Blockchain explained

How blockchain is making digital gaming better

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pc gamerThe gaming industry has evolved from humble beginnings. Those of us who are old enough remember playing Super Mario on a 16-bit gaming console know how this simplistic gaming industry has now evolved into a warehouse of emotion-churning, engrossing virtual reality games that reward precision and planning.

Games like PlayerUnknown’s Battlegrounds (PUBG) are massively multiplayer online games (MMOs) where players’ characters are customized to their own personality and hence need to live in a fair world. Any unfairness to the character reflects upon the game player themselves. Characters cannot die like Mario, they do not chase some distant goal like a princess in a castle. These games have high emotional stakes and are very close to real-life dynamics.

Most of these games are streamed online and players use virtual assets like real-world resources to achieve specific goals and establish their superiority. Gaming is quickly becoming a world sport. It is a $138 billion industry in 2019.

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Hurdles in digital gaming

As the industry grows, new problems have emerged. These problems did not exist a decade ago since the games were not close to real life. With virtual reality (VR) headsets and 5G data streaming capabilities, these problems need to be addressed before they hamper the growth of this mammoth industry.

Most of these hurdles are lack of transparency and trust between game developers and players. The games often have an economy inside them. This economy is completely controlled by the developers. Users also want fairness and transparency when it comes to transactions and ownership of assets.

Blockchain benefits

Blockchain has been a boon to many industries that lacked accountability. At the core of this technology is the ability to create a trustless environment that facilitates immutable transactions between two strangers over the internet.

Blockchain essentially provides a decentralized transparent ledger that is cryptographically stored on various nodes spread across the world. No single entity controls the network, no single database to attack or hack, and no possibility of reversing the transactions once made. The low cost of transactions makes it easier to transfer money or any other tokenized asset across the world. These transactions do not go through any middleman and hence the transactions are near real-time.

Blockchain solves some of the major problems in the gaming industry today. Let us look at some of the problems and how blockchain can solve them:

Verifiability and transparency

One of the developments in modern games is the use of assets to complete missions. You need guns, props, environments, cars, planes, characters and art. Modern games are dependent on these assets that are scarce in supply and can be purchased with real-world money as an in-game purchase or earned as the player progresses in the game.

Games need to be neutral for a player to work hard or spend their money to acquire these assets. However, currently, there is no accountability or transparency. Since these assets are virtual, game developers could just produce an unlimited amount or rig the market by providing it to certain players. There needs to be transparency and verifiability.

Blockchain enables the tokenization of these assets and the creation of decentralized gaming asset markets. Since the ledger is open for everyone to check and verify, this increases the trust factor. Also, gamers can visit the decentralized markets to buy virtual assets at a fair price based on an open order book.

Verifiable scarcity

One of the properties of these assets that make them valuable is scarcity. However, with the current setup, it is impossible for a player to know how scarce a particular Kevlar plate of armor is. If these assets are issued on a blockchain, players can easily verify the total quantity on the block ledger. This increases the trust and hence the value of the marketplace itself.


Gaming platforms are hosted on centralized servers and transactions are often made on mobile phones or desktops without adequate security measures. Also, assets held in gaming accounts are liable to be stolen. They are not as secure as our bank accounts, however valuable a gaming account may be.

Blockchain is known for being the most secure way of storing value. They are designed to be unhackable. Storing digital gaming assets on a blockchain would enhance the security for a player who has worked hard to collect them.

Collectible Items

Blockchains can also store value in form of non-fungible tokens or NFTs. These are tokens that represent a unique value. Games have assets that are unique and collectible. These assets are highly valuable. NFTs could be used to represent these items and make them easy to store on a wallet, less expensive to sell and trade on an open market.

Digital assets exchange

Currently, digital assets are traded inside the game or on exchanges like Wax, OpenSea, and RareBits. These exchanges could be more transparent on a decentralized exchange in a tokenized form. Paying for such exchange always poses risks such as exposure to scammers or buying of fake assets. Decentralized exchanges on blockchain solve this.

Time and cost of a transaction

Gaming is a global world. Players from different countries routinely play games like Counter-Strike with each other. How would they transfer their assets without taking days for processing payments and jumping through the legal hoops?

Blockchain would enable instant payments across the world. This means there would be no restrictions.

Blockchain in future gaming

The intersection of blockchain and gaming is an interesting world where lifelike reality is possible in a virtual world. With advances in VR, this world is more likely to be even more integrated with our real-world experience than we can imagine right now.

We are witnessing a revolution in gaming and blockchain. Combined, they will create an ecosystem that works seamlessly, making blockchain the invisible player in the background.

From time to time, we invite industry thought leaders, academic experts and partners, to share their opinions and insights on current trends in blockchain to the Blockchain Pulse blog. While the opinions in these blog posts are their own, and do not necessarily reflect the views of IBM, this blog strives to welcome all points of view to the conversation.

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Independent Security Analyst

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