With the eSports industry exploding in size and capitalization, many companies are building games and eSports services products on the blockchain to leverage the power of tokenization and decentralization. Incidentally, many of the gaming problems that the blockchain solves are also real world problems, but since gamers are generally early adopters of technology, gaming and eSports are the perfect test ground for much of the blockchain technology that’s presently being developed.
For this reason, we believe that gaming and eSports will be one of the first and most pervasive “killer apps” for blockchain technology that will lead to mass market adoptions.
The early application of blockchain smart contract technology to the gaming industry is manifesting itself in several key ways, all through the lens of solving a pervasive problem within gaming that has never been solvable…until blockchain:
Virtual Assets on the Blockchain
In virtual asset trading, users cannot purchase any gaming asset on one single platform, and there is significant fragmentation within the virtual goods trading space. Tokenization provides the perfect solution to this issue by enabling in-game assets to be exchanged for a gaming utility token that can be used to either (1) purchase in-game assets using a simple widget that WAX has created, or (2) sold on the market independently, allowing users to trade their in-game assets for the WAX token gaming utility token.
One company in particular, WAX, is pioneering the creation of a utility token for all gamers (called WAX Token) that will enable the buying and selling of virtual goods on the blockchain. WAX Tokens act as stored value for acquiring in-game items and as smart contracts for buying, selling, renting and trading. The WAX platform will allow the global pool of buyers and sellers to access the global supply of virtual goods in a decentralized market while eliminating financial risks that users encounter from the prevailing consignment-based marketplace model. And the coolest part: WAX’s simple blockchain-enabled widget enables all users to immediately purchase assets from one another without frictions using WAX Token, which trades independently and is exchangeable for various larger cryptocurrencies, including Bitcoin and Ethereum.
Blockchain is Purpose-Built for Game Mechanics
If you spend money on in-game assets, you generally can’t take it out again, and this leads to gamers spending less than they’d like to…since they fear the risk of losing their money. Blockchain will enable the tokenization of in-game assets, allowing them to be traded outside the game, and if assets can have value outside the game, players will be much more likely to spend money inside the game since the player’s fears about losing their money will be dampered.
The ability to tokenize in-game assets will change gaming forever, and may even lead to gamers purchasing in-game assets for purposes other than playing the game itself (while still retaining the consumptive value within a given game). Take for instance a game that is quickly gaining popularity but does not have the massive adoptions of a League of Legends or a DOTA2, but soon likely will. Early adopters of games wherein their assets are able to be tokenized may soon find their gameplay become tremendously lucrative financially as the in-game assets become more valuable…since tokenization of in-game assets that can be exchanged for a common utility token would mean their efforts could be rewarded on a speculative basis. Gaming is the earliest application of tokenization that really makes sense…but once other industries take note, it’ll soon become clear that blockchain is driving the adoption of blockchain technology in the mass market.
Toxicity within gamer community culture is another massive problem that blockchain will substantially mitigate. As any game developer will tell you, the growth of a game and its fitness for eSports relies heavily on the quality of the community, and a vast majority of games suffer from toxic players within a culture, or “saltiness” in gamer parlance. For Overwatch, player toxicity has gotten so severe that it’s delayed game updates. A game built upon blockchain smart contracts would enable an advanced reputation management system that would reduce massive gamer toxicity issues like gaming downtime, cheating, and cruelty between players to ensure that any toxicity within the gamer culture remains confined to a handful of flagged players. Such a reputation management system cannot be easily constructed without the use of smart contracts, but the blockchain makes it easy.
Gaming is the Perfect Test Ground for Blockchain’s Fraud Prevention Capabilities
Fraud is a massive problem in eSports and on virtual asset exchanges, and it is a problem that only blockchain can solve. Virtual asset exchange transactions often suffer from delivery issues on the part of the seller or receipt of incomplete virtual assets. And in games themselves, players are often double-charged and receive fake items. When a virtual asset exchange or a game is built upon the blockchain, these issues of fraud are largely prevented, since there is a blockchain record of verifiable transactions. This cannot be accomplished without the use of a smart contract or the blockchain, since both were purpose-built as solutions for this pervasive problem on the internet.
Given the power of the blockchain to mitigate fraudulent transactions without the reliance on tons of intermediaries, one major virtual asset exchange and many gaming companies have built their games upon the Ethereum or Bitcoin blockchains. Industries outside gaming will take note of how well blockchain has reduced the occurrence of fraud within early-adopting games, and will replicate, placing gaming as the “killer app” that will drive mass adoption of smart contract technology to the mass market.
Gaming Will Drive Mass Adoption of Blockchain Tech
Gaming and eSports are the perfect early adopters of blockchain technology and tokenization. Decentralized smart contract technology solves a significant number of the problems that centralized technology is unable to solve, and tokenization transforms the economics of eSports entirely. Eventually, other industries will take note of how well blockchain has done in the test ground of gaming, and gaming will be noted as one of the early applications of blockchain that drove mass adoption in a myriad of other industries.