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An Existential Moment for Crypto Gamingby@michaelbenko
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An Existential Moment for Crypto Gaming

by Michael BenkoAugust 21st, 2022
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The future of gaming in 5 years will have a huge element of crypto and blockchain. The world of crypto gaming is an interesting one. It is not just about building a game but about creating a new form of currency: cryptocurrency. One huge problem is small crypto games that cropped up and absolutely crumbled. These were akin to [Ponzi schemes]. These were small games that were super simple, that would launch with a token and promise a wild ROI, and fold within a month or months.
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Today's article's headline is the state of crypto gaming.


It could also be called "Welcome to the shitshow."


Yep. You heard it here first, the crypto gaming industry is currently in disarray--for good reason. And I'm starting my crypto gaming blog about it today. Why?


Crypto gaming is in tatters. Yet, the future of gaming in 5 years will have a huge element of crypto and blockchain. So let's roll up our sleeves and take a look at the state of the industry today, and where we may be headed.


The world of crypto gaming is an interesting one. It is not just about building a game but about creating a new form of currency: cryptocurrency. Cryptocurrency is about decentralization and democratization of game development--in theory.


So, without further ado--put on your hard hats, because it's going to be a rocky ride.


What are the biggest challenges facing the crypto gaming industry?

Unfortunately, today I have to talk about the absolutely devastating year P2E (Play to Earn) and crypto gaming have had. But why?


One huge problem is small crypto games that cropped up and absolutely crumbled. These were akin to Ponzi schemes. These were small games that were super simple, that would launch with a token and promise a wild ROI, and fold within a month or months. People would sink money in hoping to make a huge profit--and some who were early did. But many didn't, and lost money. These helped to give a bad name to crypto gaming.


Another challenge is likely the most visible game--Axie Infinity--has faced huge problems. That deserves its own article. But to summarize, their tokenomics system led to hypergrowth. Many players came in because it was easy to mint tokens and fun to play, breed, and collect. But that hypergrowth led to hyperinflation of their in-game token SLP.


While the devs seem to be working to fix it, it's been an uphill battle. Especially as a marketwide crash hit crypto led by the Luna debacle.


Next, we are in a more risk-off macro investing environment. The Fed woke up one morning and decided to turn their magic money printer off. Which kills the vibe of wild speculation over digital real estate and JPG NFTs. I know. Bummer. But that all takes some of the shine off the games and projects around those assets.


Then, there are crypto scams and hackers, like the one who stole a massive amount of money from Axie Infinity. So overall, people are more nervous and weary about crypto projects. Even good ones (can we still say that? I hope so!), because unseasoned investors aren't able to easily differentiate between solid projects who are making something interesting and scams or mere hype projects. Of which, unfortunately, there are many.


Finally, maybe most importantly, is bad actors. Not any games are mentioned here in this article. But devs who launched games. Then did rug pulls, or are doing slow rug pulls?


What happens is, after a successful launch, a dev or devs will see millions of dollars of liquidity in their tokens--and ways to exploit it by sucking it out, either by dumping large amounts of tokens for cash or sneakier ways like making a hidden liquidity pair of magically minted tokens and then sucking the cash dry. Or, a rogue dev just taking the money and running.


In an earlier unpublished draft of this article, I went into depth about one of these games. But since it's day one, I decided it was more prudent not to throw rocks, especially at semi-anonymous devs who may be sitting on piles and piles of ill-gotten gains wondering what to do with them.


But, even with all this, there's a path forward for crypto gaming. I sure hope so anyway, otherwise, this blog is going to be a very sad place.


So, to sum up--in this writer's estimation, things are hairy right now because it's still early, and good projects are learning and making mistakes. It's still early and bad actors are taking advantage of people's lack of knowledge. It's still early, and we don't have a great example to point to and say, "look at that one, crypto gaming totally works!"


So, what's the state of crypto gaming right now?

Shitshow.


An existential moment for crypto gaming: What's next?

Things aren't looking good from our high hopes last year to now. But I still believe crypto gaming will be the future, or at least a huge part of the future, of gaming.


Why?


If you're waiting for congress to understand crypto gaming, and fix everything with regulation, I hope you brought snacks.


It's because at the core of crypto gaming (or NFT gaming, or metaverse, or whatever you want to call it), is the ability for players to own gaming assets. This is a 155 billion-dollar-a-year industry.


I believe the appeal of owning your game assets is strong. As humans, we get attached to things, including the digital worlds we play in. Sometimes, a digital pet like a pokemon can have a huge emotional attachment. Imagine if you still had your first Pikachu/Squirtle, or for some even more alluring, your Tamagotchi.


I think we as players have a right to own those assets. Many gaming studios five years in the future are going to need to follow that trend or miss out on a lot of business. Or even be left behind.


As a player and a writer, one thing I'm looking toward is true decentralization. I believe that may be happening now with Axie Infinity, really for the first time in a crypto game, as they open their API up to independent game studios to create games around the NFT Axie assets. And that's actually a big deal. Instead of just using blockchain technology ("players can earn tokens!") actually moving towards a decentralized gaming ecosystem is what makes my heart beat a little faster.


Next, I believe we will start to see large studios releasing new games with NFTs or those that use elements of blockchain technology--or are full-on blockchain games. Playstation just announced their digital collectibles--and hysterically--asserted that these are not NFTs .

Sony's Gren Chen, VP of licensed merchandise, advertising, and loyalty said that:



"It’s definitely not NFTs. Definitely not. You can’t trade them or sell them. It is not leveraging any blockchain technologies and definitely not NFTs."


(Source: Games Radar)


So. We get to have a collectible we can't sell. Or trade. Interesting!


I think when their competitor or a rising blockchain game that becomes a competitor makes a collectible you can actually own and do what you want with, Sony may be forced to adopt.


I also hope new games will have more sustainable models and be more based on the fun with crypto enhancements--learning from early adopters' mistakes. So, earning crypto may be seen as a bonus, but not the entire allure of playing. Or where trading assets as NFTs avoids the shortfalls of earning crypto when you play. That deserves an entirely new article, and I think we'll see those types of changes on the horizon as well.


Finally, crypto is new--and crypto gaming is a lot newer. In the early days of Blockchain, people would talk about what Ethereum would be able to do one day, like execute smart contracts--and now we're seeing Ethereum do that successfully, and a lot more.


It's painful to watch an idea I love--building digital worlds we own, earning crypto while playing games--go through so much strife, but I believe when you love an idea, seeing how hard it is doesn't mean you should abandon it. It means I want a front-row seat to see the saga unfold. Hence, this is the best day I could think of for blog launch day.


Who is the biggest player in crypto gaming?

*Looks around.*


"Who's still standing, Senpai?"


As most of the industry is in tatters right now, I'm going to stick to talking about projects I know.


There's CryptoKitties--collect and breed digital cats (who wouldn't want to!). This one's the godfather and first major entry into crypto gaming.


Axie Infinity is still around, having had a gutting 10 months. Their mobile app is set to release (probably) this fall, and Axie Con is in early September so look for announcements.


Decentraland: possibly the creators of the metaverse real estate boom?


The Sandbox: The Sandbox is a virtual gaming world where players can build, own, and monetize their gaming experiences. (Source, The Sandbox Twitter). I've never played it, but they've survived this long and are mentioned all the time, so I should give it a go.


I've decided not to talk about pre-release games (sorry, Illuvium!), so there's the list of the major players.


If you're a game dev with a huge game that I don't know about and you're feeling salty I didn't mention you--reach out! I'm making the bold choice here to stick to only games I know, but I'd love to play and write you up.


Why?


As I'm launching my blog as a crypto gaming blog, I will never pretend to know a game I haven't played or heard a lot about. I'm hoping to turn this into a reliable source of crypto gaming info in the hairy state of the Blockchain game world we live in in 2022.


Furthermore, I'm making my blog about crypto gaming--but I'm not pretending to be an absolute expert. This is brand new, and it would be reckless to say that I was. We're going to be learning this together.


So, that's where we stand today. After all of this, is it wild to say I'm optimistic? Well, the future shall tell us.


Til next time dear reader, and thanks for joining me on this first jaunt!


Disclaimer

I as the author of this piece trade crypto--and own some of the assets discussed in this article at press time. The only significant holdings at press time are in Axie Infinity, including around 20 Axie NFTs, SLP, and AXS. However, I am going out of my way to keep this blog impartial and will never let my ownership of any currencies discussed inform what I say about them--and I will do everything possible to stay transparent. I received no financial endorsements from any companies or projects listed.


Disclaimer II: This is not financial advice. Do your own research. Crypto is hella risky, even for good projects in the best of times--and these aren't the best of times. Look out, do lots of research and never invest what you can't afford to lose.



Also published here.


Photo credit, Alexander Jawfox via Unsplash.