Digital currency in gaming is nothing new but cryptocurrency could make it fairer and more secure.
Gaming is big business. In 2017 microtransactions alone were worth more than $2.94 billion and 87% of gamers have made an in-game purchase.
This trend has helped to turn free-to-play games, like Fortnite, into money-making machines. In 2019, Fortnite made $1.8 billion and other developers have begun to follow suit. However, there are still friction points with in-game purchases and cryptocurrency could help create new opportunities for video game developers in the near future.
Just as games like ‘Animal Crossing’ have encouraged participation in real markets, crypto and blockchain will continue to intersect with gaming and foster new innovations.
Cryptocurrency and Gaming? Where’s the Connection?
Given the importance of microtransactions to the gaming industry, it is ripe for some crypto disruption. Many games now use their own in-game currency, such as Elite Dangerous’ ARX, which can be used to purchase cosmetic improvements.
This is fertile ground for crypto providers who could use cryptocurrency as a way to bring real-world value to these in-game currencies, ala EVE Online. This is particularly true for users of non-USD currencies who have to contend with poor exchange rates.
Another advantage is that it could help bring clarity to a system often rife with scams. Players have lost thousands in games like CS:GO and it is notoriously difficult to get items returned once they’re gone.
A big part of the problem is that it’s hard for game companies like Valve to know whether a request is for a trade gone wrong or a bonafide scam.
In essence, the video games industry has a number of pain points. This is particularly true for any game with a microtransaction component. This has been an ongoing complaint of players for some time now. Cryptocurrency provides an elegant solution.
Using Blockchain to Secure In-Game Items
To borrow a term that crypto investors are fond of, if you don’t own your account keys, you don’t own your cryptocurrency. The same could apply to in-game items. While they might be linked to your account they can be lost in a hack, an update, a bad trade, or simply because the developer goes under.
Blockchain can solve this. One of the key features of any blockchain is that it can record and store data in a trustless, unalterable manner.
Every item produced in-game would give a unique ID that could then be attached directly to a specific account. This records the item as existing and that you own it. This would mean that in the event of a server crash or similar, your item would not disappear and you could prove that it is in your account.
Additionally, blockchain could be used to trace ownership more easily. This would make it harder for scammers to operate and easier for video game companies to put procedures in place to track stolen items.
In other words, it brings more value to in-game items while simultaneously providing stronger security.
A Trading Ecosystem
Another advantage of this system is that it could be used to create an ecosystem to trade items between games or even developers.
Each item could be assigned a value via the blockchain and then traded for other items. This would create new interactions between developers and create a true marketplace for games.
Sounds Great in Theory, But Is Anyone Actually Doing It?
A number of blockchain companies have already tried to put this system into practice. One of the first well-known examples was CryptoKitties.
From CryptoKitties to Atari’s Token
Each kitty has its own unique 256-bit unique genome code. This is carried down to all its descendent kitties via the use of the Genetic Algorithm. It uses an optimization technique to solve nonlinear optimization problems to simulate this and enable players to “birth” unique cards.
Players are then able to trade these cats among each other for Ether. At its peak, the game was popular enough to slow Ethereum transactions.
Even though the CryptoKitties use has died down, traditional gaming companies are beginning to pick up the torch.
- In early October, video games giant Atari announced the debut of its own video game cryptocurrency, ATRI.
- The ERC-20 token has been in the works since 2018 and will be used on crypto casinos, blockchain games, and ultra.io at the beginning.
While it will certainly take some time for crypto to become mainstream in gaming, there is great potential.
Early movers like Atari could help bring more credibility to the idea of blockchain supported in-game currency, and help make microtransactions work better.