Towards a progressive development of the blockchain in video games?

Many video game developers are reluctant for blockchain to arrive in the video game industry. Among the compatible technologies we find non-fungible tokens (NFT), these unique digital objects that can be purchased using a cryptocurrency and whose conservation and authenticity are guaranteed by the blockchain.

Around these NFTs, there are several economic models, including one in particular, which interests the major video game publishers. However, on the part of the creators or the players, this new economy is not always well received. A look at the aspects of the cryptocurrency revolution that divide gamers in the gaming world: gamers, publishers, advertisers and developers.

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The main novelty brought by the blockchain in video games: NFTs

If the blockchain tends to enter everyday language it is in particular thanks to the appearance, in 2017, of the first NFTs. These non-fungible tokens are attached to a digital object or work of art, called a digital asset. The NFT itself is a certificate of ownership of a unique digital asset: it is proof that you are the one who bought this asset and the one who owns it.

The digital asset can be an Internet meme (video, image, text intended to be humorous and intended to spread quickly on the web), music videos, digital images, GIFs, or even video game objects or customizations.

In 2021, the NFT market hit a milestone, surpassing $ 40 billion as it struggled to exceed $ 1 billion in 2020. The story was sold as an NFT for $ 107,000, the first tweet from Jack Dorsey (who is also the first post in Twitter history) acquired for $ 2.9 million, and a collage made by Beeple, obtained for nearly $ 70 million.

NFT beep

There are 5,000 images or animations on the artwork produced by Beeple. Screenshot: Beeple / Christie’s.

Currently, the NFT market is mainly focused on 32,000 portfolios which hold nearly 80% of the market value. In all, 360,000 people hold the 2.7 million NFTs in circulation at the end of 2021. This number has probably already increased since the beginning of the year. According to Drake Star Partners, broadcast by VentureBeat20% of the funds raised by the video game sector was used to start projects related to NFT and blockchain.

In the gaming world, virtual asset transactions have been around for quite some time without using NFT and blockchain. games like Fortnite, Counter-Strike Where is it PUBG they allow you to acquire skins or accessories to add to your character for a few euros, in order to customize it. So why not ensure that these transactions are handled using the blockchain?

Why do video game publishers want to enter the NFT and blockchain bathroom?

In reality, using the blockchain to make these virtual asset transfers allows you to do so in markets that are not dependent on the game in question. Sure, transactions existed before, but they were game-specific.

Specifically, if you are a PUBGbut do you like the skins of Fortnite and you want to get them, it is not possible because these virtual assets are specific to Fortnite and are not transferable. Theoretically, it would be possible to switch between games by sporting the same NFT, even if it is not initially part of the universe of the second game.

Furthermore, it adds transparency: the publisher is no longer the sole master of the regulation of the trade in these goods. However, a truly brand-conscious publisher can put checks and balances in place on NFT trading. The most recent example is that of Ubisoft. Launching Quartz in December 2021, the French publisher allows its players to get NFTs based on their playing time, then resell them if they don’t want to keep them.

This market was launched using the Tezos blockchain, in which Ubisoft plays a role. She is one of the “bakers” of this blockchain: this is the name used by Tezos to qualify its minors, those who validate the creation of a block that confirms all the transactions recently made in the blockchain.

Ubisoft quartz

This is what Quartz looks like, the market developed by Ubisoft and which uses the Tezos blockchain. Image: Ubisoft.

Finally, the use of the blockchain allows you to associate dynamic metadata to NFTs: it will be possible to know the statistics of the players who have owned the digital asset in recent months.

Since the asset in question, linked to an NFT, is unique, the goal is to make players interested in the NFT worn by others during a game so that they want to buy it back. Therefore, a gaming studio can generate a revenue stream entirely based on reselling its rare and unique skins, accessories, cards as NFTs on their market.

In addition to Ubisoft, other studios and publishers have expressed their opinion and expressed their interest (or not) in blockchain and NFT. This is the case with Electronic Arts (EA) which is why, unlike Steam which doesn’t want to get into the tub. For its part, Epic Games remains divided.

A new business model: the game to earn

Interest in studies is also economic. With NFTs, game publishers can start exploiting a new economic model: play-to-earn.

The principle of the game for earning is to ensure that the player progresses in the game so that rewards can be earned. By completing missions, creating content for, setting up community animations, players can be rewarded in the form of cryptocurrencies or NFTs. It opposes pay-to-win where a player is often forced to purchase resources in order to progress.

This new business model has become very popular in the Philippines. Axie Infinity, developed by the Vietnamese studio Sky Mavis, has 40% Filipino players. . By offering a play-to-earn model, this game has become a real source of income for some, making it their daily business. According to the head of one of the main guilds (group of players) in the game, its members would earn $ 400 per month while the average salary in the country is $ 320 per month.

Other games are based on this economic model: there are Roblox where 47 million people play 3D games made by gamers every day. The creators of these virtual worlds are not paid directly by the game publisher, but they generate money if players make purchases in their universe using a virtual currency called Robux.

The game So rare it is also a good example. Based on the Ethereum blockchain, it allows players to trade virtual soccer cards to collect them. Of course, some cards are released in limited numbers and are sometimes unique. Since the aim of the game is to have the strongest team, players are heavily involved in getting the rarest cards.

Why are gamers and developers reluctant about the arrival of NFTs in video games?

Many gamers and industry specialists are clearly reluctant on the arrival of blockchain and NFT in video games. This can be explained for several reasons.

First, the implementation of NFT and blockchain technology are energy intensive. Blockchains like Ethereum have announced the transition from proof-of-work to proof-of-stake. These are two processes to validate the addition of a block in the blockchain, in particular by authenticating the transactions carried out in the blockchain. While the former has a strong ecological impact, the latter tends to be much less polluting.

Countries like China have already banned cryptocurrency mining and transactions. Other nations like Kazakhstan are realizing that blockchains are very power-hungry. Within the European Union, Sweden has called for a halt to Bitcoin mining. The EU is now examining the possibility of banning work trials on the continent to preserve the climate. The proliferation of NFT through one of the most profitable cultural sectors in the world could exacerbate this situation.

Gamers also have a hard time understanding the principles that enable them to acquire these virtual assets. Despite chain analysisblockchain analysis specialist, says that many countries are adopting cryptocurrencies and that the adoption rate has increased by 881% between 2020 and 2021, the need to fully understand the entire buying and selling process can be a drag on NFT in video games.

Having to use a wallet, send cryptocurrencies to an address, having to wait for the validation of the transaction in the blockchain (which can take several tens of minutes), are habits that video game players should adopt have not acquired.

Cryptowallet

A wallet (or wallet) allows you to store cryptocurrencies for use in the context of transactions. Their use can be practical, but when making a purchase you have to make sure that the address to which the money is sent is the correct one because a transaction, once validated, is irreversible. Photograph: David shares / Unsplash.

Added to this are some players and developers who do not understand the sense of buying NFT to obtain a virtual good that could turn out to be useless and worthless. They believe that speculation doesn’t necessarily have a place in video games. Indeed, the entire NFT buy / resell principle is based on the principle that the token increases in value due to its rarity and potential media coverage within the gaming community.For these skeptics, acquiring an NFT does not. brings nothing extra in terms of gaming experience, interest according to them is only profitable.

Finally, the regulatory aspect must be taken into account. In the Philippines where the Axie Infinity game is popular, it has become mandatory to declare the income generated in order to pay tax on winnings. In South Korea, Apple and Google have been banned from distributing games to make money through their stores since 2019, as they regard them as gambling.

If NFTs were to become the norm in the video game market, the next step would obviously be to make sure that they are at the center of transactions in the metaverse: one or more virtual universes accessible in mixed reality or virtual reality where you can live different experiences, like in life. real despite being represented by a 3D avatar, a bit like a giant video game.

NFTs would then be the equivalent of title deeds to any virtual object, or even land, present in the metaverse. Buying an NFT in this universe could therefore allow access to a place or unique features in the metaverse.

But first, the NFT should really democratize in the gaming world. While the blockchain is full of promise, video game players are clearly divided. Publishers see a lucrative interest in integrating this technology into their creations, developers find that they will find it difficult to get involved in projects that do not enhance the gaming experience, nor respond to a real problem, and clearly gamers are not used to these. microtransactions that can be considered as a game of chance that generates speculation.

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