Blockchain game

Blockchain technology, such as cryptocurrencies and NFTs, are seen as additional monetization routes for video games. Many live-service games offer in-game customization options, such as character skins or other in-game items, which the players can earn and trade with other players using in-game currency. Some games also allow for trading of virtual items using real-world currency, but this may be illegal in some countries where video games are seen as akin to gambling, and has led to gray market issues such as skin gambling, and thus publishers typically have shied away from allowing players to earn real-world funds from games.[1] Blockchain games typically allow players to trade these in-game items for cryptocurrency, which can then be exchanged for money, while avoiding problems associated with gray markets due to blockchain's accountability.[2]

The first known game to use blockchain technologies was CryptoKitties, launched by Axiom Zen in November 2017 for personal computers, where the player would purchase NFTs with Ethereum cryptocurrency, each NFT consisting of a virtual pet that the player could breed with others to create offspring with combined traits as new NFTs.[3][2] The game made headlines in December 2017 when one virtual pet sold for more than US$100,000.[4] CryptoKitties also illustrated scalability problems for games on Ethereum when it created significant congestion on the Ethereum network shortly after its launch with approximately 30% of all Ethereum transactions at the time being for the game, delaying player's transactions. Axiom Zen had feared that Ethereum would further struggle after they launched the mobile version of the game, particularly with an influx of users from China.[5][6] Another early example is The Sandbox, a sandbox game originally released in 2012 but after being acquired by Animoca Brands in 2018 was remade to support blockchains. Players could make in-game items using the game's toolbox and then sell those using a game-specific cryptocurrency to others to display in their virtual landscapes.[2] Axie Infinity, released in 2018, is an example of a "play-to-earn" game, where the game incentivizes players to purchase and then improve NFTs through in game activities which are then resold to other players by the publisher, with the player receiving compensation for their work. In the Philippines, where the game was most popular, some players were able to earn enough to earn their cost of living by playing and participating in the game's financial structure.[7]

By the early 2020s there had not been a breakout success in video games using blockchain, as these games tend to focus on using blockchain for speculation instead of more traditional forms of gameplay, which offers limited appeal to most players. Such games also represent a high risk to investors as their revenues can be difficult to predict.[2] However, limited successes of some games, such as Axie Infinity during the COVID-19 pandemic, and corporate plans towards metaverse content, refueled interest in the area of GameFi, a term describing the intersection of video games and financing typically backed by blockchain currency, in the second half of 2021.[8] By November, several major publishers, including Ubisoft, Electronic Arts, and Take Two Interactive, have stated that blockchain and NFT-based games are under serious consideration for their companies in the future.[9]

At the same time, others have commented negatively on blockchain games. Xbox head executive Phil Spencer stated that in regards to blockchain games "that some of the creative that I see today feels more exploitive than about entertainment".[10] When the gaming communication platform Discord suggested possible Ethereum integration into their client in November 2021, users criticized the inclusion of cryptocurrency and Discord backed off, affirming they had no set plans for its inclusion.[11]

In October 2021, Valve Corporation banned blockchain games, including those using cryptocurrency and NFTs, from being hosted on its Steam digital storefront service, which is widely used for personal computer gaming, claiming that this was an extension of their policy banning games that offered in-game items with real-world value. Valve's prior history with gambling, specifically skin gambling, was speculated to be a factor in the decision to ban blockchain games.[12] While journalists and players responded positively to Valve's decision as blockchain and NFT games have a reputation for scams and fraud among most PC gamers,[1][12] blockchain game publishers and developers urged Valve to reconsider their position.[13] Epic Games, which runs the Epic Games Store in competition to Steam, said that they would be open to accepted blockchain games, in the wake of Valve's refusal.[14]

Ubisoft announced its foray into blockchain gaming with its Ubisoft Quartz technology which is based on the Tezos cryptocurrency. Quartz will allow players to purchase and sell Digits, which are special character customization items within the publisher's games, with the service first launching for Tom Clancy's Ghost Recon Breakpoint in December 2021.[15] On the same day, Ars Technica stated that "Ubisoft's... plans make no sense" because Quartz system is so deeply controlled by Ubisoft that a simple conventional internal database might be a better fit.[16] Users criticized the technology because Ubisoft terms of service state that the company has "no liability" for claims or damages and is aware that the blockchain "may be subject to specific weaknesses, which make them possibly targets for specific cybersecurity threats” and disclaim "liability in the risks implied by the use of this new technology."[17] On December 9, Ubisoft de-listed the announcement video on YouTube, following viewer backlash and dislike bombing.[18] French trade union Solidaires Informatique criticized Ubisoft's plan for Quartz, stating that blockchain technology is "harmful, worthless, and without future", and that it is "a useless, costly, ecologically mortifying tech which doesn't bring anything to videogames".[19]

Peter Molyneux announced in December 2021 that his development studio 22cans was working to include blockchain and NFTs within their planned game Legacy, a business simulation game. With blockchain, players of Legacy would create parts that could be sold and purchased from other players as to complete assemblies of units, using LegacyCoin based on Ethereum cryptocurrecy.[20] Prior to release, speculative buyers were able to purchase Land within the game which players would establish their in-game factories, with LegacyCoin sales of this land reaching more than $50 million within a few days of Molyneux's announcement.[21]