According to industry analysts, the rise of blockchain's application in gaming offers a chance for smaller companies to retain and expand market share, driven by strategic use of the multibillion-dollar non-fungible token (NFT) sector.
Blockchain gaming rewards players with cryptocurrencies in exchange for their time, while NFTs are used to buy digital goods and real estate. Axie Infinity, a popular blockchain game with millions of participants worldwide, is an example of a successful blockchain game.
"Three years ago, no one saw the potential of blockchain gaming.” During a panel discussion at Gitex Global in Dubai, Ritam Gupta, founder and CEO of blockchain gaming platform Defi11, remarked, "I believe we have already reached the period of widespread adoption."
"Gaming is a fad, and people are starting to realize that we can combine gaming with blockchain in a variety of applications."
NFTs are digital assets that are one-of-a-kind, cannot be replaced, and may be transferred to other digital wallets. NFTs are a type of gadget that may be utilized to help players in video games. They, like Bitcoin, the world's most valuable cryptocurrency, are restricted in quantity, possibly increasing their worth.
The introduction of blockchain technology — a database that is difficult or impossible to hack and on which Bitcoin is based – has created potential in fields other than cryptocurrencies. The decentralized structure of blockchain, a system with no central authority and several users, also allows smaller studios to compete on a wider scale with larger companies.
According to statistics from industry tracker DappRadar, the market for NFTs soared to a new high of $10.7 billion in sales in the third quarter of this year, up 328 percent from the second quarter and an astounding 78,000 percent from only $13.7 million in the first half of 2020. NFTs from video games are among the most popular, behind only utility, art, and collectibles, according to the report.
Major technology companies are also pushing for a more digital and virtual world, most notably Facebook CEO Mark Zuckerberg, who announced that the world's largest social media network would spend $50 million to build the so-called metaverse, a digital space that allows users to communicate and move virtually.
There are, however, dangers. After being hacked by hackers, a fake NFT was purportedly sold through English street artist Banksy's website in August, costing the customer $335,560 in Bitcoin. The money was finally refunded to the buyer by the hacker.
At the discussion, John Lillywhite, a Google research associate at the Mohammed bin Rashid School of Government, stated, "Governments are wondering how to regulate this, how do we tax this, how much is being pulled out of the physical economy."
"As Big Tech and certain blockchain companies achieve traction in the field, it will spawn a slew of economic, cultural, and political issues."
While blockchain and NFTs present a significant opportunity, one of the barriers to entry is that users typically require a balance of native platform tokens, which necessitates the use of cryptocurrency wallets and exchanges, according to J.C. Kim, co-chief executive of open-source platform Planetarium.
"Blockchain addresses many of the gaming industry's historical issues. Non-fungible tokens, for example, allow players to own their in-game assets, removing the threat of account theft. They could even transfer them between games, bringing up new revenue streams for the industry," she added.