Crypto Gaming: Worth The Investment?

Crypto gaming is on the rise, with gaming coins becoming a popular investment choice. Gaming coins combine two lucrative industries: crypto and video games. Players can use the in-game cryptocurrency to purchase characters and weapons, and some games also operate on a play-to-earn model, where players are rewarded with crypto for completing tasks.

While the crypto gaming market is still young and volatile, it has massive growth potential. Blockchain games were responsible for half of all blockchain usage in 2021, and in-game collectibles generated $2.32 billion in sales during the third quarter of that year.

Some of the top gaming coins to watch and consider for investment include:

- Decentraland (CRYPTO:MANA)

- Axie Infinity (CRYPTO:AXS)

- The Sandbox (CRYPTO:SAND)

- Enjin Coin (CRYPTO:ENJ)

- My Neighbor Alice (CRYPTO:ALICE)

- Illuvium (CRYPTO:ILV)

- Yield Guild Games (CRYPTO:YGG)

Play-to-earn models

Play-to-earn (P2E) models have emerged as a new frontier in online gaming, leveraging the worlds of cryptocurrencies, non-fungible tokens (NFTs), and decentralised finance (DeFi) to offer players digital assets with real-world value in exchange for their in-game achievements.

In P2E games, players can often use the game's crypto to purchase characters, weapons, and other in-game items. These games also frequently employ a play-to-earn model, where players can earn crypto or NFTs as they progress through the game, completing tasks, battling enemies, or levelling up their characters.

Here's how P2E games work:

• Tokenised Assets and In-Game Items: P2E games utilise blockchain technology to tokenise in-game assets and items, transforming them into non-fungible tokens (NFTs) or fungible tokens. Each token has a unique digital signature, giving players indisputable ownership and a sense of rarity over their virtual possessions.
• Economic Ecosystem: Within the game, a self-sustaining economic ecosystem emerges, allowing players to buy, sell, and trade their tokenised assets. This ecosystem is often supported by a native cryptocurrency, enabling seamless transactions within the game's virtual economy.
• Gameplay and Earning: Players engage in various in-game activities, such as battles, exploration, crafting, and trading. Through these endeavours, players can accumulate valuable in-game items, tokens, or cryptocurrencies. These rewards can enhance their gameplay experience or be exchanged outside the game for real-world value.
• Blockchain Verification: Blockchain technology ensures the security and integrity of in-game transactions. Every exchange, acquisition, and sale of tokenised assets is recorded on the blockchain, preventing any manipulation or fraudulent activities.
• Marketplaces and Exchanges: Many P2E games integrate marketplaces where players can list their tokenised assets for sale. Other players or collectors can then purchase these assets using the game's native cryptocurrency or other compatible tokens. Some assets gain significant value due to their rarity or utility, leading to a thriving secondary market.
• Decentralisation: P2E games often operate on decentralised platforms, reducing the control of central authorities. This decentralisation empowers players by giving them more control over their in-game assets and earnings.
• Economic Opportunities: P2E games have created new economic opportunities, allowing players to generate income by dedicating time and skill to the virtual world. Some players have even turned gaming into a full-time career, earning substantial amounts of cryptocurrency.
• Community and Governance: Many P2E games involve their communities in decision-making through governance mechanisms. Token holders may have the power to influence the game's development, updates, and other aspects, fostering a sense of ownership and community involvement.

In-game crypto purchases

One example of a game that combines in-game crypto purchases and the play-to-earn model is Axie Infinity. Axie Infinity is a blockchain-based game that combines elements of strategy, collectibles, and blockchain technology. Players can collect, breed, battle, and trade Axies, which are non-fungible tokens (NFTs) based on the Ethereum blockchain. The game features two virtual currencies: AXS (Axie Infinity Shard) and SLP (Smooth Love Portion). Players can earn SLP tokens through gameplay and use them to breed new Axies. The AXS token is the governance token, giving platform members decision-making power and distributed to top-ranked players.

Decentraland is another example of a game that utilizes in-game crypto purchases. It is a decentralised virtual world built on the Ethereum blockchain, where users can create, explore, and monetise digital content and experiences within a virtual reality environment. The native token of Decentraland is MANA, which is used for all transactions on the platform, including the purchase of virtual land (LAND). Players can also use MANA to vote on LAND politics and earn rewards.

Other games that incorporate in-game crypto purchases include The Sandbox, My Neighbor Alice, and Illuvium. These games offer players the opportunity to purchase virtual land, assets, and other in-game items using the game's native cryptocurrency.

Blockchain gaming security

Blockchain gaming is an emerging entertainment paradigm that combines the world of gaming with blockchain technology. It gives players more control, security, and transparency. While blockchain gaming offers many benefits, it is not without its security concerns. Here are some key considerations and strategies to address blockchain gaming security:

Insecure Digital Ownership of Tokenized Assets

Tokenized assets are digital assets represented as tokens on a blockchain, allowing players to own their in-game items. However, the ownership of these assets is closely tied to cryptographic private keys. If players lose access to their private keys, they lose ownership of their assets. Additionally, phishing attacks targeting private keys are a growing concern. Private key management is, therefore, a critical issue in blockchain gaming security.

Smart Contract Vulnerabilities

Smart contracts in blockchain gaming are highly efficient and reduce human errors. However, as smart contracts become more complex, they also become more vulnerable. Once activated, modifying them is challenging. Even a small oversight in coding can lead to significant security risks. Smart contracts that interact with external data sources without proper security measures can create additional vulnerability points. Thorough testing of smart contracts before deployment is essential to identify and address potential security risks.

Cyber Attacks on Blockchain Platforms

Blockchain gaming platforms are increasingly becoming targets for cyberattacks. Hackers use malware or web attacks to penetrate platforms and player accounts, manipulate in-game economies, and steal assets. While blockchain's distributed nature reduces the risk of data breaches, some blockchain games still rely on centralized servers, which can be targeted by DDoS attacks.

Privacy and Identity Concerns

Blockchain gaming requires players to share personal and financial information. Data breaches in this context can lead to identity theft, financial losses, and unwanted intrusions into players' personal lives. Players highly value the ability to play anonymously, separating their real-world identities from their in-game personas. The immutable nature of blockchain, where data cannot be altered or deleted, can pose challenges if sensitive information needs correction or removal. Additionally, the transparency of most blockchains can inadvertently reveal player identities or activities if proper anonymization measures are not in place.

Strategies to Enhance Blockchain Gaming Security

To address these security concerns and create a secure gaming environment, several strategies can be implemented:

• Multi-Signature Wallets: Requiring multiple private keys to authorize a transaction adds an extra layer of security against unauthorized access.
• Regular Security Audits: Routine checks by third-party firms ensure that game codes and smart contracts are secure and free from vulnerabilities.
• Zero-Knowledge Proofs: This cryptographic method allows transactions to occur without revealing transaction details, enhancing player privacy.
• Enhanced Player Verification: Stringent verification processes reduce the scope for fraud and ensure that players are genuine.
• Player Education: Educating players about safe practices can minimize the risks of phishing attacks and scams.
• Data Storage Off the Blockchain: Storing sensitive player data off the blockchain and using the blockchain only for transaction verification can enhance confidentiality.
• Layered Security Measures: Implementing multiple layers of security, such as Web Application Firewalls (WAFs) and traffic analyzers, can help detect and deflect malicious actors.

Crypto gaming's future

The future of crypto gaming looks bright, with the sector expected to be worth $50 billion by 2025. The intersection of blockchain technology and gaming has given rise to a new breed of digital assets known as gaming tokens, offering lucrative opportunities for investors.

The success of blockchain-based games and the popularity of the play-to-earn model have propelled the growth of the crypto gaming industry. With in-game tokens and native cryptocurrencies, players can now earn rewards and even generate income through their gameplay.

As the industry continues to evolve, we can expect to see more innovative gaming platforms and ecosystems that leverage blockchain technology. Here are some potential trends and developments that could shape the future of crypto gaming:

• Enhanced Security and Decentralized Ownership: Blockchain technology provides enhanced security for in-game assets and offers decentralized ownership. Players can truly own their in-game items, trade them, or sell them, giving them more control and flexibility.
• Mainstream Adoption: As crypto gaming gains traction, we may see a shift towards mainstream adoption. This could lead to more players entering the space, driving the demand for gaming tokens and cryptocurrencies.
• Improved Interoperability: Blockchain technology enables improved interoperability between different gaming platforms and ecosystems. This could allow players to transfer their in-game assets, including cryptocurrencies, across different games, creating a more dynamic and interconnected gaming experience.
• Emergence of New Gaming Genres: Crypto gaming has the potential to spawn new gaming genres that blend traditional gaming mechanics with blockchain elements. These could include new types of role-playing games, adventure games, or even metaverse-based simulations.
• Collaboration Between Traditional Gaming Companies and Blockchain Projects: As the industry matures, we may witness increased collaboration between traditional gaming companies and blockchain projects. This could result in the creation of hybrid gaming platforms that leverage the strengths of both worlds, attracting a broader audience.
• Development of Regulatory Frameworks: As crypto gaming grows, there may be a push for the development of regulatory frameworks to protect players and investors. This could include guidelines for secure transactions, anti-money laundering measures, and consumer protection policies.
• Integration of Virtual Reality (VR) and Augmented Reality (AR): VR and AR technologies have the potential to revolutionize crypto gaming, offering immersive gaming experiences. Players could interact with virtual worlds and engage in gaming activities in a more realistic and engaging manner.
• Expansion of the Metaverse: The metaverse is expected to play a significant role in the future of crypto gaming. More gaming platforms may adopt metaverse concepts, allowing players to create, explore, and monetize their virtual experiences in immersive virtual worlds.
• In-Game Token Innovations: Gaming platforms will likely continue to innovate with their in-game tokens, offering unique features and benefits. This could include exclusive access to certain game modes, special events, or even governance rights within the game's ecosystem.
• Increased Focus on Community and Engagement: Crypto gaming projects that foster a strong sense of community and engagement will likely thrive in the future. Players who feel invested in the game's ecosystem and have a say in its development will be more inclined to participate and contribute to its growth.

While the future of crypto gaming looks promising, it is important to remember that the industry is still in its early stages and subject to regulatory changes and market volatility. Investors and players should carefully consider the risks and potential challenges before entering this dynamic and evolving space.

Gaming coin investment strategies

The rise of blockchain technology has led to the emergence of crypto gaming projects, presenting new investment opportunities. Gaming coins are digital tokens designed for the video game world, aiming to revolutionize transactions, virtual assets, and rewards within games. Here are some strategies to consider when investing in gaming coins:

• Research and Diversify: The gaming crypto market is volatile and relatively young. Diversifying your investment across multiple gaming coins can help reduce risk. Research reliable sources, such as crypto news websites, forums, and social media platforms, to identify popular gaming cryptocurrencies and their partnerships with established gaming companies.
• Evaluate In-Game Utility: Assess the practicality and effectiveness of a gaming coin within its ecosystem. Consider the range of in-game purchases supported, integration with gaming platforms, ease of use, and depth of integration into gameplay mechanics.
• Assess Play-to-Earn Potential: A key feature of gaming coins is their ability to reward players for their achievements. Evaluate how players can earn income through completing quests, participating in tournaments, owning and trading virtual assets, or engaging in decentralized finance activities.
• Examine Sustainable Tokenomics: Understand the economic principles and long-term viability of the gaming coin. Evaluate token distribution, inflation and deflation mechanisms, governance models, staking rewards, and the economic stability of the token economy.
• Analyze Online Traction: Consider the popularity, community engagement, and adoption rate of the gaming coin. Evaluate social media presence, community size and activity, developer support, and the level of enthusiasm within the gaming and crypto communities.
• Look for Presale Opportunities: Buying gaming coins during the presale stage can offer massive returns if the project succeeds. Analyze the market capitalization, trading volume, and tokenomics of the gaming coin to make an informed decision.
• Consider Staking Rewards: Many gaming coins utilize staking mechanisms where investors lock up their coins to support network operations and earn rewards. These rewards can provide a passive income stream and incentivize long-term holding.
• Evaluate In-Game Asset Acquisition: Some gaming ecosystems allow players to earn additional coins by investing in or acquiring in-game assets like virtual real estate or rare items. This strategy can boost the overall value of your investment.
• Monitor Industry Trends: Stay updated with the latest news and developments in the gaming crypto market. The industry is evolving rapidly, and keeping informed can help you make timely investment decisions.
• Start Small and Gradually Increase Exposure: If you're new to gaming coin investments, start with a small investment. As you gain more knowledge and experience in the market, you can gradually increase your investment portfolio.

Remember, investing in gaming coins carries risks, and it's important to do your research and assess your risk tolerance before making any investment decisions.

Frequently asked questions