Cryptocurrencies are becoming part of the growing gaming sector yet you won’t often hear the word “Bitcoin” in this context
Game developers are creating their own virtual currencies, driven by the new generations of digital-savvy gamers. Millennials or so-called Generation X are two economically active demographics with more interest in cryptocurrency than any other. They also like to play video games. In what follows, I discuss the various ways that game developers are integrating cryptocurrencies into their products.
Tokenization of Game Assets
Many games now have a form of in-game currency that players can earn, buy and spend. These currencies are typically bought within the game with fiat cash or gift cards. Usually, these monetized games are offered free and game currencies and associated item purchases are promoted within the game to encourage players to spend money.
“If we look at top games, no matter in which category, they have one thing in common: they’ve enabled their virtual economy (and that’s how they monetize as of today).” Ryan Wang, founding partner of Silicon Valley venture capital company Outpost Capital
However, the rise of gaming combined with the popularity of cryptocurrencies has led to a new trend where more and more game developers are “tokenizing” game assets. Virtual in-game currencies can be tokenized by basing them on a blockchain network and attributing value and existence to them in their own right (not only as in-game currency). This is because using blockchain technology in this way creates a cryptographic accounting system for game tokens, which also allows game assets to be bought, sold, and traded outside of the game.
Rewarding Gamers and Developers with Crypto
One startup called ClanPlay has plans to reward players of games like Clash Royale for their in-game actions with a new cryptocurrency called “Good Game.” The token is earned and used within games, but unlike familiar virtual currencies, Good Game will also be traded on exchanges and held in wallets as a cryptocurrency outside of the games.
Another company called Chukong Technologies based in Beijing, China, is also making inroads in integrating gaming with blockchain and cryptocurrencies. Chukong owns the open-source mobile game development platform Cocos2d-x. Cocos2d-x has over 1 million developers building games on its platform and has delivered successful titles like Angry Birds and Clash of Kings. Chukong has now started a blockchain-based gaming company called Cocos-BCX that has raised $40 million in capital funding.
“With this new injection of capital, we will push the blockchain gaming industry forward and focus on penetrating the market faster than anyone else in this space.” Haozhi Chen (Chukong co-founder), Venturebeat, September 2018.
Yet another example is the Galaxy Digital investment fund, which recently led a round of funding for another blockchain gaming startup based in Seattle called Mythical Games. Its founders have worked on popular games like Call of Duty and Guitar Hero but have now turned their skills to developing blockchain-based games.
“We believe that gaming — and specifically players’ interaction with in-game economies and virtual goods — will play a key role in how the masses first discover the true potential of the blockchain,” said Mike Novogratz — founder of Galaxy Digital.
Online Gaming Sees Increasing Crypto Use
Soon, gamers could be earning virtual currencies that are actually tradeable crypto-assets, with an immediate real-world value. Monetization and the creation of new digital micro-economies within games in this way reward developers and game players alike. It is also a good business idea as it incentivizes people to play more.
The chance to play video games and earn money at the same time is attractive.
As more game players start using digital currency in this way, the use of cryptocurrency and blockchain will also increase. People that have never owned cryptocurrencies before may find themselves with a balance of coins thanks to playing their favourite game. They could then become interested in transferring this balance to a cryptocurrency wallet or an exchange to trade into Bitcoin or fiat currency.
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