As we previously noted, gaming helped sustain the blockchain during crypto winter. Going forward we expect it to be one of the major blockchain growth engines. Where will we see growth in blockchain gaming? Which crypto businesses and crypto tokens will benefit the most? What are the issues affecting growth in this promising business niche?
Why Blockchain Games Are Unique
In traditional online games, all of the action takes place in a centralized setting. This includes the characters, weapons, skins, experience gained in the games, coding related to the game, and digital assets accumulated. In blockchain gaming the player is able to use digital assets, rewards, across several gaming platforms and even convert their winnings into currencies like the US dollar. This is called the “play to earn model” or P2E. This ability to convert gaming success into ownership of digital assets can be used across the blockchain gaming realm and real world earnings is expected to be the stimulus for growth of the blockchain gaming market.
Regulatory Challenges to Growth of Blockchain Gaming
Crypto winter brought us a host of issues relating to crypto tokens, crypto exchanges, decentralized finance business bankruptcies, and even charges of fraud. Prior concerns about governmental interference in the worlds of cryptocurrencies, NFTs, DeFi, crypto exchanges, and blockchain gaming have given way to concern about lack of regulation of all things crypto. In 2022 the government of India imposed a 30% tax example. Thus anyone earning reward points for in-app purchases will be taxed at every turn.
Evidence of Blockchain Gaming Growth
Blockchain gaming is growing based on the quality of the games and the unique features of this niche. This is despite any concerns about regulation. When one uses a tool like DappRadar to track active wallets from blockchain system to blockchain system one sees that in-game NFT sales were over $2 billion which is more than a fifth of all non-fungible token trading. Wallet activity across all blockchain gaming sites came close to fifty percent of all wallet use across all crypto niches.
Leading Blockchain Games
The leading blockchain game is Alien Worlds which grew as measured by wallet use by fourteen percent in 2022. Splinterlands followed in popularity but lost ground when measured by wallet use. The climber in rankings is Benji Bananas which climbed by more than 2000% in the wallet use metric. Although game popularity helps rankings, we believe that over time the blockchain games that become dominant will be those that offer the best in terms of NFTs and pay to earn models. Regulations and taxes will simply become part of the equation for deciding which is the best blockchain gaming option.
Blockchain Gaming Growth Pains
The first issue confronting blockchain gaming growth is awareness of this niche among gamers, NFT enthusiasts, and those interested in this realm as a profitable niche. The next is simply one of learning how to navigate the games and take advantage of their benefits. We expect that as those designing blockchain games with all of the bells and whistles make them easier to understand and navigate popularity will grow and, along with that, profitability.
Which Crypto Tokens Will Benefit from Blockchain Gaming?
We have written that we expect Ethereum and the Ether token to pass Bitcoin in value. This is because Ethereum is directly involved in DeFi, NFTs, and blockchain gaming. Ether is the dominant token for blockchain gaming as Ethereum has developed The Sandbox, Gods Unchained, Decentraland, Crypto Kitties and others. Because of Ethereum scaling issues others may move into this niche as well.
Growth in Blockchain Gaming – SlideShare Version
