Blockchain gaming is huge. Like, BILLIONs of dollars huge. In our lifetimes, it will turn into one of the few trillion-dollar consumer economies.
For a sector that broke out only in 2021, the web3 gaming market has grown exponentially, having quickly captured a sizable share of the gaming industry.
The introduction of blockchain elements in gaming (open economies, on-chain NFT assets, transferable gaming profiles) presented gamers with new use-cases — a potential livelihood off of playing games.
For instance, P2E (play-to-earn) games allow players to earn a substantial income merely by participating in the game (and winning). If grinding away at a game sounds like too much work, some also let you make monies from trading in-game assets as NFTs.
But not everyone is excited about these developments. Let’s go through the three misconceptions that people have about web3 games:
Web3 Gaming is Just For Making Money
Yes, it may be true that web3 games are creating new revenue streams for players, creators, and investors alike. But web3 is doing so much more.
It is revolutionizing gaming, introducing a paradigm shift in how we play and perceive games. Web3 isn’t just enabling earning opportunities on games, it is establishing an open economy around gaming.
Sounds futuristic? It isn’t.
As a matter of fact open markets in gaming have been around for decades. Older generations played board games and collected trading cards. Most of these were hand-made and durable, hence there was an active market for reselling and collecting these physical gaming assets.
But these economic liberties faded away with the advent of digital games.
Centralized games only have virtual assets with closed economies. These games have a low barrier to entry and are free-to-play, relying on players buying in-game assets for accelerating their progress. Since streamers are often more well-known by their gamer handles and in-game avatars than their real names, these assets also help players establish their digital identity through unique cosmetic items.
The most popular Twitch streamers are often more recognized by their gamer tags than their real names. Pictured (left-to-right): Pokimane, Ninja, and Shroud. Image source.
Blockchain gaming brings back open markets to gaming, by providing a transparent, immutable and consensus-based mechanism to exchange virtual property between fellow players, while allowing interoperability between games via decentralized mediums of exchange.
Still not convinced about the interrelation of gaming and economics? The study of how economic agents interact in a free market is literally called GAME theory 🤷♂️.
All Web3 Games are Ponzis-in-Waiting
The short answer — yes. Just like every other space, Web3 scams also exist. Most people in crypto are more interested in the potential profits in the space vs. creating impact, and scammers take advantage of this by routinely duping thousands with rug-pulls and pyramid schemes.
While the number of perpetrators are small, it is the wider, honest community of blockchain gaming that ends up taking the fall, with both gamers and developers suffering as a result 😢.
Image source: Protocol
In a nascent and upcoming space like web3, security and regulations are bound to be limited. Every time a new tool or technology is introduced, it is safe to assume that fraudsters will hop on it too.
The key is realizing this:
The potential advantages of web3 will always prevail over the negative intentions of a few bad actors.
As for staying safe on-chain, doing your own diligence on projects with a healthy dose of skepticism can go a long way in protecting you from such scams. And finally, if anything, the existence of these bad actors signals that everyone, including conmen, are recognizing the potential of web3 — all the more reason to be bullish!
B-but, Think of the Environment Harm from NFTs 😨
The number one argument on the Internet against NFTs and blockchain technology in general, is the ecological destruction it allegedly causes.
While it’s true that cryptocurrencies like Bitcoin and Ethereum consume copious amounts of energy (due to the resource-intensive Proof of Work consensus they use), one must also remember that this environmental impact is less about web3 gaming, and more fundamental to the technology powering it.
Also, most web3 games are NOT built on Bitcoin or Ethereum; these legacy networks have very slow verification times and high gas fees, hence developers prefer more efficient networks (like Solana) and other L2 solutions (like Arbitrum One) for their games, as they are faster and cheaper.
These solutions are better and more environment-friendly too!
Some Closing Thoughts
All misconceptions aside, web3 games today are far from perfect. You cannot build closed economy games on open economy protocols. Most blockchain games fail because they try to mash web2 dynamics with web3 fundamentals.
What builders need is a first principle approach to building on-chain games. But this won’t be easy. The art of game development is anyways a difficult craft, and web3 game development, even more.
The road may be slightly bumpy, but if you’re red-pilled on the future of gaming, you’re in for a ride of a lifetime ❄