How Does Blockchain Currently Work in Video Games?

Blockchain is a powerful decentralizing tool that parts of the gaming industry have already begun to embrace.

Note: This post is sponsored and written by DGaming. 

Just a few years ago, the growing popularity of blockchain technology was only associated with the rapid growth of cryptocurrencies, such as Bitcoin. The hype was for a serious reason: in just five years, the Bitcoin market increased almost 6000 times — from approximately $0.04 billion in the first quarter of 2012 to $237.62 billion in the fourth quarter of 2017.

Now, after the initial buzz around digital currencies has waned mostly due to the cryptocurrency market decrease starting around the beginning of 2018 more and more people in various industries see the technology not as a sure way to make more money by investing in cryptocurrencies, but as an alternative tool to improve their business processes.

Similar to markets in retail, healthcare, financial services, and the public sector, the gaming industry has experienced some influence also.

But before we explore how blockchain works in gaming, what is blockchain in a nutshell?

Behind the Blocks

The blockchain is simply a data structure where each block is linked to another block in a time-stamped chronological order. Every new record should be validated across the distributed network before it can be stored in a block.

Once the record is stored in a block, it can’t be erased or edited, but it can also be easily verified and traced. In short, the technology was a fertile ground for creating Bitcoin as the first cryptocurrency and influencing the entire field of banking and finance in terms of decentralization.

The idea of placing trust not in a single centralized entity like a bank or a multinational company but in the network itself has become a feature, which is considered by technology supporters as revolutionary.

For example, the main advantages of decentralization in the finance sector include empowering users with more control over their information and transactions, enabling them to make an exchange without the intermediation of a third party. This speeds up some processes and removes additional costs, making the whole ecosystem more transparent and less corrupt with publicly viewable and inflexible transaction histories.

Today, examples of blockchain technology applications go far beyond the finance industry. In the healthcare area, as another example, a blockchain system can allow doctors and healthcare providers to access a patient’s health records securely and easily. Voting systems secured with blockchain technology would be resistant to hacking activities. And, in general, the peer-to-peer nature of the technology would allow users to eliminate the need for middle-men companies in many other industries as well.

But how exactly can blockchain technology benefit the gaming industry?
Money flow and security issues.

With the growth of cryptocurrency market capitalization, more and more developers began considering the implementation of cryptos for the sake of in-game monetization.

Exchanging Goods In Games

The peak of that market has brought to bear some big DGames titles (decentralized game titles) like Cryptokitties, which went viral with more than 14,000 daily users just a month after its launch in November 2017; more than $25 million was exchanged on the platform for a period of 10 months after the start of the project.

The main task of gamers in this situation is to collect unique digital items known as “cryptocollectibles” or “non-fungible tokens,” which cannot be copied. That is where blockchain technology comes into action. Since there are many rare “kitties” in the game, and players are bidding for them, some of these cryptocollectibles can reach the mark of hundreds of thousands.

In fact, there were more than 10 kitties that sold for more than $100,000 during that time frame, with the most expensive one going for $172,625.

Another decentralized game, called Decentraland, has seen another major deal worth $215,204, when a player bought a virtual piece of land.

With such significant amounts of money circulated between players, the security of these transactions and purchased assets is a crucial concern for those involved.

Since blockchain technology doesn't have a single point-of-failure, a decentralized game is not a subject to DDoS attacks, for example. And this fact especially makes sense for gaming, considering that 50-99 percent of all virtual good purchases in the traditional gaming industry were found illegitimate due to fraud.

A Game as a Marketplace

Another distinctive feature of blockchain-based games is greater control of characters and in-game items.

Anyone who plays games knows that most of the time, a game's characters and in-game items don't technically belong to the player. The Ancient Legendary Katana in Diablo 3 and the Primal Fire Sword in World of Warcraft are the legal property of Blizzard, something that’s explicitly stated in their End User License Agreement (point 2A).

In the case with DGames (decentralized games), however, the player has full ownership over every item they buy.

This means that players can sell any purchased game item whenever they want without any limitations from the developer. What's more, every blockchain-based virtual asset in the game is assigned with a proprietary hashtag, which tracks the item's history; this prevents scams from taking place by making the history of in-game assets fully visible and open to the public.

Multiverses

Another feature of decentralized games is that they allow gamers to play with each other and use their characters and items across several decentralized games. Called a gaming multiverse, it’s possible due to blockchain’s distributed ledger, which verifies all data through smart contracts.

Some blockchain industry experts state that a multiverse controlled and governed by a single entity would always be bound by restrictions, so the decentralization provided by blockchain is a must.

The makers of Enjin Coin have already implemented a multiverse principle in six blockchain games: Age of Rust, 9Lives Arena, CryptoFights, War of Crypto, Bitcoin Hodler, and Forest Knight. All games use Enjin Coin’s blockchain development platform to integrate gaming assets stored on the Ethereum blockchain to maintain their gaming multiverse.

That means their worlds, characters, and items will be tied together. So players who own assets in these games can use them across the “multiverse.” Such innovation has some benefits for both parties: it enables developers to cross-promote their titles while offering players a unique inter-universe experience.

What is Next?

Blockchain represents a fundamental shift from value extraction in closed ecosystems to value capture in open ecosystems. And even though many blockchain-based gaming projects are still experimenting with their mechanics and gaming features, the technology, in general, has a lot to offer.

The fact that some big industry names are entering the world of blockchain gaming only confirms that statement. Square Enix, for instance, has announced that it considers blockchain a big part of its strategy in 2019.

In the meantime, DGames allow players to:

  • Make and spend money while playing video games
  • Complete transactions in a decentralized secure network
  • Have full control over their in-game assets 
  • Use these assets between different games 
  • Trade and exchange the assets at any moment without any restrictions

For more news and in-depth analyses of the most exciting blockchain projects and DGames, check out DGaming.com.

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Published Mar. 13th 2019

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