets could potentially face unexpected losses due to market instability.
Blockchain gaming relies heavily on decentralized networks and smart contracts to manage transactions and asset ownership. However, these systems are not immune to security vulnerabilities and hacking attempts. If a smart contract is compromised, gamers risk losing their valuable in-game items or tokens, which can result in financial losses and raise privacy concerns.
Lack of regulation
The blockchain gaming arena is relatively nascent and lacks comprehensive regulatory frameworks. This absence of oversight can create an environment where fraudulent projects, scams, and unscrupulous practices can flourish. Gamers may encounter fraudulent initial coin offerings (ICOs) or developers who overpromise and underdeliver, potentially leading to financial disappointment.
Scalability and speed
Blockchain networks, such as Ethereum, which are commonly employed in blockchain gaming, may encounter scalability and speed issues. The limitations of these networks can result in sluggish transaction processing, elevated fees, and diminished gaming experiences, particularly during peak usage periods.
Complexity and learning curve
For gamers who are new to blockchain technology, navigating the intricacies of blockchain gaming platforms, wallets, and transactions can be an intimidating endeavor. Grasping concepts like private keys, wallets, and gas fees can present a steep learning curve, potentially discouraging newcomers from fully immersing themselves in the world of blockchain gaming.
After examining the core question: Are blockchain games genuinely decentralized? Majority of crypto games today can best be described as “partially decentralized” at most, with critical components such as game logic, state, and storage residing off-chain on centralized servers.
Nonetheless, blockchain gaming offers numerous advantages. It guarantees secure in-game transactions through digital wallets like MetaMask, fosters interoperability among gaming profiles, ensures genuine ownership of in-game assets, and introduces decentralization, giving players a say in decision-making. Moreover, blockchain gaming’s utilization of smart contracts enables the creation of rare and valuable in-game assets, adding depth and excitement to the gaming experience.
What are blockchain games?
Blockchain games are video games built on blockchain technology, a decentralized and secure digital ledger. They utilize blockchain to create, manage, and trade in-game assets, providing players with true ownership and control over their digital items.
Are blockchain games decentralized?
Most blockchain games are partially decentralized. While some aspects, like asset ownership, rely on blockchain, critical components like game logic and storage may still operate on centralized servers. Full decentralization remains a challenge due to blockchain's current limitations.
Are blockchain games secure?
Blockchain games benefit from the security of blockchain technology, but they can still face security challenges. Smart contract vulnerabilities and hacking attempts can pose risks. It's essential to exercise caution and use secure digital wallets.
Can I use in-game assets from one blockchain game in another game?
Yes, one of the advantages of blockchain gaming is the ability to use in-game assets across different games and virtual universes, provided they are compatible with the same blockchain.
How do I sell in-game assets for cryptocurrency?
You can sell in-game assets for cryptocurrency on blockchain marketplaces and exchanges that support NFT trading. List your assets for sale, specify a price, and complete the transaction when a buyer purchases your item.
Are blockchain games regulated?
Blockchain gaming is relatively new and may lack comprehensive regulatory frameworks. As a result, it's essential to exercise caution and conduct due diligence when participating in blockchain gaming activities.
Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.