Online gaming is booming and has turned into a multi-billion dollar industry. Video games were originally found in arcades and later on consoles but online gaming has since taken over with PC multiplayer games and a new wave of mobile games for smartphone and tablet users. Today, several blockchain startups are focusing on the gaming space in an effort to secure virtual in-game economies and to decentralize a very decentralized industry.
The Virtual Economy in Online Games
As online gaming has grown, so has the virtual in-game economy in which gamers pay money in exchange for virtual goods or currency that can be used to further them in the game. The creation of this new virtual economy in games, however, has created a new potential risk to gamers in the form of cyber theft. This new threat could be alleviated through implementing blockchain-based security measures in online games.
An innovative new monetization strategy in the gaming space is the in-game purchase in “free-to-play” games, which in many cases exceed how much gamers spend outside of the game. This new monetization strategy works particularly well with mobile games but also in the online PC games space. In-game purchases can include extra lives for the player or upgrades to the character’s arsenal for example.
However, storing and trading these new types of virtual goods can pose problems for gamers as it opens up the potential for cyber theft, which according to popular online gaming platform Steam has become a major issue. Given how much some gamers spend on virtual goods and how popular the trading of virtual goods has become, quite a bit of money is at stake and this has attracted cybercriminals.
To increase the security of trading virtual gaming goods, the startup MyFreeVunk has built a decentralized platform using blockchain technology that enables gamers to trade virtual goods in a secure, trustless and transparent manner and, thereby, preventing gamers from falling victim to scams or theft. The platform not only allows users to trade specific in-game goods with one another but also allows for cross-game trades where, for example, one gamer can trade a virtual good from the game World of Warcraft for a virtual good in another game.
Online gaming company Beyond The Void has also recognized the value of implementing blockchain technology to secure its virtual economy goods. Beyond The Void is transporting its entire in-game virtual economy onto the ethereum blockchain to leverage smart contracts for the creation and the trading of its games virtual goods.
Beyond The Void CEO Eric Burgel told VentureBeat that using blockchain technology “trust is no longer an issue because the blockchain system is decentralized; digital goods aren’t stored on private servers but on the blockchain directly, for everyone to see. If you own a blockchain asset, nobody can take it away from you, and you have total control over it. Whether we shut down your account or our servers, you still have all the digital goods you purchased.”
Securely storing virtual goods on a blockchain would make cyber theft substantially more difficult and, therefore, making online games’ virtual economies more secure. Furthermore, using smart contracts to prove ownership of virtual assets and to trade virtual assets will further increase cyber security in the gaming space.
How the Blockchain Can Disintermediate Online Gaming
Online gaming is heavily dominated by a few large players such as the online gaming platform Steam and Apple and Google in the mobile games space, which all take a considerable share in game developers’ revenues.
According to Sergey Sholom, VP of Business Development at the gaming-focused blockchain startup GameCredits:
“If you are developer with a game on Google or Apple, you will pay up to 30 percent of your top line revenues to the platform, leaving you 70 percent of every dollar spent for - or in - your game and typical wait times to receive your 70 percent payout are up to 60 days.”
Using blockchain technology, however, the gaming industry could be decentralized and each game producer could have full control of the distribution and revenue collection for their games by dealing with their users directly.
GameCredits has developed a platform with the intention of cutting out the middleman when it comes to payments in the gaming world. On the GameCredits platform, gamers can purchase GAME tokens which can be used to purchase games and in-game virtual goods, while all spent GAME token are transferred directly to the game developer without a middleman taking a large percentage out of the revenues. The platform also allows developers to issue in-game rewards and coupons to gamers to keep them engaged with their game.
GameCredits is in the process of trialing its platform in cooperation with Datcroft Games, which integrated GAME tokens into two of its games, Get The Gun and Fragoria, which are accessible to Datcroft’s over seven million registered users. Once the trial is finished, GameCredits plans to roll out its platform to the entire online gaming industry.
Another area within the online gaming world that can benefit from decentralization is the hugely popular and growing eSports industry. eSports are professional online gaming competitions where the winners are financially rewarded.
Boston-based gaming startup First Blood has built a decentralized eSports platform on top of the ethereum blockchain that allows gamers to compete against each other in popular games such as DOTA2, League of Legends and Counterstrike. Financial payments are made through the platform’s native cryptocurrency, First Blood (1ST), and are executed using smart contracts. Hence, there is no need to store currency in a centralized hub, which is prone to cyber attacks, as it is the case when playing on established eSports platforms.
First Blood’s eSports platform utilizes game APIs to gauge match results from in-game data and uses smart contracts to automatically reward the winning team with First Blood (1ST) tokens. It also possesses a decentralized voting system to settle disputes.
Blockchain technology has the potential to make the online gaming industry much fairer for both game developers and gamers, and can provide an added layer of security to protect in-game virtual economies. It will remain to be seen whether larger gaming companies will incorporate the technology or whether it will only be a few startups that will leverage the blockchain to improve online gaming for everyone.