Crypto crosses the digital gaming divide

2 July, 2018

Since video games became a household fixture in the 1980s and 1990s, the dream of every little gamer - and their mothers - has been to find a way to play video games for a living.

A lucky few eke out a surprisingly miserable existence as testers, endlessly playing broken games for a paycheck. Others work on the fringes of the gaming industry, in design, art, programming, or other auxiliary industries. Some people have even found a way to get paid for playing live games on a live stream.1

The dream, however, of turning those gold coins or little diamonds you collect in-game into cold, hard cash is still pretty elusive. However, cryptocurrencies are shifting that paradigm. Without a grounding in traditional trusted third parties, like banks or national governments, who gets paid for what can be pretty flexible in the cryptocurrency arena. This has facilitated some shady enterprises in the past - such as the infamous Silk Road - but also opened opportunities that quite simply never existed before.

The truth is that video games - like Hollywood movies, radio programs, and some internet forums - are a form of media, and all varieties of media can be tweaked to allow advertising. It doesn't have to be as blatant as, say, ET scarfing down Reese's Pieces in exchange for some sweet advertising revenue.2 It can be far subtler, such as promoting a certain gaming platform or device by issuing tokens for simply playing.

This reward scheme is already prevalent in brick-and-mortar establishments, like grocery stores and gas stations, and it's slowly making inroads into the gaming arena via tokenized blockchain assets. Those assets are more flexible than ever before. Not only can they be spent in-game, a mechanism that's been in place since at least 'Super Mario Bros,' they can now be spent in different games sharing the same platform and even in real life. We're going to take a brief survey of tokenized gaming and look at some new projects that aim to make that hypothetical little gamer's dream a reality.

Cross-Platform Trading

For the sake of simplicity, when we talk about gaming here, we're not talking about Bitcoin casinos or other gambling venues. It's obvious that kind of gaming can produce money in the form of fiat cash or cryptocurrencies that can be spent elsewhere. For the duration of this article, when talking about gaming, we're talking about moving little sprites around in virtual worlds, making them fight each other, and generally other skill-based games that reward achievement and don't involve the possibility of losing money at any point.

Free-to-play gaming on mobile devices really sparked the current surge of interest in gaming economies, though managing in-game economies predates mobile devices.3 It's a giant market. Forbes estimates that the free-to-play gaming industry now tops $82 billion. That's real fiat money essentially being spent on in-game tokens to customize or improve game-play.

The trouble with free-to-play gaming in the traditional model is multifaceted.4 Fraud is the first major issue. It's not limited to free-to-play games, but the orders of magnitude there are potentially much higher. In-game items can be forged via clever coding tricks or gamers outright cheated in insecure markets. This echoes the double-spend problem Bitcoin initially faced. How do you know if you own the genuine, one-of-a-kind Sword of Greater Slashing or a copy-paste worthless variant? This isn't limited to gamer-on-gamer fraud, either. There are plenty of shady free-to-play mobile games about that are outright unwinnable without spending fiat currency on in-game items or perks.

The second problem is that in-game currencies are typically limited to a single game. Your gold coins only buy extra lives in one game. If you decide to switch to a different game, you're going to have to collect a different currency to collect perks. This means a lot of grinding and a lot of frivolously spent cash.

Cross-platform cryptocurrencies solve both problems at once. Fraud is nearly impossible in a blockchain system, as in-game items can be assigned a cryptographic hash. This mirrors the cryptographic hashes used to store value or information on other blockchains, and it also matches the tokenization going on in other fields like fine art and real estate. If you buy a tokenized Sword of Greater Slashing, you can be assured that it's the real deal. Cross-platform use is also addressed by the flexibility of the blockchain system. As long as a group of games agrees to use the same basic underlying blockchain platform, it doesn't matter very much what currency is used in-game. Platform "exchange rates" can move currencies from one game to another, much as some cryptocurrencies help banks move fiat funds from one country to another.

A number of cryptocurrencies are geared solely towards making it easier to move funds from one game to another - FUN and, in its earliest incarnation, TRON are the most widely known. A specialist coin with this use case that appears to be gaining traction, however, is BUFF.5

Buff and its eponymous token BUFF have created a web of linked games that use the Buff platform as a crypto loyalty system. New coins are minted via a process that considers both game progress and the length of time played. The longer and better you play, the more coins you earn. These coins are earned in the background of the game, so they don't necessarily have to impact game-play itself. BUFF earned in one game can be easily ported over to another, and it doesn't cost any fiat cash to rack up in-game currency. However, the next level of BUFF and similar coins is even more exciting.

Crossing the Digital Gap

Almost by definition, cryptocurrencies are easy to move around. It's one of their biggest advantages over fiat currency. Currencies earned in-game, then, have the potential to be moved out to exchanges and bought and sold for other cryptocurrencies or exchanged for fiat dollars. While this field is still in its infancy, it's definitely on the way. FunFair, creator of the FUN token, is currently only geared toward creating tokens for fixed-odds games, and that's outside the scope of this article. However, the team does plan to implement games of skill in the near future, according to the token's FAQ, and that means it could eventually be ported to traditional console-type games.6

The real kicker here is that FUN is available on major exchanges. In fact, FUN is in the top 100 cryptocurrencies on CoinMarketCap, with a per-token price of around $0.02 and a total market capitalization of $115 million.7

That lays the groundwork for more specialist coins, like BUFF, to gain acceptance on exchanges. Once that occurs, it will be completely possible to play a game, earn an in-game token, and then move that token to an exchange where it can be traded for fiat cash. The virtual barrier between in-game currencies and physical currencies will have completely broken down, and it will have done so without shady intermediaries or the concerns about fraud that plagued early digital-to-physical markets, like 'Second Life.'

Don't knock the earnings potential on in-game currencies, either. Even though fraud and such were hard to police in 'Second Life,' quite a few early adopters earned heaps of cash crafting in-game items or - as one forum user claims - performing as virtual strippers. A $100,000-per-year paycheck for getting your online avatar to dance?8 Stranger things have happened. A BUFF listing - or the listing of any of BUFF's competitors - could potentially turn time spent gaming into time spent earning.


1) 6 Ways to Actually Make Money Playing Video Games, MakeUseOf.

2) From Ray-Bans to Reese's Pieces: 13 Unforgettable Examples of Product Placement, HubSpot.

3) Gamers And Investors Bet Big On Cryptocurrency And Blockchain In The Gaming Industry, Forbes.

4) Blockchain could transform in-game economies, Venture Beat.

5) Buff: Game for Fun, Earn for Real.

6) FunFair: FAQ.

7) CoinMarketCap.

8) Second Life forum.