January 29, 2018
With over 2 billion gamers worldwide and an increasing US$94.4 billion in revenue in 2016, the gaming industry has been experiencing significant growth. Moreover, global game revenues are even expected to rise to US$108.9 billion in 2017 and US$128.5 billion in 2020, according to market researcher Newzoo (1).
Although this is a good sign for gaming’s potential to expand and develop, there are still many challenges ahead for the industry. Unfair and too complicated revenue sharing models (2), difficulties in managing ownership of assets and dealing with fraud and cyber attacks (3) are just some of the major issues that both gamers and developers have to deal with.
Blockchain, the distributed ledger underlying cryptocurrencies such as Bitcoin and Ethereum, can offer an alternative approach to address these problems of the gaming industry. Blockchain development process has proven its worth as a reliable and transparent platform for secure registration and transfer of ownership without any intermediary, making it particularly suitable and effective for a number of domains including online gaming. So, how Blockchain development could change the situation?
Aside from big companies owning their own platforms, it is necessary for indie developers and smaller studios to rely on intermediaries such as Steam (4), the well-known gaming community, or major app stores to publicize and sell their games. However, the problem is that these platforms charge a large amount of fees but offer opaque compensation models. In addition, they usually block earnings up to 60 days before handing them out to developers.
In comparison with blockchain, the technology can offer a robust platform for a more transparent gaming environment. Specifically, Blockchain enables direct connections between gamers and developers as a transaction system is independent from intermediaries. One such example is GameCredits (5), a blockchain company focusing on a namesake gaming platform based on Ethereum blockchain. The firm relies on GAME, a crypto-token that gamers can purchase in order to buy games or during in-game content. GameCredits’ platform transfers every spent GAME token directly to the developers’ wallet with minimum transfer fees and none of the intermediary costs of traditional methods. Developers also can incentivise their gamers by issuing promotion coupons or rewards on the blockchain. As a result, this direct relationship can be beneficial to both developers and their gamers.
It is expected that smart contracts, actions executed and enforced automatically upon the completion of a transaction or specific therms relying on blockchain, can be used in the gaming industry as well. For example, blockchain-based gaming platforms can be developed to create automated revenue sharing between developers and content creators. Money can change hands out without a central authority which safeguards against human error as well as dishonest actors.
There is a massive but untapped opportunity to enhance the security and efficiency of the market for “gamer-earned” digital assets including the goods that gamers earn by playing the game. Nowadays, many gamers spend tons of their time and money playing games and earning rare collectible items for use only inside the game. However, when the games begin to lose popularity, as they regularly do, the items become worthless and impossible to liquidate. As a result, regardless of how many thousands of dollars and countless hours were invested to obtain those goods, gamers lose everything. Others often become victims of fraud and cyber attacks. Therefore, finding the effective way to address the above issues could successfully unlock a new potential environment for gamers to exchange and trade items. In fact, many companies are aware and have attempted to solve the issues evolved in gaming industry, but they failed to create a secure and frictionless infrastructure to support transactions of digital goods at any reasonable scale.
It is no wonder then that the most transformative technology on the internet, blockchain, is on the way to penetrate the gaming industry and rising the possibilities for everyone involved with secure and frictionless movement of digital goods in games. By preventing double-spending of cryptocurrencies (6), blockchain has proven its reliability in providing authentic ownership of digital goods without dependence on third-party brokers. Moreover, transactions on blockchain are also tamper proof and auditable. This makes them much more resilient against fraud and cyber attacks as they are opposed to proprietary and ad-hoc systems developed by gaming companies (7). This concept is directly portable to the domain of game assets.
For example, Beyond the Void (BtV), which is an online strategy game, is using the Ethereum blockchain for the administration of its in-game asset economy. By using smart contract, BtV creates and registers ownership of in-game assets on the blockchain. By not storing virtual assets in game servers, BtV provides full ownership of in-game items outside the game. Moreover, it gives gamers the ability to freely buy, sell or exchange virtual goods without ties to company servers. The company is also exploring the idea of creating cross-game assets on the blockchain allowing gamers to employ these items across multiple games (8). If the items can be used in different games, they no longer lose value if interest in that particular game fades. In essence, along with blockchain development process, the technology is giving gamers the opportunity to liquidate their goods in a secure, fraud-free ecosystem that this space has never seen before.
Blockchain has revolutionized the world’s financial system. Transferring funds from one person to another has never been easier thanks to its peer-to-peer feature. And in a short period of time, blockchain has started to shape the gaming industry as developers think of ways to attract gamers and gain their trust. A decade ago, the shift from console to digital gave global gamers access to a world of free games. Now we can see the shift to blockchain in the same light. By empowering players to own their digital assets and enhancing transparency, blockchain development has the potential to yet again transform gaming as we know it.
Infinity Blockchain Labs (IBL) is a visionary R&D company engaged in intermediary and RegTech services employing blockchain technology. We focus on forming alliances with established businesses and regulatory institutions across various industries, as well as providing collaborative incubation for early stage blockchain projects.
IBL aspires to empower Vietnam to become a global leader in blockchain development and therefore are committed to sharing information to nurture a passionate, educated blockchain community. One of the ways we maintain our role as ecosystem pioneer is by helping create educated blockchain enthusiasts. We are committed to sharing information and resources to help Vietnam become a blockchain hub through conferences, courses, contests, alliances, workshops, speaking engagements and incubations. Information regarding topics like hard forks helps people become more familiar with key blockchain concepts and thus able to adopt the technology.
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Contact: Nicole Nguyen PR@blockchainlabs.asia