The eSports industry is becoming more popular every day and attracting more and more users. Conventional computer entertainment has turned into a big business, as, according to analysts, by 2020, PC gaming will reach $33.6 billion. Blockchain is now being used to structure the system with its colossal income, as some companies from the eSports industry launched their own cryptocurrencies. What are the advantages of distributed ledger technology and tokenization of payments in gaming?
The Formation of a Gaming Economy: The Period before Blockchain
At first, video games were simple fun for one or two players. More than 20 years ago, two people could spend hours in offline mode and not think about networking with other users.
As the development of video games evolved, an economy was formed within the nascent gaming industry. Role-playing games were the first platforms within which a complex economy started working for profit. For example, in the virtual world of the Ultima game, digital coins were used to buy weapons and carry out missions. Since the development of the PC and the advent of high-speed Internet, online games such as Everquest and World of Warcraft were launched, which required monthly subscriptions.
Afterward, teams were formed as players from all over the world banded together to create an overall strategy for missions. The digital economy has become a system in which the player interacts with other players, rather than with programmed creatures. That is, this digital gaming economy was generated by the users themselves. As a result, they started buying and trading virtual items: magic swords, additional armor, powers, and so on for real money using Paypal, and after a successful mission, players exchanged their earnings for dollars. Thus, people started receiving income and were professionally engaged in gaming.
The Transition Period from Video Games to Cryptography
Virtual gaming skills and abilities started becoming lucrative. In 1993, a rare Black Lotus card in Magic: The Gathering was traded for up to $20,000. People were willing to pay way more for cards than they actually cost. Some smart entrepreneurs realized this potential and took advantage of it.
It is noteworthy that many of the largest players in the cryptocurrency industry came from the world of video games. In 2010, Brock Pierce, the founder of IGE, became one of the first followers of Bitcoin. Pierce was the co-founder of Block.one and the ECHO project. In Rolling Stone's July interview, Brock again showcased his connections with video games. "The universe is constantly throwing more coins and power-ups at you, and if you keep collecting them, you get more points and you go up in levels."
Vitalik Buterin, the creator of Ethereum, says that interest in creating the platform appeared after the owners of the gaming community were able to change World of Warcraft without his participation. "I played World of Warcraft from 2007 to 2010, but then Blizzard removed the damage component from the spell of life of my favorite character. I cried, I could not sleep, and on that day, I realized that centralized platforms could do great harm."
Vitalik believed that the gaming community should have a voice in the development of the game. After that, Buterin stopped playing World of Warcraft and while developing his ideas for projects, he discovered Bitcoin and came up with Ethereum.
Changing the rules of the game is only one of the problems that concern the gaming industry. As soon as eSports became a prestigious activity, teams began to form. They started participating in competitions and got paid for it. Alexander Kokhanovskyy, former player and founder of the team Natus Vincere, in an interview for DeCenter, said that the introduction of cryptocurrencies into the gaming environment will help avoid deviation from the contracts concluded between cyber athletes and sponsors. "I was at various competitions, it happened that the players were not paid the prize money, or the players did not come to fights. Smart contracts with cryptocurrency will exclude these shortcomings of the system and everything will be fair in the relationship between the customer and the contractor."
Billions of dollars and large sums of prize money led to the tokenization of the system and the introduction of blockchain into gaming. At crypto exchange conferences, there are discussions on the topic of crypto gaming, separate forums are being created, such as Crypto Games Conference (Minsk, October 17 to 18), which are devoted to the symbiosis of digital assets, blockchain, and computer games. For example, experts in the gaming industry at CryptoBBQ said that their industry is similar to professional sports, so a technological environment is needed for their activities. "Any product designed for a game experience sells you a story with interaction and a spirit of competition. It is just as easy to incorporate a blockchain in online games. The symbiosis can take place in the realm of virtual reality," experts say. "The stability of the game coin can be ensured through stablecoins. The most difficult thing is not the technology of blockchain, as it can be tailored to suit your needs, but the legal problems are much more terrible. Sometimes there are reverse cases when the developer tries to implement something that often does not have a practical application."
After the crisis, systems appeared that simulated games based on cryptocurrencies. But experts believe that CryptoKitties is not gaming. "The games we have now do not quite reveal their concept. They are rather gaming pyramids, which simply demonstrate the technology. If the mass market does not come to blockchain, then it will die. Games are the only IT business that does not sell services. People buy fandom and emotions."
Despite the introduction of new technologies, the essence of the games themselves will not change. "From the point of view of the user gamer, blockchain will change very little. It is just a digital asset which is in every game and used as a reward, and it will be available at all game sites. People who make crypto games need to monetize their activities. Hard segmentation will have to go. Our task is to transfer the maximum of these sensations through the technology," as experts of the gaming industry said in the framework of the panel discussion at CryptoBBQ in August.
Do not forget that there are some shortcomings in the blockchain that can discredit the system and slow down the whole process. For example, the sluggish nature of processes, the long wait times for verification, and a system of entry into wallets that is rather difficult in comparison with usual authorization are only part of the inconvenience that corporations suffer from.
In addition, the crypto exchange rate is changing dramatically, and high volatility is unprofitable for large businesses. Because of this, conservative investors are cautious and are only assessing the prospects for investment in crypto assets.
In general, gaming has established a strong relationship with PayPal, Yandex Money, Apple Pay, and others. Therefore, it will not be easy to implement a cryptocurrency in a short period of time and to establish trustworthy cooperation.