Blockchain gaming is fast becoming the latest and most popular craze within the crypto space. The number of GameFi participants is rising rapidly as it revolutionises the gaming world, offering players a whole host of new opportunities, including more control over their gaming and the ability to earn money through playing. 

According to data from DappRadar, gaming-related NFTs generated $4.8 billion in revenue last year, representing 20% of all NFT sales throughout 2021. GameFi applications even surpassed DeFi in terms of user popularity. Bloomberg reported that nearly 50% of active cryptocurrency wallets connected to decentralised applications in November 2021 were for playing games, with the percentage of wallets linked to DeFi DApps falling to 45% during the same period. 

CryptoKitties, a collectable virtual pet platform launched in 2017 by Dapper Labs, was one of the first examples of successful blockchain gaming. But this NFT gaming craze kicked into high gear over the past year through popular NFT-based games such as Axie Infinity. Axie Infinity is an NFT game similar to Pokémon, where players pay hundreds of dollars to acquire mythical pets and love potions. It reportedly generated more than $2.3 billion in sales as of October 2021. It has over 2.5 billion monthly active users, with some even using the game as their primary source of income.

Hundreds of new NFT games, such as Splinterlands, CryptoMines and Alien Worlds, have gained hundreds of thousands of new daily users in recent months. According to DappRadar, there are now over 1000 blockchain games, with about 70 new ones added each month. 

Mainstream gaming companies entering the world of blockchain gaming

Large companies such as EA Sports, Ubisoft, and Zynga are now even considering stepping into the world of NFT gaming, seeing blockchain as a potential stream of revenue for global gaming, an industry which Fortune Business Insights pegged at more than $200 billion in 2020

In December, the French company behind Assassin’s Creed and Far Cry, Ubisoft, released a limited edition non-fungible tokens (NFTs) called “Digits” inside their military shooter game Ghost Recon Breakpoint. This made them the first major publishers to include NFTs in a title, marking a massive shift in the mainstream gaming sector to using blockchain technology. This only further supports the idea that blockchain gaming is the future. 

However, the launch did not go as planned and received huge backlash as it wasn’t implemented effectively. Players complained how it took 600 hours of playing time to earn just a single free item – a cosmetic helmet for in-game avatars. Those in the crypto space were wary of centralised platforms and companies like Ubisoft entering the space, too, as this goes against a lot of what they stand for. The launch didn’t have the response Ubisoft hoped, with one report stating just 15 NFTs were purchased, totalling under $400. 

John Linden, CEO of Mythical Games, argued that the reason it failed was that “it was a little half done, the key to success with NFTs is to fully integrate them into a games native economy so that users have a stake in it. They just bolted it on. It’s not really a technology to be bolted on.” 

Despite their rather unsuccessful step into the market, Ubisoft states this was just the beginning, with further drops planned for 2022. Done correctly, however, blockchain gaming can revolutionise the industry, providing benefits for developers and opening a whole new world of opportunity for players too, making investing in GameFi a much more enticing prospect. 

In this article, we’re going to discuss how blockchain could revolutionise the world of gaming if it is implemented in a genuinely permissionless and decentralised way. Finally, we’ll discuss what the future of blockchain gaming looks like and how players and game developers can avoid any potential setbacks or negative impacts through the Cudos blockchain

First of all, what is blockchain gaming? 

Blockchain gaming is a type of gaming where digital assets within the video games are developed on the blockchain and have a real-world value in the form of non-fungible tokens (NFTs) that can appreciate in value, similar to stocks. As these NFTs are stored on the blockchain, a decentralised and public ledger, it gives control of these virtual assets to the consumer, allowing them to retain, resell or trade their assets as they wish. 

How blockchain is revolutionising the world of gaming

Despite being in its infancy, blockchain and NFT gaming is attractive for users as it offers a range of new opportunities that traditional gaming does not. Revolutionary new concepts such as ‘play-to-earn’ gaming and giving more control to the players have made it attractive to crypto enthusiasts and gamers alike. The potential for blockchain gaming is huge, and as it progresses, so will the offerings. Below we’ll discuss some of the main benefits of NFT based games. 

Learn more: 🏆 Cudos partners with LDN UTD on ”All Access Gaming” at Samsung KX 🎮

More control for players 

Players have more control with blockchain gaming as they retain control of their assets. This means that unlike traditional gaming, where the developers have all the power and can remove or change items as they see fit, the assets players have bought or earned through the game cannot be removed or taken away by anyone else. So, if the development company decides to shut down a game or remove certain features, players won’t lose the assets they’ve gained whilst playing the game. With blockchain gaming, once a person owns an asset, it can’t be taken from them. 

Once someone has an asset in the form of an NFT, it remains theirs and can be stored in a digital wallet and potentially used in other games, sold or traded. This means that the NFT assets can exist beyond the lifespan of a game and retain their value or even appreciate as long as there is demand. 

This is because smart contracts facilitate NFT distribution within games. Consequently, ownership of the digital asset is automatically given to the player when a certain condition is met, such as completing a task within the game or purchasing the asset. Because data held in a public and permissionless blockchain is immutable, the developer cannot change the smart contracts, giving the player more security and control. 

This opens up new opportunities for players to monetise their skills. With blockchain, you can trace the history of each NFT back through the chain. If a player is successful, they can sell off or auction their in-game assets, such as rare collectable or game-winning tools. Essentially, people can pay to own a piece of historic game memorabilia.

Play to earn gaming 

The rise of blockchain gaming and NFTs has introduced several game-changing features, one of the most revolutionary of which is play-to-earn gaming. Shaking up the traditional ‘play-to-win’ structure or the more insidious ‘pay-to-win’ trend, play-to-earn gaming is a new model that allows players to earn tokens or assets for completing certain objectives such as passing a level or completing a challenge. The tokens earned within the game have real-world value and can be used to pay for a range of things, including NFTs, exchanged for other cryptocurrencies such as Bitcoin or Ethereum, and even used to purchase real-world assets. This has allowed players to earn income from playing games. 

The concept of monetising in-game actions to fuel real-world transactions is an exciting and revolutionary step and presents an abundance of opportunities. This revolution is called “GameFi”. GameFi encompasses the idea that gamers shouldn’t just throw their money away on in-game content, but they should instead invest their money and gain assets that can retain and even appreciate and be resold on secondary markets. Blockchain gaming has made this a reality. The underlying blockchains allow gamers to earn currencies and assets with real-world value. In turn, this has created a brand-new digital economy that rewards gamers for playing and has made gaming a potentially lucrative way to generate income.

A great example of this is the popular NFT game Axie Infinity, created by SkyMavis, where players breed, battle and trade digital pets called Axies and earn income for doing so. It was widely reported last year that many players were using the game as their primary source of income. A mini documentary was created following several Filipino people who played Axie Infinity throughout the COVID-19 pandemic to earn money. Axie Infinity uses NFTs for the rights for each pet purchased and to grow these pets you purchased by farming SLPs (small-love potions). Players can then sell these pets or SLPs for cryptocurrency and swap this into their respective fiat currency. 

The creation of decentralised gaming economies 

The implementation of NFTs within gaming has created an all-new digital economy that benefits users, rewards them for their engagements and offers financial services that make gaming a potentially lucrative way to make money. 

The idea of a gaming economy isn’t a completely new one. Online multiplayer games such as World of Warcraft and Runescape have proven the utility of a robust in-game economy, even seeing players spend real money to unofficially buy items from the games and game accounts from third-party sites like eBay. And Second Life, a predecessor to today’s metaverse, popularised the use of digital currency that became real-world assets over ten years ago. 

Blockchain gaming has expanded gaming economies to a mass scale and made them much more robust and easier to create and develop. Blockchains, in principle, allow for transactions to be quickly and efficiently completed, though chains like Ethereum have in-built limitations that need to be overcome – as we’ll discuss.

NFTs and other decentralised assets can also be transferred seamlessly across multiple platforms when connected to a blockchain. The development and expansion of the metaverse will push this further, helping to build a fully functioning decentralised economy that revolutionises the way gamers interact with their favourite games, other players and the broader economy. 

This has enormous benefits for gamers worldwide. As previously discussed, people can generate income through simply playing the game and buying and trading NFTs within the game. However, it goes much further than this and has created new digital economies along the way. 

For example, players can choose to rent necessary tools or characters they need to pass a level or complete a task from those who already have these assets. The renter then splits the profits they make with the owner or pays a fee for using their item. Experienced players can charge for their assistance to help other players complete objectives or charge for simply playing alongside them or teaching people how to play better. 

It has been reported some owners of properties in Splinterlands hire scouts who pick out new players to rent properties and get a share of that player’s earnings too. Other owners even hired marketing firms to give players rewards to play on specific lands in Alienworlds. The marketer then gets a part of the players’ income or fee and owns some of the lands in Alienworlds. 

Pedro Herrera, senior data analyst at DappRadar, said of the rise of blockchain games, “It’s just impressive to see the evolution that blockchain games have experienced this year. They (players) create micro economies of their own, it’s something that’s going to be big.” 

Learn more: 💬 Cudos’ Matt Hawkins joins Tingo’s Chris Cleverly to discuss compute monetisation in the metaverse 💰

Developers’ opportunities 

Although blockchain gaming may seem to be shifting the power towards the player, it can also benefit developers. For example, developers can regulate their gaming economies effectively through smart contracts, setting specific predefined conditions to control trading within their games. This ensures that trades are conducted fairly and can limit the over-saturation of the in-game market. 

Building on blockchain allows developers endless possibilities to create any world they can imagine and gives developers the power to create an ecosystem that players use to build gaming economies. This means developers can even generate their own revenue through these micro-economies by adding charges for trading or taxing peer-to-peer transactions. 

Blockchain platforms also provide a safer and more secure environment to build on. They use powerful data encryption technologies to secure transactions and hackers can’t destroy a decentralised blockchain network like Cudos since there isn’t a single centralised server or set of servers to destroy. On top of this, blockchain allows developers to communicate more openly with players, hear their feedback, and make improvements to ensure their game works better.

Potential setbacks 

Despite the world of new opportunities blockchain gaming provides, there is still some work to be done. There are a few potential setbacks discussed below that gamers and game developers may experience when navigating their way through the world of blockchain gaming. However, by choosing the right blockchain to build on and use, you can quite easily overcome these setbacks. 

Slow transactions 

Many existing blockchains simply aren’t prepared for the transaction volume that these new gaming economies will create. This will lead to long waits for transfers to complete, something that gamers won’t want to do. Gamers aren’t going to want to wait several minutes or longer for their transfers to be made so they can continue playing, trade or get their money. Transfers need to be instantaneous and completed in seconds. 

This issue can be mitigated by choosing a blockchain with the infrastructure to deal with large volumes of transactions. Cudos’ blockchain is fully equipped, allowing for fast, low-cost transactions. The Cudos blockchain provides a high-performance, trustless, permission-less foundation for applications of all kinds. Our new blockchain liberates users from the limitations of other blockchains such as Ethereum, drastically speeding up transactions. 

Environmental impact and high gas fees 

The environmental impact of some of the more popular blockchains is huge, with some requiring more electricity to run than entire countries. Their data-intensive mining protocols also lead to considerable premiums in the form of “gas fees”. Ethereum, one of the world’s most popular blockchains, is built on a system called “proof of work” that requires energy-guzzling machines to solve complex puzzles to verify transactions. This process is incredibly energy inefficient, and as a result, the Ethereum network uses about as much electricity as the entire country of Libya, which has huge environmental impacts. 

Learn more: 🥩 Staking’s colossal growth — is proof of work actually becoming extinct? 🦕

Cudos is dedicated to providing a more sustainable solution for decentralisation. The Cudos network runs on a Proof of Stake mechanism, which eradicates the environmental costs of proof of work by attributing mining power to the proportion of coins staked by a miner. As a result, the Cudos blockchain has much lower gas fees than Ethereum, making transactions on the Cudos network cheaper, quicker to process, and more environmentally friendly, as well as reducing costs for consumers and developers. 

Learn more: 🎮 How gaming in the metaverse will depend on the infrastructure that supports it 🕸️

How can you join the Cudos network?

If you want to start building on the Cudos blockchain, you can help by contributing towards the testing to help move the network closer to mainnet. If you wish to support decentralisation, become a validator on our network as we roll out our final phase of the testnet soon. 

You can get involved right away by following the links below:

Finally, if you are a CUDOS token holder, consider earning more by staking on our platform to help secure the Network and receive rewards in return. 

About Cudos

Cudos is powering the metaverse bringing together DeFi, NFTs and gaming experiences to realise the vision of a decentralised Web 3.0, enabling all users to benefit from the growth of the network. We’re an interoperable, open platform launchpad that will provide the infrastructure required to meet the 1000x higher computing needs for the creation of fully immersive, gamified digital realities. Cudos is a Layer 1 blockchain and Layer 2 community-governed compute network, designed to ensure decentralised, permissionless access to high-performance computing at scale. Our native utility token CUDOS is the lifeblood of our network and offers an attractive annual yield and liquidity for stakers and holders.

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