Is Blockchain the next revolution in Gaming Industry?

As the gaming industry evolves and more new technologies emerge, there’s one on the horizon that could solve many current issues: Blockchain.

The world is unraveling new use cases for blockchain technology each day. Although most people think of Bitcoin and finance when they hear the word ‘blockchain’ but the technology extends its reach far beyond those two things. Countless gamers around the world are currently unable to play some of the industry’s leading titles because they lack the powerful hardware necessary to run them efficiently. For this purpose, the gaming industry is in great need of a shift from the traditional, centralised hardware platform currently in place to an entirely new, decentralised ecosystem: the cloud. At the heart of this transition is blockchain. This ability to share processing power will transform the gaming industry as we know it. And, as more game developers look into the capabilities of blockchain technology, the more it becomes apparent it is the perfect fit for the industry.

Transforming the Gaming World

The most common way to integrate blockchain into gaming is to use the same blockchain-based cryptocurrency to reward in-game achievements, to purchase upgrades and to purchase other games from the online store. It turns out the blurring the line between game-commerce and real-commerce creates freedom and opportunities for players. The blockchain technology lends itself to gaming in two important ways — market efficiency, and security.

The concept of a digital marketplace is already well-established in the gaming world. Steam is a good example of this, a centralised system in which Visa, developers and the platform itself each take a cut every time a trade is made. This means that between 10% and 15% of the value of trades in lost in fees. With blockchain, trades can become decentralised, which means that those fees disappear. In addition, items can be stored in a way that allows them to be traded not only within a particular game, but between games, a feature for which there is much demand. Blockchain is the perfect way to enable this, owing to how it tracks items. The blockchain approach will remove many of the obstacles currently blocking the path of gamers who wish to trade in-game objects. It can also provide a distributed market where assets can be traded across games. This is an alternative to black markets that are at best risky and riddled with fraud. So you can trade a laser gun from a sci-fi game for a pouch of gold in your fantasy RPG without fearing fraud or the lockup of your PayPal account.

There are companies that are attempting to be the first to solve the problem by converting virtual items into real-world commodities, removing the need for a middle man. Dmarket is developing a framework of smart contracts that can execute themselves based upon certain conditions. GameCredits is a cryptocurrency on the rise, attempting to become the universal standard within the world of gaming. Enjin Coin are targeting private servers, which brings monetisation to the server providers and provides a small-scale safety net in case of failure. The problem for many new startups trying to enter this space, however, is that, without the years of experience that Gameflip has, it is really hard to truly empathize with and understand the customer.

Fraud Prevention

Theft and fraud have dogged the gaming industry for years. Historically, disputes over transactions in which customers claim to have been hacked have been met by credit card companies with no form of compensation, due to the lack of any physical item having been shipped. Gaming platforms are a hot target for hackers. From direct attacks to huge gaming platform such as Steam, to scam plots carried out in unconventional trading hubs, fraudsters and hackers have taking away big chunks of the money being circulated in the industry. At the end of the day, virtual goods have no real protection. Using Blockchain, fraud in particular, becomes extremely difficult to execute because of the transparency of the public ledger central to blockchain technology. Any kind of competitive record or benchmark claim would be immediately verifiable by anyone in the world. The origin of anyone’s in-game items would also be traceable at any time, creating an environment that can be objectively fair.

Currently, the gaming industry is on a precipice. In 2020, it is expected to generate $128.5bn of revenue. With such a rate of growth, it seems inevitable that breakthroughs will come, and blockchain technology offers innovative solutions to problems with long histories.

But blockchain can do much more. For instance, a blockchain could also be used as a data structure to store gameplay. Developers could even use blockchain nodes to store executable elements of the game program, linking to them at run-time to create a more varied, unpredictable gaming experience.

Transforming Payments in Gaming

As with other industries, traditional gaming payment systems are usually slow, cumbersome, and expensive. They can also cause a maldistributed ecosystem of wealth as the middlemen and large vendors benefit the most from those inefficiencies. With cryptocurrency payments, in-app purchases become frictionless as micropayments can transfer directly from players to the game developer. There’s no more need for a middleman in this transaction. The security and immutability of blockchain technology are enough to facilitate this type of trustless exchange.

Moreover, blockchain removes intermediaries and brokers, providing developers with a means to be directly compensated for the use of their game. Instead of waiting out for revenues to be doled out, a platform based on smart contracts can provide a mechanism where players immediately direct funds to the developer’s wallet, without any intermediary taking cuts.

The blockchain also brings value to game distribution. Instead of publishing to a centralized marketplace like the Apple App Store, game developers can reach consumers directly through a decentralized marketplace.

What Lies in the Future?

While there have been successful test cases, not enough has been tested and proven for the largest and most influential players to make the leap of faith required to push blockchain technology from having potential to becoming a new standard. We are still at a point where the progress that has been made so far could lead nowhere. The finish line is still years away, but the advantages of blockchain are clear, and the atmosphere in the industry is largely positive. It is predicted that 2018 will be the year where blockchain will go mainstream in the gaming industry. There are many projects that are ready to launch and more that are being developed. It’ll be interesting to see if developers and gamers will be able to overcome the hurdles and achieve the milestones required to fully leverage this exciting technology.

Is Blockchain the next revolution in Gaming Industry? was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.