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The future of crypto investing
21.12.2018
Crypto Games: Current State & Beyond
ANDREW LEE
@alee
Daily users of ETH dapps, according to dappradar.com.

 
If you look at the transactions on dappradar.com, you’ll notice that games are starting to be the number one use case for crypto protocols. It’s a tiny market, for example there are only less than 5k DAUs on ETH games, but at the very least, it’s showing signs of life.
 
I anticipate the trend will grow and we’ll see crypto games take shape in one of the two following game types:
 
1. Gambling Games. There will likely be two types of gambling games that will get traction: casino games, and casual games that mix in an element of gambling. Gambling and betting games: Like dice and casino games, gambling and betting games will continue to gain traction because blockchain can provide transparent odds as well as ease-of-access to gambling applications. Casual games with a betting aspect: I believe more casual games and video games that we’re used to playing on mobile or console can easily implement an element of gambling. An example might be a battle royale type game where you knock out other players for their crypto, or a crypto Counter-Strike where you can beat other players for crypto.
 
2. Non-Fungible Token Games. While gambling is regulatory uncertain and in a lot of cases illegal, I believe that games that use NFTs can be a huge market. NFTs create a new ingredient of fun inside games by allowing players to “own” their digital game items which have liquidity for real money value. The addicting loop for blockchain games is the fact that players can earn and own their game items via skill, time spent in game and luck; which can be then sold for real liquid value when the players get tired of the game. It is not directly gambling; but users in NFT games I anticipate will still have the thrill of being able to make money by playing the game.
 
I think blockchain can add value to games because of the public and distributed ledger can verify direct ownership and authenticity of assets on-chain. Furthermore, the decentralized ledger can give gamers a real and authentic history of the game item; for example, if a sword in a game was particularly effective, the blockchain can verify how many kills/damage that item has done in the past or who owned it. Blockchain will give players direct ownership of their game assets via private key and crypto wallet, which is game behavior that wasn’t possible before. In addition, the existence of secondary markets for NFTS will indirectly allow players to make money while playing games which is totally new for gamers. And finally, blockchain can provide transparency for game rules and odds, which is helpful for gambling and casino games.
 
The biggest challenge is being able to make a “non-crypto” user use a crypto game without knowing they’re using blockchain. The biggest problem to blockchain games is the market size for crypto investors that are also game players is really tiny. I imagine the crypto game studio that is able to market to non-crypto gamers yet allow them to stumble into using wallets and NFT exchanges and sending crypto transactions will be able to tap a much larger market of gamers. Furthermore, I think the main way crypto games will monetize is by selling in-game purchases for digital items that are either via normal app store marketplaces or directly for crypto (BTC/ETH).
 
The infrastructure needed for this market include: game studios that understand how NFTs and blockchain add real value for gamers, gaming development protocols, NFT wallets and finally secondary markets to trade NFTs.
 

 
One of the most interesting markets for adoption crypto games is South Korea. Seoul is a very dense city, with super high adoption rates on crypto investing and mobile gaming. I believe the because Korea is such a high-crypto-and-gaming-penetration population, it will be much easier for crypto games to go viral within the geographic area. The most promising crypto game company I was able to discover and spend time with is Itam (https://itam.games), which is incubating a couple super polished blockchain games that use NFTs.
 

Itam.games from Korea is building high-polish mobile games that use NFTs and cryptocurrencies. They are building on EOS.

 
Crypto games are relatively very early, but could be one of the product categories that survive this bear market. To further explore the intersection of blockchain and games, I’ll be self-funding and building my own NFT game this year, more on that soon. 👍CB Insights has a great matrix that categorizes a lot of the emerging blockchain markets.
 

From CBInsight’s 2019 Blockchain Trends report.

 

Will crypto make the jump from speculation to usage and valuations? Will take time, but I certainly 100% believe so. Tweet by Ian Lee.

 

An interesting poll from a contact of mine Tor Bair, who runs a podcast called Decentralize This.

 

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