By Matej Michalko | While cryptocurrencies like Bitcoin and Ethereum have dominated media headlines in the past couple of years, the lack of a ‘killer app’ has so far prevented a blockchain-based platform from permeating consumers’ lives.
All this talk about cryptocurrencies certainly has played a vital role in bringing the concept of decentralized tech into the mainstream. But such currencies are far from replacing traditional fiat instruments – after all, it’s not very practical to buy your morning coffee with Bitcoin just yet.
At the moment, blockchain lacks a product akin to how smartphones and e-commerce helped catalyze the near-ubiquitous use of the Internet today. But this elusive product may be hiding in plain sight: consumer gaming.
This industry is a natural fit for virtual coins, tokens, and other digital methods of storage and transaction. Gamers typically earn virtual rewards for completing tasks or emerging victorious. Such rewards – in the form of in-app currencies – can be used to level up the battlefield, build fortifications, or even exchange for real-world cash.
By some estimates, the global gaming industry is expected to grow to US$180.1 billion by 2021. Mobile games will account for US$106.4 billion of that pie, or approximately 59 percent, and mobile is not eating away at the share of PC, handheld, or console gaming – all three have posted healthy year-on-year growth.
The gaming industry is taken very seriously in Southeast Asia, which is host to 9.5 million eSports enthusiasts – not including the vast Chinese market. The size of the industry globally was estimated to be US$655 million in 2017, a figure that grew 102 percent from 2015.
China’s dominance in eSports and mobile gaming, exemplified by Tencent’s bold forays in the sector, are expected to drive further growth. In fact, Tencent’s increasing propensity to invest outside of China and its partnerships with players like Garena will undoubtedly result in further mainstreaming of virtual gaming currencies.
So how does Blockchain fit into all this?
The first, and obvious point of reference is that most avid gamers and eSport enthusiasts are between the ages of 21 and 35. They’re early adopters of all things tech, and if blockchain-powered solutions can make it easier to trade with each other, then it’s a relative no-brainer.
Some early players, such as FirstBlood – an Ethereum-based decentralized eSports platform – are testing the waters. Users can set up and bet on games without needing a bank account or credit card, removing barriers to entry and bringing into play the 438 million unbanked individuals in Southeast Asia alone.
Interoperability is another area blockchain startups can target. At the moment, virtual currencies in games operate in silos. You might be able to trade with another registered gamer or spend for in-game upgrades, but that’s about it. Coins are restricted to the publisher that created them – without an immutable, decentralized intermediary it’s impossible for a single currency to emerge that could potentially be used across an entire industry.
Singapore-headquartered Enjin is a startup that focuses on ownership and trading of virtual goods, a market that was estimated to be worth nearly US$50 billion globally in 2015. If done right, this could very well spawn a robust community that combines gaming and cryptocurrencies – with the net result of complementary industries such as hardware manufacturers and live-streaming platforms latching on.
The use of blockchain makes even more sense when you think about the potential payouts for each gamer, on a daily or weekly basis. While eSports is a niche area and payouts are large, there’s only a trickle of events each year and rewards are top-heavy. For gaming to be considered a ‘killer app’, it has to be ubiquitous.
Ordinary gamers don’t practice and train the way eSports practitioners do; they’ll play during the morning commute to the office, in short spurts during lunch hour, or even while answering the call of nature. If rewards for winning games were paid out in fiat currencies, then banking fees and slow rates of transfer would simply kill all incentive due to their relatively miniscule amounts. But a blockchain-powered system would eliminate these inefficiencies by providing real-time settlement with negligible cost.
Building this vision requires an ecosystem. That’s not something done overnight or in the absence of trust. But the opportunities are vast and real. If Cryptokitties can almost choke the Ethereum network, this means there’s already plenty of interest for decentralized collectibles.
ALAX is a blockchain mobile game distribution platform that is a joint venture between my blockchain technology business Decent and app/game distribution platform Dragonfly that aims to provide a platform for content creators and gamers, including unbanked consumers worldwide. The ALAX partnerships means Decent’s proprietary blockchain technology will be rolled out immediately to Dragonfly’s 100+ million active users. decent.ch| alax.io
About The Author Matej Michalko is the Founder and CEO of Decent and a blockchain pioneer with over 7 years of Bitcoin, blockchain and cryptocurrency experience. Matej organized China’s first international Bitcoin conference and also founded and led many Bitcoin, blockchain and cryptocurrency conferences such as Bitcoin Expo, Central European Bitcoin Expo, and BTC2B Congress. Matej founded the world’s first Bitcoin marketing agency, as well as the first cryptocurrency e-gaming consulting firm.