Blockchain gaming incorporates cryptocurrencies and NFTs into video games. This allows people to play exciting games while making (or losing) money at the same time.
With billions of gamers worldwide and the rapidly-growing cryptocurrency world, why hasn’t this happened sooner? To the surprise of many, blockchain gaming has already been around for nearly a decade, yet only started gaining popularity somewhat recently. In 2021, blockchain games actually made up nearly half of all blockchain transactions.
Alright, so what is it really? How do you get involved? And why should you even care? Allow me to break it down for you and answer all of these questions for you.
I like gaming, but what’s this blockchain thing
The simplest way to understand the blockchain is to think of it as a digital ledger. All a ledger does is record transactions. That’s pretty well what the blockchain does as well, except it’s highly secure, and these transactions are all verified by thousands or even millions of computers on the network. Having all of these transactions constantly verified makes it impossible to modify or hack the blockchain. This makes the blockchain one of the most secure financial systems in the world.
Now the blockchain isn’t housed in one location, it’s decentralized. That means it’s everywhere and constantly working, unlike your typical financial institution – yep, it even works holidays. Having no central location also means that no country or individual can own or regulate it.
How does Blockchain Gaming work
Blockchain-based games use NFTs and various cryptocurrencies as the backbone of the game. How these are incorporated tends to vary slightly for each game. Here is a great video that gives you a rough outline of how it all works and some things to watch out for.
Techquickie: Blockchain Games Are Here – What You Should Know
If watching Youtube videos isn’t your thing, don’t worry, we’re going to break it down for you below.
NFTs and Blockchain Gaming
A majority of games on the blockchain use NFTs. NFTs are used as characters, items, or even cosmetic skins. These NFTs hold a real dollar value and they can even fluctuate in price based on the market and demand. You’re also able to trade these with other players. Buying and selling these NFTs might even net you a nice profit.
Now how does this differ from the current in-game shops that most games use today? Well, for starters, when you purchase one of these NFTs, you become the sole owner of it. Nobody can take it away from you, even if the game itself shuts down. Every NFT you purchase will remain tradeable because they are located on the blockchain, not the developer’s game servers.
If you’re not even sure what NFTs are, be sure to read our guide to all things NFT.
Cryptocurrencies and Blockchain Gaming
Many blockchain-based games use cryptocurrencies as the main in-game currency. They are generally used to purchase all of the NFTs for the game. Not every game uses the same blockchain, though one of the most popular is Ethereum. When playing games that are Ethereum based, you always need to take a few things into consideration. Ethereum transactions tend to have high gas fees and usually take some time to process. However, the Ethereum team is actually working towards moving to a proof-of-stake model (Ethereum 2.0) which will help with the issues in the future.
Play to Earn (P2E): Make money with Blockchain Gaming
Surely, if you’re a gamer, you’ve heard the words ‘play to earn’. It sounds great, but what does it really mean?
Play to earn, means you play the game and you can earn money. However, it’s not as easy as just picking up your phone and making a bunch of money. Most games take a while before you can actually make enough money to cover your initial starting costs. That’s right, they almost always require a signup fee or force you to buy some NFTs to get started. Some games might only require $100 or less to get started, others may cost you several hundred.
Play to earn games certainly do have the potential to make you a large sum of money. Back in February of 2021, a player from Axie Infinity sold a plot of land in the form of an NFT for a whopping 888 ETH. At the current Ethereum price that would be $1,500,000 US. However, that generally all comes down to luck, dedication, and what in game investments you decide to make.
The top 5 Blockchain Games to check out now
Axie Infinity
Axie Infinity (check out our Axie Infinity guide) uses NFTs to represent characters in-game. These characters can battle it out, breed, and even be bought or sold. These NFT characters hold real value as they are backed by cryptocurrencies.
Alien Worlds
Alien Worlds is a rather simple, yet quite popular game. It consists of purchasing land plots on different planets. These land plots are represented by NFTs and can be traded with other players. Players can stake the in-game currency ‘Trilium’ to earn even more.
The Sandbox
The Sandbox originally began as a mobile game on iOS and Android. After their huge success, the developers decided to bring their game to the blockchain. Similar to ‘Minecraft’ or ‘Roblox’, The Sandbox allows players to create and build worlds while having the ability to monetize their creations.
Decentraland
Decentraland is a 3D virtual reality world where players can create, view, and sell content and experiences. Players can purchase virtual land and publish content on their land. Other players can then view, use, or even purchase the content.
The darker side
No article brought to you by Versopedia would be complete without providing you with some of the cons to blockchain gaming. We’re also going to provide some tips that you can use to help yourself safe out there in the blockchain gaming world.
Loss Potential
Making large sums of money isn’t easy, blockchain gaming certainly isn’t a get-rich-quick scheme or a guarantee of any kind. Sure, there’s definitely some potential here for you to make money with blockchain games. However, there’s also potential for you to lose. These may be games, but deep down they are investments. Investments can go up and they can go down.
It takes a lot of time and dedication to earn these large amounts of money. So if you don’t have the time to dedicate to it, your return on investment likely wont be as high as you might have hoped. Now don’t get discouraged just yet, some of these NFT drops are completely random, or based upon choices you make in the game. Maybe you’ll get lucky, or maybe you’ll become a master of the game and retire early so you can sail your private yacht around the world.
To protect yourself a little, never invest or play with money that you can’t afford to lose. If you’re spending your kids’ college tuition on crypto in hopes of tripling it, just put that money back because you truly never know what might happen. Everything is subject to the market price of each currency and if things go down, your NFT prices will too.
Scams and how to protect yourself
We have all heard the words ‘Ponzi scheme, pyramid scheme, or rug-pull’ when investing in the crypto world. These are all very common types of scams. These scams are often quite hard to spot, even for professional investors. You might have thought these types of scams only happen when trading tokens; unfortunately, they even happen in the blockchain gaming world.
One of the most high-profile scams involving a blockchain game happened back in October of 2021. A team of individuals launched a token to raise the money for the development of their game that was based on Netflix’s ‘Squid Game’ series. The token became incredibly popular, yet shortly after the token hit $2,800 US they decided to disable the ability to sell the token and then run off the funds raised. According to several sources, the scammers made off with nearly $3,500,000.
Cryptocurrencies and blockchain games both share the fact that they can be developed by anyone. The best way you can protect yourself is to always do plenty of research on the games before you send them your paycheck. Check whether the developers are anonymous or if they have been publicly KYC’d.
A KYC is a process in which a third-party organisation takes ID and other personal information and keeps it on record so the developer is unable to simply run off without any consequence. If a developer was to scam the users of the game or token, the company that holds their KYC information would immediately turn this information over to the authorities.
Always be on the hunt for as many details as you can find about the game or project. See how long it’s been live, if it’s in development still, request development proof. Listen to interviews with the developer, chat with community members and ensure all of your concerns are satisfied. While you’re researching your next investment, don’t forget the saying “If it sounds too good to be true, it probably is”. More often than not, this one holds up.
Final Thoughts
The world of blockchain gaming is rapidly growing and changing all the time. It’s still early and it’s hard to say exactly where it’s going. Is there potential for major game developers to hop on the bandwagon? There’s no way to know for sure, however, with the booming popularity it’s likely that this is only the beginning. There’s loads of potential for blockchain gaming to expand into a household passtime.
Cryptocurrency, the Metaverse, NFTs and Web3 is changing our finances and social lives, it’s possible that we may see a big change in the way we play games too.
Helpful Videos, Articles & References
Videos
- Blockchain Games Are Here – What You Should Know (Techquickie) https://www.youtube.com/watch?v=roO0tIpYk6Q
- Top Blockchain Games & Platforms That You Must Check Out (Coinsider) https://www.youtube.com/watch?v=0PU7BuYOuQ8
- NFTs In Gaming… Are We Doomed? (GameSpot) https://www.youtube.com/watch?v=TJ77Nvvth_w
Articles & References
- https://cointelegraph.com/news/scams-in-gamefi-how-to-identify-toxic-nft-gaming-projects
- https://cryptopotato.com/decentraland-guide-and-review/
- https://www.gobankingrates.com/investing/crypto/play-to-earn-games/htt
- https://www.altcoinbuzz.io/blockchain-gaming/how-to-set-up-and-play-alien-worlds/
- https://cointelegraph.com/metaverse-for-beginners/sandbox-sand-a-beginners-guide-to-the-trending-metaverse-platform
- https://en.wikipedia.org/wiki/Blockchain_game#:~:text=A%20blockchain%20game%20(also%20known,use%20cryptography%2Dbased%20blockchain%20technologies.
- https://www.finder.com/ca/how-to-make-money-nft-games
- https://www.wired.com/story/squid-game-coin-crypto-scam/
- https://www.fool.com/investing/stock-market/market-sectors/financials/cryptocurrency-stocks/gaming-coins/#:~:text=Many%20are%20online%20games%20that,crypto%20as%20they%20complete%20tasks.
- https://www.investopedia.com/terms/b/blockchain.asp
