Unless you have been hiding under a rock for the past 12 months, you will know that crypto has had a rollercoaster of a year.
For example, in November 2021, Bitcoin was valued at $60,955.77. Now, in July 2022, that value has dropped by over two-thirds to $19,488.
Crypto is a volatile digital asset but web3 gaming has been surprisingly unaffected by the current crypto market conditions. Investment is continuing to flow into the space and for good reason.
In this post, we will explore why blockchain and web3 gaming continues to be a great investment, through crypto volatility.
Traditional gaming is built on a centralised network. When a user plays a game, what they earn in XP or in-game currency is only usable within that game.
Blockchain and web3 games work on a decentralised network. This means that users can take their XP, weapons, currency and more from one game to another. All game data is transferable between blockchain games, giving players the freedom to trade, sell, and retain their assets as they wish and enjoy multiple gaming worlds.
For example, a user can play a game on the blockchain and earn XP and weapons. They then decide to move to another game. Unlike in traditional games, they can take all of the XP and weapons they have earned with them when they leave, or they could trade them with another player.
Some blockchain and web3 games also offer users the opportunity to earn cryptocurrency while playing. Gamers can earn tokens or cryptocurrency within the game that they can then trade for currency such as USD or GBP.
Blockchain games can create this decentralise network of assets through NFTs. NFTs are digital tokens that represent a unique item.
Each NFT has unique metadata making it impossible to replace one token with another. When a unique weapon is earned in a game, it cannot be copied or stolen because there is only one of it.
Blockchain gaming uses NFTs to create everything from characters to weapons and skins. With blockchain games, players can sell their NFTs (weapons, XP etc) to other players or take them to an exchange or auction to earn cryptocurrency.
If so much of blockchain gaming is based on NFTs, and these are then sold for cryptocurrency, why is blockchain gaming not feeling the impacts of crypto volatility?
Blockchain and crypto are often thought to go hand in hand. But blockchain gaming and crypto are not as intertwined as you might first think.
On the surface, it is easy to couple the two together but in reality, you should think of it like pairing up tech stocks on the London Stock Exchange with the businesses of tech companies. There is some correlation but it's not as direct as you first assume.
Over the past year, the value of crypto exchanges and crypto assets has been in free fall. Coinbase has seen its shares plummet this year as we enter what some are calling the ‘crypto-winter’.
You would expect that this would negatively impact blockchain gaming, however, the industry has remained fairly stable.
According to a DappRadar x BGA Games report, in May 2022, there were over 1.15 million daily unique active wallets that interacted with blockchain games. This is only a 5% decrease from the previous month (April).
The crypto market is having little effect on users and some speculate this is due to the entertainment value of gaming itself. Many users are not playing blockchain games as a way to earn money or as a form of investment. Instead, they are playing these games for the same purpose as playing traditional video games, for entertainment and leisure.
Crypto may be a volatile market, but gaming is not. Even games that are blockchain-based, are seeing that the decline in the value of crypto is having little effect on the number of daily users on their games. Gaming is a form of entertainment for many rather than a source of income so many gamers are unbothered by the decline in value of their digital assets and continue to play and earn crypto.
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