Despite the disappointment of users in the ICO model and the organization and implementation of blockchain projects, 2018 is still going down in history as the time of the birth of the crypto gaming industry. The industry, as the name implies, combines digital tokens and various games. We collected the essential things that formed the game market.

New, Unique NFT. How It All Began

The past 12 months were not the easiest for the Ethereum project, but despite this, the platform made a massive contribution to the development of the crypto industry. The introduction of ERC-20 token has opened up new opportunities for various companies to create their internal coins, and its reformation has led to the appearance of a new standard—ERC-721.

While ERC-20 standard provides for the creation of identical coins, in ERC-721, each token is unique and authentic. Thus, this standard, created at the end of 2017, became the first non-fungible token (NFT) where “fungible” means a property of currency and implies interchangeability. For example, any one hundred dollar bill is identical to another one hundred dollar bill.

Coins of the ERC-721 standard can be collected, because there is no other similar token, or introduced into the field of activity where exclusiveness is needed. Therefore, ERC-721 began to be used in the gaming industry.

CryptoKitties: The First and Cutest of All

Canadian developers of Axiom Zen first used ERC-721 in the blockchain game CryptoKitties. CryptoKitties is the first game where the user can grow, buy, and sell virtual cats on the Ethereum platform. At the end of December last year, the virtual pets conquered the crypto community not only with their cuteness but also the opportunity to earn.

The owner of a crypto kitten could create a unique pet and sell it: with an average price of $15 for one crypto kitty, the cost of a virtual animal could reach $120,000. Then the blockchain community saw that with the help of blockchain games, one could earn good money. And, given the experience of CryptoKitties, the era of the introduction of digital tokens and the operation of the blockchain in the gaming industry had begun.

Followers of Kittens and the Squad of NFT Standards

In 2018, developers began to improve the ERC-721 standard and introduced the new ERC-1155 and ERC-998, which consumed less gas and saved on commissions. In the industry, some standards are engaged in the unification of NFTs or collecting electronic items. Thanks to this, in the first quarter, the marketplaces OpenSea and Rare Bits appeared, where users can buy, sell, and manage digital crypto heroes.

After that, various gaming companies began to adapt crypto tokens for their projects and thus form a more open and profitable gaming industry. Crypto gaming has become popular. In October, DeCenter visited the Crypto Games Conference in Minsk, where, throughout three days, the experts shared their experiences in creating crypto games.

True Flip co-founder Konstantin Katsev during his speech said that the blockchain for gaming is a great achievement. After all, modern projects must earn money. At the same time, as Katsev explained, for tokenization of games, it is not necessary to create their own unique technology, because players can receive payments using smart contracts and a crypto wallet.

“It is difficult for a computer game to prove its truthfulness with the help of fiat. If your rewards are in dollars, then this is a very ‘gray’ story with intermediaries. Two years ago, we decided to create a blockchain-powered lottery game with a big score and did not regret it,” says Konstantin Katsev.

The process of creating a crypto game is no different from the usual method of building games for PCs or consoles. This was told by Tomas Draksas, the co-founder of the Ethereum crypto casino Edgeless. He explained that to form a successful game case, you need to gather developers, write code, upload to the server, and gather user opinion. It is also necessary to take into account the specifics of the Ethereum network operation and oblige users to undergo the KYC procedure.

One of the popular trends in crypto games is the organization of auctions. The French company Auctionity enables its customers to hold sales with NFT tokens. NFT standards confirm the uniqueness and authenticity of objects, explains the developer of the project Begonia Garrido. Therefore, in the case of crypto auctions, the user exchanges the token for the subject of interest. “And this is all really legal; it’s impossible to fake,” says Garrido.

Crypto Games Tokens

An important component of any crypto game is the token that the gamer will use to make contributions, receive rewards, and more. In most cases, the projects are based on Ethereum and apply the standards mentioned above: ERC-721, ERC-1155, and ERC 998. Vladimir Serzhanovich from CopPay believes that not all games need special tokens, and in many cases, Ether would be enough. “The user who enters the landing page of the game must clearly understand the cryptocurrency’s functionality. Technically, the situation has been solved long ago, but there are many problems related to jurisdiction and compliance,” as Serzhanovich is sure.

Jenny Erez from Jubiter believes, however, that Ethereum technology does not quite fit into a valid economic model. “Large institutions are afraid of cryptocurrency because of too high risks for people. In addition, users in many cases overpay considerable transaction fees. In general, however, if you introduce the blockchain into a crypto game, then bonuses for swords or powers will not cause any harm.”

Besides, the system on the Ethereum is characterized by slow transactions. The lead developer of Minter, Daniil Lashin, said that the project’s blockchain would allow for 2,000 tx/sec. In addition, users can create their own coins and quickly transfer them. Therefore, Minter is ideal for gaming coins.

“You need to know two things about the coin that you create on Minter: first, it always has a fixed price, and you can buy and sell your coins inside the blockchain. Secondly, all coins are exchangeable. If there is interest in the internal tokens of the game, then they can be converted to others and increase the popularity of the project,” says Lashin.

The more popular the crypto game, the higher the cost of the token. Therefore, Minter coins are self-sufficient and completely liquid. On the blockchain, you can create any game without smart contracts, using the MApps Framework in any programming language, says Daniil Lashin.

What’s Next: The Prospects for the Development of Crypto Gaming in 2019

Of course, crypto gaming will develop further and will not stop on the introduction of basic reward models using cryptocurrency. Stanislav Sokolovsky of GMTLegal believes that gaming tokens that generate income should get a legal definition and gain a foothold in the tax authorities. “How to do this is an open question. It is likely that tokens will be registered as the financial part of the business, or as fiat assets,” says Sokolovsky.

The legal regulation of the crypto industry as a whole is an important issue that concerns gaming. So far, as many experts believe, regulators do not want to change anything, but despite this, young crypto games need to act and attract an audience, as people have long been ready to receive money for gaming. And “now mom will not be able to scold you for lost time.”

Some critics of crypto gaming believe that this line of games is intended solely for enthusiasts of digital assets, and not for mass adoption. For this view not to be confirmed, it is necessary to be user-friendly and have an attractive interface.

“Crypto projects, especially games, pay little attention to design. Heroes must be bright; it is important for the user to see and feel that this game not only brings money but also looks pleasant. Projects, I appeal to you: finally, hire a freelance student who will make everything look pretty for a small fee!” says a PR manager of a crypto game.

Also, project marketing is still a problem area in the promotion of games, as experts in PR and advertising say. Now the teams are faced with the task of retaining coin holders.

“We need to identify the target audience and work with it. People have become passive; they only need earnings. Nobody cares about technology, what we are doing there, or what we are improving. The main question of users is, ‘Where are the x’s?’ Your public should be interested in the project,” the specialists are sure.

It is also necessary to work actively to eliminate the negative impact by using the high-quality work of all departments. “Haters must be fought softly and loyally. You can call them to your office and show the work. You can demonstrate the process online. The main thing is to act. Otherwise, the haters’ acidity will spread to the community.”

In 2019, experts advise to adapt crypto games to the audience and make them more accessible for all users to understand. “Traditional gamers come to crypto game platforms and leave immediately, as it is difficult for them to understand everything and register on the network. Therefore, marketing should help simplify technical processes.”