How Blockchain Gaming Continues to Ascend Despite the Negative Sentiment Around the Crypto Market
The past year and in particular the past few weeks have been a trying time for the cryptocurrency market. However, despite the current volatility, blockchain gaming continues to show significant signs of growth. The recent DappRadar x BGA Games Report #4 showed that despite the challenging period of turmoil for the crypto market, the blockchain gaming category was still trending upwards. There was a 4,125% expansion since April 2021 and over 1.2M daily Unique Active Wallets interacted on blockchain in April 2022 (an all-time high).
While some prominent altcoins are losing up to 90% of their value – and NFT sales have seen volatility – we wanted to dig into what is driving blockchain gaming to be largely insulated.
Author’s Note: this is not the definitive answer but rather an exploration of some of the key drivers – it’s a starting point.
In-Game Economies Aren’t New: the behavior isn’t new, the medium is
Gamers, though often vocally against crypto entering the gaming space, are accustomed to tokenization, with some of the earliest games featuring virtual currency applications. When talking to game-players, we’ve found that the backlash towards crypto is often based on the fear that blockchain will dictate the gaming experience, instead of enhancing it. For example, many gamers feel that blockchain gaming is a glorified way to sell NFTs rather than placing value on gameplay.
The ability to buy and sell with crypto-based currency seems natural when it’s intended to enhance the gaming experience. Gamers that interact with blockchain based games with strong game-play first models are helping fuel the growth in this space. As more games are built on blockchain with immersive experiences intended to keep players engaged, this upward trend in the popularity of crypto-based gaming will continue.
Authors note: there are other thoughts on game-based economies overall, but that’s for another day.
The Utility is Real: Money generated through true ownership of in-game digital assets
In many traditional games, game-based economies exist outside the game itself. For games that have their own virtual currency and enable purchasing within the game, the value of the asset purchased stays only in the game. Blockchain-based games change that.
An in-game asset or community-access token is not simply a rare NFT – they now have utility beyond the item itself. The fact that players can actually own the rewards or assets earned in a game inverts the institutional hierarchy of how games previously operated. The power-through-ownership now lives with the decentralized base of gamers rather than only gaming executives. For game executives, they benefit by sharing in the secondary sales/trading of in-game assets. For players, the time spent playing a game has a real value now.
Blockchain gaming enables true ownership of assets that cannot be taken away from the user. This is the subtle shift from game exec-first to game player-first gaming economies that are possible on blockchain and why those that start engaging in blockchain gaming can see the palpable value.
The Community Layer: Incentivizes community based earnings.
Much like traditional games, blockchain games are characterized by the social aspect. With blockchain-based games, new social structures are popping up making them more attractive to a wider variety of game enthusiasts. With Guilds, DAOs, and other groups springing up around popular blockchain games, game-players have the option to interact both within a game but also around a game.
Beyond the social aspect, communities can truly influence a blockchain game. In a decentralized blockchain game, the game is run completely on-chain and no changes can be made without the community’s sign-off. In a hybrid model, the game itself is centralized but the assets can be traded in a decentralized marketplace, giving more options to buy and sell around the game itself. Some blockchain games have community models that incentivize players via dividends and voting influence in the game development processes.
The blockchain-gaming model is growing, evolving, and keeping game players (and game enthusiasts) engaged through utility, community, and increasingly more interesting gameplay. While the crypto market fluctuates as a whole, it’s a good reminder that the value of utility can hold constant when other things seem uncertain.