Blockchain is not pure evil

Blockchain-based play-to-earn (P2E) games stole the show in 2021, explode from a fringe hobby to a major part of the decentralized space...

Blockchain-based play-to-earn (P2E) games stole the show in 2021, explode from a fringe hobby to a major part of the decentralized space. They have even helped people in developing economies put food on the table, as the business models of these games don’t shy away from farming in-game currency and items to resell to other players, which many massively multiplayer online (MMO) games don’t blockchain disapprove, to say the least. .

The mainstream gaming industry was taking notes as the P2E rocket headed for the moon – and its flight left the industry bitterly splintered. On the one hand, senior executives at major game companies, such as Ubisoft and Square Enix, have set their sights on the new market, seeing new business models, new revenue streams, new monetization opportunities – and telling investors they know what the cool kids are doing can still score a few bonus points.

Related: Play-to-Earn games usher in the next generation of platforms

On the other hand, however, players themselves were less impressed, to attack against blockchain initiatives, even from beloved developers. Developers aren’t rushing to adopt new technology, it seems: Around 70% of game developers have no appetite for blockchain or crypto, according to a recent major survey watch. It also means that 30% are interested to varying degrees, but the overall sentiment is negative.

Interestingly, the survey included some of the developers’ concerns about developing games on the blockchain. These mostly represented all the regular criticism the crypto community has long grown accustomed to – environmental impact, scams, and monetization issues. Well, let’s set the record straight once again, this time focusing specifically on the game world.

No, blockchain doesn’t have to set the earth on fire

The environmental impact of blockchain is the easiest fruit for a critic to reach, but, at this point, it probably has more to do with the industry’s perception than its actual situation. Yes, it’s true that Ethereum, the second-largest blockchain by market capitalization, has a high carbon footprint due to its use of the proof-of-work consensus mechanism — but you don’t have to develop on Ethereum in the first place.

Related: How blockchain technology is transforming climate action

It’s no secret that sustainability is one of the main fronts in the DeFi battle for the Ethereum throne. Several other blockchains, from Cardano and Avalanche to WAX and BNB Chain, are flaunting their low power consumption to attract more eco-friendly development teams. Blockchain gaming is no different, and the vast majority of game developers build their projects on eco-friendly chains.

Admittedly, the main reason to rely on Ethereum is the fact that you are entering a developed ecosystem worth almost $310 billion, which is more promising for your bottom line than moving to an ecosystem with a lower market cap. That being said, cool projects attract more people and transactions to any blockchain network, which drives up its token price and market capitalization. Additionally, since dozens of blockchains support the Ethereum virtual machine, which is the execution environment for smart contracts, developers will be able to easily migrate their applications to Ethereum once the network fully transitions to proof-of-stake.

Additionally, developers can go the extra mile and build sustainability into their economy by design. They can hard-code royalty payments to carbon offset providers into their NFTs and tokens, pledging to respect the environment in the strongest way possible. Energy and finance are already shopping difficult for carbon credits, after all, so it might make sense to adopt a similar strategy as part of a broader quest for environmentally friendly decentralization. Sure, it would help the studio’s revenue, but the sustainability is worth it.

No, blockchain is not just about scams

Crypto has a scam problem – that is undoubtedly true. Over the past year, scammers, fraudsters and hackers have been able to to pretend with $14 billion in cryptocurrency. Crypto scams come in all shapes and sizes, including rug pulls, social engineering, and pumps and dumps. Anyone entering space should be aware of the possible risks, that’s for sure.

Related: Beware of sophisticated scams and rug draws as thugs target crypto users

That said, however, the mainstream gaming industry also has a scam problem, and in fact, dope in 2021, as Lloyds Bank discovered. COVID-19 has brought more people and money into games, and scammers are going wherever the money is flowing, using every proven technique, from Phishing to malicious third-party sites claiming offer free in-game currencies. Meanwhile, the survey found that only 8% of gamers had seen tips on how to spot scammers.

In both industries, there are also instances of questionable behavior on the developer side. From crowd-funded projects sitting for years without updates to first releases selling on Steam without ever seeing further development, the mainstream scene is not without its rogues. On the crypto side, there are similarly developers disappearing with money raised through token sales and other scams.

All in all, cheating can happen in any space that incorporates something of value, whether it’s a magic sword that helps your game character deal with those pesky dragons or, say, to real estate. For both crypto games and mainstream games, education must play a major role in rooting out scams. Developers working on blockchain projects should be sure to convey the ABCs of avoiding fraud to players at every possible opportunity.

At the same time, the crypto space offers additional safeguards against scams. When integrating with decentralized services, such as exchanges or yield farms, developers can inspect their code on-chain because it is available in the open. They can also use the maturity and market capitalization of specific protocols as a measure of their security, as both indicate greater investor confidence and stronger protections.

No, blockchain is not bad for monetization

The concern about potential monetization issues seems somewhat misplaced at first glance. Blockchain was designed from the ground up as a value transfer protocol, which, if anything, is actually quite conducive to monetization efforts. A P2E game must naturally include a strong economic component that would allow players and developers to generate profits.

At the same time, however, there is a problem here. Any blockchain game becomes part of the larger ecosystem. This ecosystem is inherently turbulent, volatile, and speculative, and these are risks that gamers and developers alike must be prepared to face to even enter the business. Here’s a quick example: to play an NFT game, you usually have to bear the initial cost of purchasing your NFTs. To be able to do this, you must first buy the native token of the chain on which the game is based, which means exposure to its fluctuations which will also be present if you want to withdraw money by selling your NFTs later. Similarly, any fungible in-game token will inevitably rise and fall in value with the broader crypto market. Or will they?

The answer, again, depends on the choices developers make. The studio may choose to build the game’s economy around a stablecoin, whose value does not fluctuate over time despite the rollercoaster of the crypto market. The reason teams rarely do this is because they are looking for a token economy that will skyrocket quickly, which is only possible with a more dynamic coin. It also creates the risk of additional instability on top of general crypto market movements, as an economy built this way can begin to crumble as soon as the token turns around or player base growth slows.

Related: Cointelegraph Research report analyzes GameFi bumper in 2021 and trends for 2022

Developers can avoid this problem, however, by being more creative in their monetization. They can use the programmable nature of blockchain tokens to algorithmically control the dynamics of their prices by burning and minting them based on demand and broader market fluctuations. At the same time, they can add indirect monetization via second-market fees on NFT sales, which would effectively create a never-ending revenue cycle and align their interests with those of users. If developers release NFT content that players want, they will be able to get a discount on all subsequent resales, offsetting what they could have gained by raising the price of their token.

Like any other technology, blockchain is not inherently good or bad. It’s a protocol with its own design flaws that savvy developers can mitigate by making smart design choices. While not all games need to adopt decentralized technology, there is nothing wrong with experimenting with the value that blockchain brings to game design, and doing so in a safe and sustainable way is above all a matter of choice. .

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Adrian Krion is the founder of the Berlin-based blockchain game startup Spielworks, with a background in computer science and mathematics. Having started programming at the age of seven, he has successfully bridged business and technology for over 15 years, currently working on projects that connect the emerging DeFi ecosystem to the gaming world.