Whether you’re a gamer or not, the idea of virtual currencies is incredibly commonplace. Gaining gold from doing deeds and trading it in for upgraded gear, items and more seem, more or less, reflective of real-world economies. However, when the economic buzzword of the last decade gets thrown into the mix the majority of us start scratching our heads as cryptocurrency is still one of those concepts that evades global understanding.
But in a world rife with virtual currencies and a gaming leaning more and more into free-to-play models, perhaps integrating pre-existing or specifically crafted cryptocurrencies into the gaming industry makes sense. Let’s dive into why.
What is a Crypto Currency?
To get us all on the same page, a cryptocurrency can be defined as a digital currency within which transactions are verified by a decentralized system which utilises cryptography. While this jargon may be hard to penetrate, it manifests as a form of currency where all transactional records are made freely available—meaning that it is nearly impossible to counterfeit or double-spend with the currency.
Beyond that, a defining feature of cryptocurrencies is that they are (currently) not issued by any central authority, bolstering their immunity to government interference or manipulation.
The first, and most ubiquitous, cryptocurrency is Bitcoin, and still holds its place as the most popular and valuable. However since its inception in 2009, a whole host of other cryptocurrencies have been launched creating an aggregate value of almost $1.5 trillion across the range of cryptocurrencies (as of February 2021).
While the value of cryptocurrencies is incredibly complex, with some observers arguing that value can fluctuate wildly, it has been suggested that certain cryptocurrencies like Bitcoin can be valued in direct relation to the amount of energy required to source and facilitate transactions and the infamous “mining”.
Emergence in Video Gaming
The birth of the modern microtransaction is intrinsically linked to why cryptocurrencies may soon find a secure place within video gaming. And the inception of microtransaction takes us back to South Korea in the early 2000s.
Unlike Western gaming markets which have histories of buying boxed goods from high street retailers, South Korea’s early years of gaming were totally different. For historical reasons Japanese goods were not popular, and seeing as Japan was (and remains) one of the largest proponents of console-based gaming culture Korean gamers had to find new ways of playing.
This resulted in the widespread adoption of PCs, spawning the now legendary phenomenon of the PC Bang. Translating quite literally as “PC room”, these rooms housed networked computers allowing individuals to indulge in the emerging medium.
However, with this came a strange complexity. As piracy through torrenting was so rife throughout the 2000s locally made games struggled to turn a profit. Instead players would simply download titles at will playing, more or less, every title for free. Because of this, the industry had to face the impending demon of free-to-play with an innovative approach.
In 2003, Maple Story was released and became an instant hit. It was a 2D, side-scrolling MMORPG that was legally free-to-play. The catch? Within the game were microtransactions where players could pay for in-game benefits through online payment of real currencies. As the game quickly amassed over 100 million players, it solidified the market value of the microtransaction—resulting in many scholars and analysts considering 2003 as the year that in-app purchases truly came into being.
However, to isolate early 2000s microtransactions in South Korea would be missing the point—as both Second Life and Disney’s ToonTown Online, released later the same year, also contained microtransactions.
Fast-forward to the mid-to-late 2010s and, as we all know, microtransactions are everywhere. Be it to purchase cosmetic items, in-game perks or simply the right to continue playing the game when you lose. While some games still link this directly to real currencies—by an in-game item being listed as X amount of dollars (or your local currency)—many opt for obscuring the real-world cost through virtual currencies that are often exclusively obtainable by real-world cash. These can be Candy Crush’s Gold, Fortnite’s V-Bucks or Guild Wars 2’s Gems.
One of the main reasons these currencies exist, especially in online games where trading can take place, is to allow developers to combat the grey market. This grey market refers to players earning items in game, by playing, then selling them outside of the game’s servers for real money. This, of course, results in developers losing out on transactions which they could take a piece of.
And this is one point where cryptocurrencies come in.
But beyond offering security of keeping funds within their own servers, ensuring an entire ecosystem runs within a custom-made cryptocurrency will also end developers’ reliance on external payment mechanisms.
Furthermore, by integrating cryptocurrencies into game worlds, developers could inject real value into their virtual goods—as items could be obtained, bought and sold for a currency that extends beyond the game itself. This has far-reaching benefits, such as players being able to secure all history of their items and funds in the blockchain, combatting any dev-slips resulting in items or progress going astray.
With the explosion of cryptocurrencies in the past decade, many of these long-established virtual currency creators, among companies newer to the table, are considering the value of integrating fully functional cryptocurrencies into their games. These come in two forms: entirely unique blockchains (essentially, new cryptocurrencies) or scalable sidechains known as Dappchains. For the purposes of this article, we aren’t going to split hairs and will consider these two types together.
At this point, it is unclear whether the gaming industry may adopt one (or more) of the developing cryptocurrencies that aim to work between games (Enjin Coin, GT Coin, Game Credits) or whether companies themselves will close their doors, creating unique cryptocurrencies to secure their own ecosystem. Either way the industry chooses to turn, it is clear that the economics of video games will balloon into incredible complexity if cryptocurrencies do become widely adopted.
Teething Issues
While it seems almost inevitable that gaming will turn to these newfound currencies in the end, there are a number of teething issues to be faced before gamers will be happy adopting them.
First of all, the public at large is still quite cautious with regards to cryptocurrencies—either not wholly understanding how they work or simply being sceptical of the new, far less tangible form of cash. This means that cryptocurrencies may need to burst the bubble of stigma that surrounds them before going mainstream. But, then again, a medium filled with tech-savvy individuals who interface with computers may also prove to be the perfect testing-grounds for integrating cryptocurrencies deeper into everyday life.
That said, the second issue gaming struggles with in particular is the time cryptocurrency transactions take to be made and registered, peaking into minutes or more instead of the current instantaneous payments used through more traditional online payment systems. The complex thing about this delay is the fact it is there by design—required by the blockchain to facilitate the transaction. Thus, this may be an issue that proves hard to remedy.
Despite these foreseeable hurdles, it seems incredibly likely that cryptocurrencies will feature more and more in the world of gaming in the coming years, until a moment where, perhaps, the industry as a whole moves over to this alternative form of currency.
To give some perspective, in 2018 the streaming platform Twitch began allowing tips in cryptocurrencies, which has seen great success despite a bumpy start. While on the other side of the fence, free-to-play titles are more successful than ever. For example, 69% of Fortnite players have spent real money to purchase in-game content, with the average investment being $84.67.
Thus, while virtual currencies remain commercially viable on an explosive scale, and cryptocurrencies slowly creep their way into gaming, it seems almost inevitable that some time in the 2020s we may be paying for all things virtual with a virtual, cryptocurrency.
In the meantime, if you are looking to bolster your supply of in game currency to stock up for the upcoming valuation of in-game goods, head on over to ElDorado.gg. There you can purchase currencies for all major games—from OSRS Gold to Warfame Platinum.