Gaming And Crypto: Why Gamers Are More Inclined Towards Cryptocurrency?

Gaming and Cryptocurrency. Both phenomena of the modern era have taken huge numbers of our population with an ever-increasing velocity. What has caused such an acceleration in their adoption, and are the two interconnected?

Those questions and more are to be uncovered in the article that follows as we try to unravel and look closely into the workings of the two industries and how they two are expected to evolve together.

This article will consist of the following table of contents:

• Gamers are more likely to own Cryptocurrencies
• How and Why does cryptocurrency technology grow in the gaming industry?
• The Rise of GameFi
• NFTs
• Metaverse

Getting its beginnings in the late 1970s and early 1980s, the gaming industry was emboldened with the creation of the first home console, The Magnavox Odyssey. Now, around 40 years later, the industry is valued in billions. Not tens, but hundreds of billions.

Surely this aspect of entertaining the human population is popularizing ever so rapidly all around the globe, which is why it has seen a rise witnessed by many in its market value. Similar compliments can be made towards the other industry in focus in this article; the cryptocurrency industry.

While the famous Bitcoin took root in 2008 with the release of its whitepaper, it offered a mode of payment unlike any the world had adopted majorly before. Virtual Currencies hence took a rise in popularity, and now the cryptocurrency market is valued in trillions.

The two industries have a lot of subject matter from which comparisons and contrasts can be drawn; however, one underlying commonality remains; both industries are heavily virtual at the current time. What does this mean for both of them moving forward together? Time for us to jump into the bulk of this article.

Let’s start with a simple fact.

Gamers are more likely to own cryptocurrencies

As stated before, the gaming industry has indeed seen a huge increase in its popularity and, as a result, its market worth in the four decades it has been allowed to grow. Valued at around $173 Billion as of 2021, the gaming industry now caters to around 2.7 billion people globally. To put that into perspective, this means that almost every third person on the planet… is a gamer.

Now this industry may as well be a huge one, but let’s start drawing overlaps between it and the cryptocurrency industry in order to illustrate the fact in the heading. Around 42 million gamers owned some form of cryptocurrency. In these 42 million gamers, we are looking at primarily the millennial age group who range from 21 to 38 years of age.

To make a relevant comparison, 55% of the millennial gamers we are looking at owned cryptocurrencies as opposed to the average statistic of 5% of overall millennials owning cryptocurrencies. This clearly proves that gamers are more likely to own cryptocurrencies than others.

Going into the geographical side of the available statistics, the Asia-pacific region of the globe dominates in housing gamers who own cryptocurrencies, with the more or less actual figure lying around 23 million gamers. This region is followed by Europe, then the Middle East and Africa, Latin America and finally North America. Moreover, the region which generates almost half of all crypto gaming revenue is also the very esteemed Asia-Pacific region.

So now, all this statistical information must make you wonder… why… how…? We get it. Let’s look at some factors that have accelerated the rise of cryptocurrency adoption in the gaming industry.

How and Why does cryptocurrency technology grow in the gaming industry?

To answer the aforementioned question, we need to dig deeper into the current state of gaming as gamers know it. Many games which are highly popular, some of which may lie along the lines of Fortnite, incentivise the use of good strategy and skills to win in-game by offering them in-game rewards. These in-game rewards can vary highly from game to game, ranging from apparel users can customize their virtual avatars to rare objects only possessed by a handful of users all around the globe.

As gamers spend their precious time and, in many instances, resources to acquire these items, these items can be deemed as valuable ones in their eyes and not just theirs (refer back to how big the gaming industry is). Also, in many places, these items have a trait of exclusivity and rarity attached to them. This is created by the game designers in order to make that item more desirable to gamers.

Now, as gamers value these virtual assets, it is understandable when statistics reveal that almost 3 in every four gamers are interested in exchanging their virtual assets for a kind of currency that they could use to buy and sell on other platforms. Now, this is one area where cryptocurrency shines at its best. Not only are cryptocurrencies safe to use with their blockchain technology powering them, but they are also getting widely adopted in so many marketplaces as time progresses.

Cryptocurrencies also have another advantage which is that it exists on the same medium as a lot of the popular games, the internet. Hence, cryptocurrencies gain a versatility point.

Cryptocurrencies are also very easy to use. Ease originates from the same root as security stems from. The ability of anyone to create digital wallets in which they can store cryptocurrencies and can use them for trading them as well. Hence, setting up a mode of payment that is as easy and quick as a cryptocurrency wallet is something we don’t really have anything else for.

Now while these reasons may help to explain why cryptocurrencies have been adopted by gamers, they only offer one part of what must be a wide array of factors that lead to the popularity of cryptocurrency in the gaming industry.

We can also look at another angle of how games operate and generate the revenue that they do if we want to understand the prevalence of cryptocurrency in this industry. Games usually generate revenue by allowing their players to purchase virtual assets too. This could mean ‘extra lives’ or just about anything that potential players will be willing to pay money for in-game.

However, remember the point about the ease of using cryptocurrencies to trade virtual assets? The same applies here where given how easy it is to use cryptocurrencies. An increasing number of players are now willing to pay for these in-game virtual assets using cryptocurrencies themselves.

As a lot of good processes can go both ways, so does the previously mentioned one. Like how players use cryptocurrencies to pay the game developers in exchange for particular in-game virtual assets, players themselves also get paid or, rather, rewarded by many games themselves in the form of cryptocurrencies.

As you are now starting to see, there are so many ways in which cryptocurrencies are being used in the gaming industry by both gamers and developers alike. But… this definitely is not all cryptocurrency is offering in the realm of gaming.

The Rise of GameFi

While you may have already read paragraphs in this article that subscribe to the heading of ‘GameFi’, it is still imperative to focus on GameFi separately as a whole in order to clearly illustrate its importance.

Coming from the words ‘Game’ and ‘Finance’, GameFi refers to the financialization that has taken place in and of the online gaming industry as we know it. Although discussed earlier, this may symbolize the monetization of the achievements of players that are in-game. In-game assets acquired by players may be traded for other assets or cryptocurrencies.

GameFi is also allowing the democratization of gaming as well. This is where holding in-game assets is given a new meaning due to the reliance on technologies earlier used by cryptocurrencies; blockchain.

As per blockchain technology, any user can become a node on a network that processes data. Blockchain allows anyone to plug themselves into it and hence allows for there to be a network that exists outside the control of a single institution or entity.

This allows for the decentralization of many industries. We have seen this take place in the case of currencies where now, cryptocurrencies such as bitcoin are freshly minted through mining. Nobody can control bitcoin as it is governed only by its code, which is accessible by anyone. This allows for a level of transparency which gives decentralized networks the trust associated with them.

So how is blockchain revolutionizing the gaming industry? Many games are now being developed which are relying on blockchain technology in such a way that the virtual assets owned by the players are purely theirs’. This means that the game itself is not being controlled by the game developer in a tyrannical way but rather in a way that is out there for anybody participating in the network can see and, in most cases, even vote for or against. This allows for the democratization of gaming as this adds a level of ownership that is verifiable.

Blockchain runs on distributed ledger technology, which is basically a fancy term for describing that the transactions taking place on the network are uneditable, unalterable, and out there for the public eyes to see. When this is applied to monitor the ownership of in-game virtual items, players feel more secure knowing their virtual items cannot just be edited or taken away from them and that the status of their ownership is verifiable by anyone on the blockchain.

However, there is a significant market changer that is worth discussing here. Let’s introduce it with an example of an online game from 2017 called CryptoKitties. The game allowed players to breed virtual rare cats and convert them to non-fungible tokens, or NFTs for short.

NFTs

‘What are NFTs?’ is indeed a question that is gaining popularity as debates on them spark every other day in the gaming community. Essentially, they refer to virtual tradable assets.

When games use them in their stride towards GameFi, it can be highly probable NFTs will probably be collectibles found in-game that players would like to trade for their value. For example, in the infamous Axie Infinity game, an ‘Axie’ is a creature that players can use to go on battle with other players’ ‘Axies’. An ‘Axie’ is a good example of an NFT.

As NFTs are essentially tokens, they can be traded and with their rising popularity comes the emergence of NFT Marketplaces. On such marketplaces, NFTs can be sold at fixed prices or even auctioned, allowing players to earn off of something that was merely a source of entertainment in the past.

NFTs are also enjoyed by many gamers as they allow a way through which the interoperability of virtual assets can take place. In the past, games which could be played on multi-platforms used to shine in a special light as multi-platform ability is valued by gamers. It means that the same game which could be played on a Windows-powered PC can also be played on a console.

NFTs offer a way for users to collect virtual items in one game, and then on top of allowing them to be used in that specific game, it allows for using that virtual asset in other games too. This obviously depends on whether the games’ developers allow this or not hence limiting this feature to only a few games as of currently. However, with the increasing rise of blockchain technology in the gaming industry, it would be fair to say a rise in such features is predicted as time passes.

However, NFTs are indeed instruments that are very, very recent, sparking debates among gamers as to whether they have a net positive or a negative impact on the gaming community as a whole. While some say it is a sign of a more exploitative move by game developers, others welcome them for their ability to enable players to pursue a ‘play-to-earn model’.

Despite NFTs being good or bad for the gaming industry, they definitely are something disrupting the gaming industry for sure. Whether that is in a good way or bad is up for debate that can go on till the cows come home.

There is a direction in which all these developments are pointing, however. With the financialization of gaming, players can act in the virtual world in order to gain virtual assets which are holding actual fiat value in the real world. This allows the virtual world to have a significance it did not happen before in the last few decades or even years.

Couple this with the trends the human society has seen in the last few years, ones of social distancing and switching to things online due to easy accessibility, and you have the recipe for something that is already being served to some and quickly coming to you—a metaverse.

Metaverse

As many of you would be aware, the metaverse is Meta’s (formerly known as Facebook) brand new project. With the goal of creating a virtual space that can allow users to interact online, just how to do so in the real world, the metaverse is already making strides in a direction that seems to be fueled by GameFi.

As Metaverse’s key concept is basically a virtual sphere like the real world we are all familiar with inhabiting, it is making efforts to introduce concepts of the economy that give its virtual world the same feeling of significance described in the GameFi section of this article.

Take this fun fact, for example, Someone paid an amount equal to roughly $450000 to become Snoop Dogg’s neighbour in the metaverse. As you can grasp from this headline, the metaverse will be pretty serious in its efforts to emulate a lot of key core concepts of real-life and bring a digital spin to the entire thing.

A lot of metaverse related markets, where the key core concept is the same as in GameFi, where virtual assets are traded for actual money, have already sprung up. As this example itself illustrates, Virtual Real Estate with such high-price transactions taking place seems like it is here to stay.

Along with virtual real estate, the metaverse houses transactions via NFTs as well; another feature we have seen originate from the cryptocurrency and gaming industry overlapped. All of such transactions being enabled in the virtual world, which has real-world value, work towards making the virtual seem more than just bits of code. It makes the virtual comparably as influential as real life for a person, or at least that is where the future can be seen to go towards.

Taking a step back and observing how the evolution of the gaming industry has taken place due to technologies and concepts powering cryptocurrencies are allowed to flourish can tell us a lot about the direction in which the future can lead. This is one reason why such articles are often a good read.

Conclusion

Going through the entire article and trying to summarize it, in a nutshell would lead to defining it as a short summary of how and why cryptocurrency technology was adopted by the gaming industry, its current state and the direction in which most of the change can be seen to be led towards. Cryptocurrency has vast benefits for users who game, and it is these benefits that have enabled it to be adopted by so many gamers. Developers have picked their own set of cherries off the blockchain technology and, in doing so, have made efforts in trying to define the future of virtual life.

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