What is blockchain gaming and its relevance to the NFT Market?

The gaming industry is one of the fastest-growing industries in the world, with a market moving upwards to hit $545.98 billion.

It’s believed that gaming is the key for NFTs to achieve mainstream popularity.

While the gaming community has been receiving NFT games, many gamers have criticized them for their lack of engagement and focus on tokenomics. Some of them don’t even know what is an NFT.

Could Blockchain gaming be the cornerstone of a mainstream NFT market?

Let’s analyze the possibilities:

What is blockchain gaming?

Blockchain games, also known as crypto games or NFT games, include elements of Blockchain, crypto and Metaverses.

The blockchain gaming industry has its primary motivator in the potential for profits within the gaming industry, which is expected to motivate more non-blockchain-focused brands to experiment with NFTs as games or catalysts for Metaverse games.

Blockchain-enabled apps are known as dApps, and they focus on generating value for the players, allowing them to capture the utility and value of assets.

Many gaming NFTs use Ethereum’s ERC-721 token standard, prevalent on many other networks, such as TRON, EOSIO, and NEO. They can also exist in other blockchains. Some of the main benefits of decentralized gaming platforms are:

Interoperability

Interoperability opens up cross-platform compatibility, as it creates a unique gaming ecosystem where players can use their virtual currency and in-game perks across different games. The fact that NFTs are used in blockchain games only enforces this fact.

Blockchain games benefit players by providing them with digital rights, which they can share with others, trade on virtual currency marketplaces, or use in interoperable Metaverse environments.

Provable scarcity

Gaming economies need a level of scarcity in their items and utilities. Scarcity is provable through Blockchain, as all NFT purchases are recorded in an immutable record that validates the uniqueness of each NFT. If there’s just one rare item retrieved from a gaming world in the Metaverse, then that item is scarce and cannot be replicated or obtained by another player unless they purchase it from the original player.

Ownership

In-game purchases happen in real-time, and they are non-transferable investments that remain locked in a single gaming world—using NFTs in gaming environments grants players ownership of their in-game assets, making them own the NFTs in their games.

Let’s illustrate this with an example:

A player character obtains a magical fire sword that also doubles as an NFT, which they can use in-game for fighting, trading, or out of the game by selling them on a linked NFT marketplace. In a classic Web2 game, if the item didn’t double as an NFT, the player would be unable to sell it on the NFT marketplace, being limited only to sell it for in-game currency.

If the game were to shut down, the player wouldn’t lose access to the item as it’s minted on the Blockchain, meaning it would remain the player’s property. If it wasn’t on the Blockchain, the player forever lost the item and its associated value.

Online games exist in centralized environments. For example, the MMORPG World of Warcraft exists in different online environments than the MMORPG RuneScape. This means that an item in World of Warcraft isn’t transferrable to RuneScape.

In a blockchain game, things change: you’d be able to transfer items from a Metaverse to another as long as they were on the same Blockchain.

Play-to-earn profits

In the past, gamers needed to be famous as streamers, YouTubers, or professional eSports players for certain games to even think of making money while playing.

The gamers who paid to play had to invest money for extra perks, subscriptions, and purchasing the games themselves.

Blockchain gaming has allowed people from countries around the world to earn money while playing games from the comfort of their homes.

How do Blockchain games work?

Some of the most popular NFT games collaborate with a Metaverse to provide users with a more immersive experience.

On the other hand, many NFT games don’t involve joining a virtual reality or purchasing Oculus Quest to enjoy them. Axie Infinity is one of those games not too different from Facebook games from 2008 or mobile games like Dragon City.

The Sandbox & Decentraland

For example, the Sandbox and Decentraland are the most popular Metaverse games. They are play-to-earn virtual realities where you can purchase virtual lands, create gaming experiences for others ala Roblox and play other people’s games.

The freedom to do anything you want within the boundaries of your virtual imagination is the foundation of a decentralized economy, where you can hop from world to world or socially interact with your friends.

Decentraland and The Sandbox are both built on the Ethereum network. Decentraland has its crypto tokens: LAND and MANA, while The Sandbox has its native crypto token called Sand.

Axie Infinity

In Axie, users can purchase Tamagotchi-like creatures known as Axies, which they can level up and resell at a higher price. On top of that, players can battle with their Axies to earn SLP and AXS, Ethereum-based tokens that can be redeemed for fiat money.

Alien Worlds

Alien Worlds is one of the top NFT games, where you can take a spacecraft to explore one of the biggest Metaverse games available on Web3.

Alien Worlds exists on Ethereum, Wax, and Binance Smart Chain, where players mine space worlds to mine the game’s utility token: Trilium (TLM), which can be staked to participate in the governance of the planets in the Metaverse. The more rewards they obtain, the more money they can earn from Alien Worlds.

Splinterlands

Splinterlands is another top NFT game on the HIVE Blockchain, which functions as a collectible card game (CCG), where players duel in one-on-one battles between teams of monster cards. There are 249 unique Monsters and 40 unique summoners, with many more to be released. To unlock the play-to-earn features, players must purchase an entry level $10 Summoner’s book, allowing them to earn the tokenized Dark Energy Crystals (DEC) and complete daily quests.

Cons and challenges of Blockchain gaming

As with all things Blockchain, there are many challenges for Blockchain game developers.

One of the main challenges for Blockchain games is optimizing security for players. The games have to create private keys for each player in each game they choose to play. If they lose the private keys, their accounts are irretrievable, similar to how crypto wallets work.

The entry-level costs might be off-putting for some players who don’t feel comfortable spending a high sum of money just for the chance of making a profit from an NFT game.

Yes, gamers can earn money while playing, and that’s the gist of blockchain gaming. However, some games need you to first invest in crypto or tokens actually to be able to play them.

Let’s analyze this case for the NFT game Axie Infinity, which Sky Mavis developed. Axie, as it’s colloquially called, is the biggest NFT game of all, with over 926,873 daily users
actively playing the game, trading Axies and breeding them for SLP, and a chance to redeem the token for crypto.

However, to start playing Axie, you’ll need to purchase at least three Axies, and their costs could vary from $100 to $1,500.

Furthermore, Blockchain games tend to have high aspirations that misunderstand the purpose of creating an engaging, best-selling game.

Precisely, this happens because the focal point of blockchain games is to provide the players with a decentralized environment where they can earn money by playing and promise them in-game items and selling voting rights rather than tailoring the gaming experience.

On top of that, many of these games are poorly hashed reiterations of traditional Web2 best-selling games, such as PUBG, World of Warcraft, Hearthstone, Pokémon, and League of Legends, to the point that some could be considered borderline plagiarism.

Ripping off concepts from Web2 games and slapping them onto Web3 will not guarantee the success of the blockchain games.

The final challenge to overcome for blockchain game developers is to create engaging games that can compete with web2 games in the entertainment department.

Not many of the popular blockchain games are considered fun. This is a subjective metric and skewed towards personal taste, but consumer sentiment towards many of these games tends to reflect dissatisfaction regarding their level of engagement.

In plain words, gamers play blockchain games because they can earn money, not because they have fun playing them.

Should blockchain game developers overcome these challenges, it’s safe to say that the market would boom in popularity.

Final Words About Blockchain Gaming

Play-to-earn is the future of gaming, or so crypto experts say. Blockchain networks allow developers to create systems that facilitate player ownership and decentralized in-game economies.

As with anything blockchain-related, blockchain gaming is still a way before it kicks off in mainstream popularity, let alone take over web2 gaming. Creating engaging gaming experiences that also provide gamers with a decent income from playing them is the primordial challenge to overcome before blockchain gaming becomes the norm.

Check out our other guides on NFT games here.