There are few industries as tightly linked as blockchain and gaming, and through extension, gambling.
As a new technology, blockchain is quickly being applied to solve problems such as proving digital ownership, provably fair games, and liquidity. These problems were otherwise too complicated to solve and the inefficiencies were left to run rampant.
However, many entrepreneurs are exploring blockchain to take gaming (and gambling) to the next level – and for good reason; both are positioned to be incredibly lucrative markets. The video game industry hit about $135 billion in 2018 and has been growing rapidly, and the global online gambling market is currently estimated to be around $46 billion and anticipated to more than double to $94 billion in 2024.
News of venture capitalists jumping into these sectors is popping out left and right. Just in July 2019, Reddit Co-Founder Alexis Ohanian’s venture fund led a $3.75 million seed round for Horizon Blockchain Games, a blockchain-powered video game studio.
The following article explores a handful of ways that blockchain will usher a new future for the gaming and gambling industries.
"True" Virtual Goods Ownership
Fraud and scamming is currently rife in the virtual goods marketplace. The lack of marketplace trust and regulation has led to a domination of several centralized trading platforms that charge high fees when exchanging assets. Users looking to go around that run the risk of getting scammed by other users.
Additionally, an abrupt shutdown or update of a gaming platform could make your hard-earned goods worthless.
Projects such as WAX and Enjin Coin are looking to transform the ownership of virtual goods. WAX, or Worldwide Asset eXchange, is a decentralized platform created by the OPSkins team that enables users to trade any virtual asset for cryptocurrency. This essentially allows users to “tokenize” any kind of virtual good. Enjin Coin, on the other hand, allows gaming communities to create items and currencies on the Ethereum blockchain-backed by Enjin Coin.
Blockchain Technology for Payments
Traditionally, gaming payment systems have been fairly slow and expensive. There was always a need for some sort of middleman interface to bridge the video game world and that of, let’s say, Visa. Cryptocurrency allows for in-app purchases to be seamless. Backed by the security and immutability of blockchain, users will be able to conduct more trustless exchange on the game (and potentially with other players).
Additionally, app developers don’t need to put their games on something like the Apple App Store to be able to accept payments. Developers are able to directly reach consumers through decentralized marketplaces, only paying a fraction compared to what they would have to pay Apple or Steam.
Epic Games, the studio that created the massively successful Fortnite, recently entered into an agreement with a digital distribution network called The Abyss – a partnership that allows developers to release gaming titles on the platform and receive funds in Abyss tokens.
Although the simple ability to dodge third-party payment processors and save money is appealing enough, the buck doesn’t stop there. Cryptocurrency allows for the birth of entire financially-backed ecosystems that tie into real-world economies provided there is liquidity for the tokens.
To dive into that idea further, imagine leveling your World of War character for several years and earning a digital fortune from your in-game mastery. Then one day, you decide you don’t want to play anymore. Before blockchain, all the time you spent, all those countless hours on this game, would be for nothing. The value of your time and energy would be locked in the World of Warcraft ecosystem.
However, with blockchain and cryptocurrency, you’d be able to receive some monetary compensation for your time, potentially even earning a decent wage doing what you loved. Heck, if you told most gaming teenagers that their favorite video game could be their job, entire life trajectories would change.
Smart Contracts for Smart Gaming and Gambling
The integration of smart contracts opens the industries of gaming and gambling into new worlds. Players are able to add an element of real-world staking and competition based on particular outcomes in a video game, essentially making wagers that have real-world legitimacy.
In cryptocurrency gambling and betting, smart contracts make all the difference. A smart contract gets rid of the third party intermediary that would otherwise have to take custody of funds and redistribute them accordingly once the final results are completed.
Blockchain and cryptocurrency are building a bridge between the virtual world and real-world economies, arguably at what isn’t even the fastest period of growth for cryptocurrency, gaming or gambling.
Not only are new video games coming out built on blockchain, but there are also even online casinos powered by blockchain are coming out of the woodwork. The sheer convenience and pragmatic solutions offered by blockchain are enabling everyone from developers to end-users to embrace the digital world like never before.