Overview

Video games can include elements that use blockchain technologies, including cryptocurrencies and non-fungible tokens (NFTs), often as a form of monetization. These elements typically allow players to trade in-game items for cryptocurrency, or represent in-game items with NFTs. Blockchain games have existed since 2017, gaining wider attention from the video game industry in 2021, when several AAA publishers expressed an intent to include this technology in the future.

Players, developers, and game companies have criticized the use of blockchain technology in video games for being exploitative, environmentally unsustainable, and unnecessary.

A subset of these games are also known as play-to-earn games because they include systems that allow players to earn cryptocurrency through gameplay.

Concept

Blockchains have been used by game developers and publishers as a tool for video game monetization. Many video games offer in-game customization options, such as changes to a character's appearance, improved equipment, or other options. In some live-service games, players can also trade with other players, either directly or via in-game currency. Trading of virtual items for money may be illegal in some countries where this is classified as illegal/under-age gambling, money laundering, or securities fraud.

This has led to gray market activity such as skin gambling, and publishers often attempt to prohibit players from earning real-world funds from games for legal reasons. To avoid these regulations, blockchain games allow players to trade in-game items for cryptocurrency, which can then be exchanged for money via a cryptocurrency exchange.

History

One of the first best-known games to use blockchain technologies was CryptoKitties, launched by Axiom Zen in November 2017 for personal computers. A 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. The game made headlines in December 2017 when one virtual pet sold for more than US$100,000.

CryptoKitties also exposed 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, and with the congestion delaying players' transactions. Axiom Zen feared that Ethereum would further struggle after they launched the mobile version of the game, particularly with an influx of users from China.

The Sandbox is a platform that bought the brandname of a 2012 crafting game of the same name, in 2018. Players could make in-game items by using the game's toolbox and then sell them, using a game-specific cryptocurrency, to others who could display them in their virtual landscapes.

Axie Infinity, released in 2018 by Sky Mavis, 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 pay their cost of living by playing and participating in the game's financial structure.

However, following an early 2022 hack which saw over $600 million stolen from Axie Infinity's publisher, the game saw a large drop in players and the game's economy was impacted. Sky Mavis removed references to "play-to-earn" on its websites and marketing as its tokens plummeted in value.

Reception and criticism

Xbox head executive Phil Spencer said in regards to blockchain games "that some of the creative that I see today feels more exploitative than about entertainment". 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.

MMO developer Damion Schubert argued that most pitches for games for NFTs could also be achieved without the use of NFTs and that the non-NFT options would be easier to implement.

In November 2021 Rob Fahy wrote in Gameindustry.biz that the "play-to-earn" business model is similar to earlier systems that encouraged the rise of gold farming which later led developers to shift to selling "gold" to players directly in real currency. He argued that the business model could potentially reintroduce artificial scarcity of in-game currency and in-game items or characters, and that in-game marketplaces will likely have a payment system where a game developer takes a cut when players sell a marketplace item to each other.