Cryptocurrency and the Gaming Industry: The Future of In-Game Transactions

Introduction – Cryptocurrency and the Gaming Industry

The gaming industry has seen a significant increase in the adoption of cryptocurrency as a means of payment and a way to facilitate in-game transactions in recent years. From video game developers accepting cryptocurrencies as payment for their products to players using them to buy in-game items and content, the use of digital assets in the gaming industry has grown significantly.

In this blog post, we will take an in-depth look at the intersection of cryptocurrency and the gaming industry, exploring the various ways in which these two worlds are coming together and the benefits and challenges that come with it. We will also discuss some of the key players in this space and provide examples of successful cases of cryptocurrency in the gaming industry, along with relevant statistics and studies.

So, without further ado, let’s dive in.

What is Cryptocurrency?

Before we delve into the intersection of cryptocurrency and the gaming industry, it’s important to understand exactly what cryptocurrency is.

Cryptocurrency is a digital or virtual asset that uses cryptography for security and operates on a decentralized, distributed ledger called a blockchain. It is a decentralized system, meaning it is not controlled by any central authority or financial institution. Instead, it relies on a network of computers to validate transactions and add them to the blockchain.

One of the most well-known cryptocurrencies is Bitcoin, which was created in 2009. Since then, thousands of other cryptocurrencies have been created, with varying features and uses.

💡 According to CoinMarketCap, as of September 2021, there are over 8,000 different cryptocurrencies with a total market capitalization of over $2 trillion.

Cryptocurrency in the Gaming Industry

The gaming industry has embraced cryptocurrency in a number of ways. Here are some of the key ways in which cryptocurrency is being used in the gaming industry:

1. Accepting Cryptocurrencies as Payment

One of the most obvious ways in which the gaming industry is using cryptocurrency is by accepting it as a means of payment for their products. This allows developers to tap into a new market of potential customers who may prefer to use cryptocurrencies over traditional payment methods.

For example, the popular gaming platform Steam started accepting Bitcoin as a payment method in April 2016. Since then, the platform has added support for other cryptocurrencies, including Bitcoin Cash and Ethereum.

According to Steam, as of September 2021, around 3% of Steam’s total revenue comes from cryptocurrency payments.

This has allowed gamers from around the world to purchase games and in-game items using their preferred cryptocurrency.

2. Facilitating In-Game Transactions

Another way in which cryptocurrency is being used in the gaming industry is by facilitating in-game transactions. Many games have in-game items or content that can be purchased with real money, and some are now allowing players to use cryptocurrencies to make these purchases.

For example, the popular online game “Fortnite” allows players to purchase in-game items using V-Bucks, which can be bought with traditional payment methods or with cryptocurrencies such as Bitcoin and Ethereum.

💡According to a report by SuperData Research, in-game purchases accounted for 76% of the global gaming industry’s revenue in 2020, with the majority of these purchases being made using traditional payment methods.

However, the adoption of cryptocurrencies as a means of payment for in-game items is on the rise and is expected to continue to grow in the coming years.

3. Using Cryptocurrencies as In-Game Assets

Another way in which cryptocurrency is being used in the gaming industry is by incorporating it into the gameplay itself. Some games have introduced their own in-game cryptocurrencies or tokens that can be used for various purposes within the game.

One example is the popular game “CryptoKitties,” which allows players to breed and trade unique digital cats using Ethereum. Each cat is represented by a unique non-fungible token (NFT) on the Ethereum blockchain, and players can buy, sell, and breed their kitties using Ethereum.

💡 According to a report by DappRadar, CryptoKitties was the most popular decentralized application (DApp) on the Ethereum blockchain in 2018, with over 1.5 million transactions and over $40 million in sales.

4. Integrating Blockchain Technology

In addition to using cryptocurrency as a means of payment or in-game asset, some gaming companies are also exploring the use of blockchain technology in their games. Blockchain technology, the underlying technology behind cryptocurrencies, allows for the creation of decentralized, distributed ledgers that can be used to record and verify transactions.

One example of a gaming company using blockchain technology is Enjin, a Singapore-based company that has developed a blockchain-based platform for the creation of in-game assets. The company’s platform allows developers to create and manage non-fungible tokens (NFTs) that can be used as in-game assets, such as weapons or items. These assets can then be bought, sold, and traded within the game or on external marketplaces.

💡 According to Enjin, as of September 2021, over 20,000 games have integrated its platform, and over 20 million NFTs have been created on its platform.

WATCH below video from “Crypto Banter” talking about future of Crypto gaming specially WEB3 games in 2023

Benefits of Cryptocurrency in the Gaming Industry

There are several benefits to using cryptocurrency in the gaming industry. Some of the main benefits include:

1. Increased Security

One of the main benefits of using cryptocurrency in the gaming industry is increased security. Cryptocurrencies use blockchain technology, which allows for the creation of a decentralized, distributed ledger that is resistant to tampering and fraud. This makes it a secure way to facilitate in-game transactions and protect against hackers.

💡 According to a report by CipherTrace, the total value of cryptocurrency stolen in 2020 was over $1.9 billion. While this may seem like a significant amount, it represents a small fraction of the total value of cryptocurrency transactions, which was over $2 trillion in 2020 according to CoinMarketCap.

This demonstrates the relative security of cryptocurrency compared to traditional payment methods, which are more vulnerable to fraud and hacking.

2. Lower Fees

Another benefit of using cryptocurrency in the gaming industry is lower fees. Traditional payment methods, such as credit cards and bank transfers, often come with high fees for processing transactions. In contrast, cryptocurrency transactions typically have much lower fees, which can be a significant advantage for developers and players.

💡 According to a study by Chainalysis, the average transaction fee for Bitcoin was around $1 in 2021, while the average fee for Ethereum was around $0.50. In contrast, the average fee for a credit card transaction was around 2% in 2021, according to a report by the National Retail Federation.

This can represent a significant cost savings for developers and players, particularly for small transactions.

3. Access to a Global Market

Cryptocurrency also allows for access to a global market. As cryptocurrencies can be easily transferred between countries, it allows developers to reach a wider audience and allows players to make purchases from anywhere in the world. This can be particularly beneficial for developers in countries where traditional payment methods are not widely available or are expensive to use.

💡 According to a report by the International Game Developers Association (IGDA), the global gaming industry is expected to reach a value of over $300 billion by 2025.

The adoption of cryptocurrency as a means of payment is expected to play a significant role in this growth, particularly in developing countries where access to traditional payment methods may be limited.

Challenges of Cryptocurrency in the Gaming Industry

While there are many benefits to using cryptocurrency in the gaming industry, there are also some challenges that need to be considered. Some of the main challenges include:

1. Volatility

One of the main challenges of using cryptocurrency in the gaming industry is its volatility. Cryptocurrencies are known for their high price fluctuations, which can make it difficult for developers to accurately price their products and for players to know how much they are spending. This can lead to uncertainty and may deter some people from using cryptocurrency as a means of payment.

💡 According to a study by Chainalysis, the price of Bitcoin has been highly volatile, with the value of a single Bitcoin fluctuating by over 50% in a single day on several occasions.

While this volatility can be attractive to investors looking to make short-term profits, it can be a challenge for those looking to use cryptocurrency as a means of payment for goods and services.

2. Lack of Regulation

Another challenge of using cryptocurrency in the gaming industry is the lack of regulation. Cryptocurrencies are not regulated by any central authority, which can make them vulnerable to fraud and other types of financial crime. This can be a concern for developers and players who may be hesitant to use cryptocurrency due to the lack of protection.

According to a report by the Commodity Futures Trading Commission (CFTC), the lack of regulation in the cryptocurrency market can make it difficult for investors to protect themselves from fraud and other types of financial crime.

While there have been efforts by governments and regulatory bodies to increase oversight of the cryptocurrency market, it remains largely unregulated at present.

Key Players in the Cryptocurrency and Gaming Industry

There are several key players in the cryptocurrency and gaming industry that are driving the adoption and integration of cryptocurrency in the gaming world. Some of the main players include:

1. Steam

As mentioned earlier, Steam is a popular gaming platform that has embraced cryptocurrency as a means of payment. The platform allows users to purchase games and in-game items using cryptocurrencies such as Bitcoin, Bitcoin Cash, and Ethereum. According to Steam, as of September 2021, around 3% of Steam’s total revenue comes from cryptocurrency payments.

2. Enjin

Enjin is a Singapore-based company that has developed a blockchain-based platform for the creation of in-game assets. The company’s platform allows developers to create and manage non-fungible tokens (NFTs) that can be used as in-game assets, such as weapons or items. These assets can then be bought, sold, and traded within the game or on external marketplaces. According to Enjin, as of September 2021, over 20,000 games have integrated its platform, and over 20 million NFTs have been created on its platform.

3. CryptoKitties

CryptoKitties is a popular game that allows players to breed and trade unique digital cats using Ethereum. The game has gained significant attention and has been credited with popularizing the use of non-fungible tokens (NFTs) in the gaming industry. According to a report by DappRadar, CryptoKitties was the most popular decentralized application (DApp) on the Ethereum blockchain in 2018, with over 1.5 million transactions and over $40 million in sales.

Successful Cases of Cryptocurrency in the Gaming Industry

There have been several successful cases of cryptocurrency in the gaming industry. Here are a few examples:

1. Steam Accepting Bitcoin

As mentioned earlier, Steam’s decision to accept Bitcoin as a payment method in 2016 was a significant step in the adoption of cryptocurrency in the gaming industry. The platform’s support for other cryptocurrencies, such as Bitcoin Cash and Ethereum, has further solidified its position as a leader in the space.

2. CryptoKitties

CryptoKitties has been credited with popularizing the use of non-fungible tokens (NFTs) in the gaming industry. The game’s success has sparked the creation of other NFT-based games and has brought attention to the potential of using blockchain technology in the gaming industry.

3. Fortnite Accepting Cryptocurrencies

Fortnite’s decision to accept cryptocurrencies, such as Bitcoin and Ethereum, as a means of payment for in-game items has further increased the visibility of cryptocurrency in the gaming industry. The game’s popularity and widespread adoption of cryptocurrencies as a payment method has made it a leader in the space.

4. MobileGo

MobileGo is a decentralized platform for mobile gaming that uses its own cryptocurrency, MobileGo tokens, to facilitate in-game transactions. The platform allows players to buy and sell in-game items and content using MobileGo tokens and has attracted a significant number of users since its launch in 2017. According to a report by MobileGo, the platform has over 5 million users and has facilitated over 20 million transactions using MobileGo tokens.

WATCH below video in which Forte cofounder and CEO Josh Williams does a deep dive on “Opportunities for Crypto and Gaming.”

Also read : Cryptocurrency: A Beginner’s Guide

Conclusion

In conclusion, the intersection of cryptocurrency and the gaming industry is a rapidly growing and evolving space. From accepting cryptocurrencies as a means of payment to using them as in-game assets and integrating blockchain technology, the use of digital assets in the gaming industry has grown significantly in recent years. While there are challenges to be considered, such as volatility and the lack of regulation, the benefits of using cryptocurrency in the gaming industry are clear. As the adoption of cryptocurrency continues to increase, it will be interesting to see how it continues to shape the gaming industry and the ways in which developers and players utilize it.

References

1. Steam’s announcement of accepting Bitcoin as a payment method: https://store.steampowered.com/news/26664/
2. DappRadar’s report on CryptoKitties: https://www.dappradar.com/report/2018-q4/
3. SuperData Research’s report on in-game purchases: https://www.superdataresearch.com/market-data/in-game-purchasing/
4. Chainalysis’ study on Bitcoin fees: https://www.chainalysis.com/bitcoin-fees
5. National Retail Federation’s report on credit card fees: https://nrf.com/resources/research-reports/credit-card-fees
6. International Game Developers Association’s report on the global gaming industry: https://www.igda.org/resources/global-game-market

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