While the gaming industry is performing strongly with increases year over year, why is blockchain gaming so revolutionary? How is it an improvement on the traditional gaming system that, for many, already works?
The gaming industry is predicted to surpass $138 billion USD by the end of 2021, an increase from 2020 which had global revenue of over $131 billion USD. Clearly, the industry is doing well, but there are opportunities by leveraging the strengths of blockchain technology. There is just so much that can be done on a blockchain that allows developers to achieve more, from a design perspective, but also from a monetization standpoint that wasn’t achievable before.
What is a blockchain?
A blockchain is a distributed database shared within a computer network’s nodes, and as a database, it stores electronic information in a digital form, making it harder to hack. Most famous for their vital role in cryptocurrency systems, such as Bitcoin and Etherium, blockchains can maintain secure and decentralized records of transactions.
What is so innovative with a blockchain is how it guarantees the security and fidelity of a data record and fosters confidence without requiring a trusted third party such as a bank.
An important difference between a standard database and blockchain is how the data is organized. A regular database typically arranges its data into tables but a blockchain, as indicated by its name, organizes its data into groups (blocks) that are sequenced together. These blocks have certain capacities for storage. When these blocks are filled, they are then closed and connected to the most recently filled block, thereby making a data chain and how we get the term: “blockchain.” Then, any new information that follows the latest block is assembled into another newly formed block that will also be added to the chain once it is filled.
Inherently, this data structure results in what is essentially an irreversible data timeline when used in a decentralized nature. Every time a block is filled, it is basically unchangeable and subsequently joins this timeline. Plus, it results in a precise timestamp given to every block on the chain for the time it was added to the chain.
Verifiability and transparency
Everyone should start a game in the same position, but with hard work (or investing personal finances), a player can acquire digital assets. Yet in most traditional games, there remains a lack of accountability or transparency. As these are virtual assets, game developers have the option of producing an unlimited amount of an item that is supposed to be rare or tilt the scales by giving it to select players.
Blockchain gives greater transparency and verifiability by allowing the tokenization of these virtual assets and by creating decentralized gaming asset markets - often called an NFT (non-fungible tokens) Marketplace. As the records are open for anyone to double check and verify, this leads to greater trust. Moreover, players have the option of visiting these decentralized markets to purchase digital assets at reasonable prices drawn from an open order book.
A key way to increase the value of these assets is scarcity. Unfortunately, in traditional gaming, finding out the rarity of specific items or pieces of equipment (like a magical sword) is basically impossible for a player to determine in most games.
But when issued on a blockchain, the total quantity of these assets can easily be authenticated on the block ledger. Consequently, this results in an increase in trust which impacts the marketplace value.
Centralized servers host gaming platforms, and transactions are regularly conducted on mobile phones or personal computers that lack suitable security measures. Also, assets stored in gaming accounts are capable of being stolen. Certainly, they are nowhere near as secure as personal bank accounts, regardless of the gaming accounts’ value.
Due to blockchain’s distributed nature, it is one of the most secure ways of holding value and is basically unhackable. Security can be enhanced by storing any digital gaming assets that a gamer collects on a blockchain.
It’s also possible for blockchains to store value as non-fungible tokens (NFTs). NFTs are used to represent game items that are one-of-a-kind, collectible, and potentially quite valuable. Because NFTs are stored in a wallet it makes them very easy to buy or sell and so they become more tradable on the open blockchain-based market.
Time and cost of a transaction
While North America may have been the cash cow historically for gaming, it is being eclipsed by other regions, especially eastern Asia. It’s common for players of different countries to play with or against each other. But in the traditional gaming world, transferring digital assets could take days for payments processing, not to mention potential legal wrangling.
But with blockchain, worldwide payments are nearly instantaneous. Simply a matter of connecting wallets, clicking a button, and the item can be transferred around the world in a moment.
Blockchain and the Metaverse
Where blockchain and gaming intersect is an intriguing world where it’s possible for a virtual world to have a lifelike reality. As both augmented reality and virtual reality develops (and with substantial recent investment from Big Tech, this is only a matter of time), we can expect the Metaverse to take on an increasingly integrated role within our real-world life.
Breaking the shackles of the console market
Blockchain has the potential to completely restructure the industry, which has in many ways been dominated by the near-monopolistic console market. Decentralization by leveraging blockchain could help smaller developers (such as the partners that RADA backs like The Parallel, Heroes TD, and DeFiHorse) take control from the limited number of large gaming studios which currently dominate the industry.
So there is much that blockchain gaming is doing to contribute to the blooming Metaverse - making games more immersive and boundary-blurring than ever while also making them safer and more transparent than traditional gaming.
We are fortunate enough to be witnessing a technical disruption in the worlds of gaming and blockchain. Together, they will create a seamless ecosystem, making blockchain the foundation from which it springs.