How today’s gaming industry is intertwined with blockchain, cryptocurrencies, NFTs and tokenization
Since cryptocurrencies entered the economy, some games have started to integrate non-fungible tokens (NFTs) and blockchain.
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Blockchain, cryptocurrencies and the NFT game
Blockchain gaming focuses on decentralisation, while crypto and NFT games tend to collect rewards from the game.
Blockchain-based marketplaces are designed to allow players to buy and sell game items in a secure and transparent process using blockchain technology.
Blockchain technology is also likely to be used for in-game event voting systems and to create decentralised gaming communities where players can connect, share resources and collaborate on projects.
The biggest risk is that a game would lose its lustre in the market; the game token would then become worthless.
Since the industry is new and there are no proper regulations, hackers are always on the lookout for fraudsters.
Intertwining of gaming and cryptocurrency
Depending on how much a player gets in a game, play-to-earn (or P2E) games reward players by paying them in cryptocurrencies or digital tokens, which can be traded in stable currencies on centralised or decentralised cryptocurrency exchanges.
Digital assets can be sold/traded on online marketplaces or converted directly into conventional currency.
However, the industry has recently seen a shift towards a more sustainable and inclusive play-and-earn (PAE) approach, which combines the financial rewards of P2E games with immersive gaming experiences.
DappRadar and BGA Games published a report on games in which the blockchain games sector accounts for 41% of all crypto industry exposure, while DeFi accounts for 30% of all crypto exposure, social blockchain platforms account for 15% and NFTs a marginal 4%.
In July, the blockchain industry raised $297m in investment funds. About 63% of this went to building infrastructure to support game development. Most blockchain games take place on the Ethereum platform, but Binance’s smart chain currently hosts the largest number of games (38% of all games as of March 2023).
Most popular games/game tokens
The three most popular game tokens developed and operated on the Ethereum blockchain are ApeCoin (APE), Decentraland (MANA) and Sandbox (SAND).
Axie Infinity, Illivium, Splinterlands and many others are among the cryptographic games.
Axie Infinity is one of the most popular P2E games developed by Sky Mavic. It boasts a strong monthly active user base, where users can collect pets called Axies (NFT) to use in battles against other players in a virtual world.
Sandbox is another P2E game that revolves around user-generated content created by building in the metaverse. Players can use SAND tokens to create virtual worlds with characters, buildings, artwork, events and resources. Everything users create becomes NFT and then they can share or monetise their in-game assets to earn cryptocurrency rewards through the platform’s marketplace.
Industry Forecast
According to the report Cryptocurrency Exchange Platform Market – Global Outlook & Forecast 2023-2028 by ResearchandMarkets, the global cryptocurrency exchange platform market is expected to register a CAGR of 16.08% from 2022 to 2028.
A significant portion of the growth is likely to be driven by the increasing demand for cryptocurrency exchange platforms in the crypto gaming sector and the growing adoption of blockchain technology.
According to the blockchain gaming market demand analysis, the size and revenue of the blockchain gaming market has been estimated at around $7.1 billion in 2022 and is expected to increase to $772.7 billion by 2032. This means a CAGR of around 60.4 per cent.
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