Is Web3 the future of gaming?

The collision of blockchain technology and gaming has sparked heated arguments about where the industry is headed. Web3 – a decentralized internet built on blockchain – has people asking whether this shift could fundamentally change how we play and engage with games.

Web3 games provide a decentralized, transparent and immersive experience. It offers players ownership of in-game assets, true digital scarcity and stronger security. As blockchain matures and spreads, the question becomes: Is web3 gaming’s future?

This article explores web3’s potential impact on gaming ecosystems, the obstacles it faces, and the transformative opportunities it creates for players, developers, and the industry.

Key definitions

Play-to-earn: “Play-to-earn represents a genre of blockchain-based games that incorporates player-owned economies through the use of in-game assets represented by tokens and NFTs.”

Blockchain Game: “A blockchain game is any game that uses blockchain technology to improve or rebuild traditional video games.”

NFT Game: “An NFT game is a video game that uses NFTs as a core part of their gameplay and economy. NFTs, or Non-Fungible Tokens, are 1-of-1 tokens generated through smart contracts and blockchain technology.”

Traditional web2 games have changed dramatically over the years. Now, blockchain technology is reshaping the industry in ways that weren’t possible before.

Web3 games use distributed ledgers, non-fungible tokens (NFTs) and decentralization to give players real control over the games they love. As of 2022, games account for approximately 49% of daily blockchain activity, showing continued growth.

What are web3 games?

(1) Distributed Ledger Technology and NFTs

Web3 games stand out because they integrate distributed ledger technology (DLT), which improves transparency and security. With DLT, these games can reward players with cryptocurrency and democratize development. Web3 games often sign in-game items as non-fungible tokens (NFTs), giving players full ownership of their digital assets.

(2) Conventional gaming infrastructure and blockchain

Web3 games are not stored directly on the blockchain. They use standard gaming infrastructure and web2 technology for the gaming environment. Players link their wallets to the game, while developers use smart contracts to bridge the web2 software with web3 components.

(3) Smart contracts and wallets

Smart contracts are critical in web3 games. They transfer digital assets such as game NFTs or exchangeable tokens to players’ wallets when earned. When developers set up a game DAO, smart contracts facilitate and count votes, ensuring transparent decision-making.

Does web2 bring IP to web3?

Any web2 game can theoretically become a web3 game. Major developers such as Ubisoft and Square Enix have begun to integrate web3 elements into their titles, including franchises such as Tom Clancy’s Ghost Recon.

Decentralization is a core feature of blockchain-based games. Many developers use game decentralized applications (dApps) to handle in-game transactions and blockchain interactions. These dApps run on interconnected nodes rather than centralized servers.

With decentralized node operators, player asset ownership, and decentralized governance, web3 games tend to be more player-driven than web2 games.

Advantages of web3 games?

The web3 gaming ecosystem delivers increased transparency, security and privacy. Here’s why web3 gaming is on the rise.

(1) Increased transparency

The web2 gaming industry has been criticized for lack of transparency. Publishers often force NDAs on developers and withhold footage until a polished demo exists.

While this can still happen in web3, the decentralized nature makes it less common. Many blockchain game developers openly share progress and involve players in decisions.

Transactions and item mining in web3 games are stored in public distributed ledgers, so players can see exactly how much of each item will exist. This transparency builds trust.

(2) Ownership of in-game assets

Web3 projects change game economies by letting players buy and sell their items. Gods Unchained lets players trade cards on the secondary market. Many web2 trading card games such as Hearthstone and Magic: The Gathering Arena give players cards that cannot be traded.

Some web2 games like Magic: The Gathering Online do let players buy and sell in-game items, but these items live on centralized servers. If the developer shuts down the server, the items disappear.

(3) Security and privacy

In web3 games, items, achievements and cryptocurrency rewards are stored on the chain. Distributed ledgers improve account security through decentralization and cryptography. Storing player data in the chain reduces the risk of hacking because there is no single point of failure.

(4) Interoperability and cross-platform play

Using NFT-based skins, characters and items across multiple games is an idea that is attracting companies like Sony. It won’t happen immediately, but it’s an interesting possibility.

Game interoperability faces major challenges. Developers will have to accommodate items carried over from other franchises, which requires serious work. Creating hundreds of items in an Elder Scrolls game to match those earned in The Legend of Zelda would be a massive undertaking.

We may soon see games that reward players with comparable game assets based on their crypto wallet contents. If you earn rare armor in The Legend of Zelda, you may receive similar rare armor in Elder Scrolls when you link your wallet.

Web3 game use cases?

(1) Play-to-earn games

These games allow players to earn profits while playing. Players often receive NFTs for completing missions or ranking high on daily, weekly or monthly leaderboards. These NFTs can be used in-game or traded on the secondary market. Some play-to-earn games reward players with cryptocurrency tokens as they progress.

Example: Gods Unchained

Gods Unchained is a popular play-to-earn and NFT trading card game by Immutable (IMX) on the Ethereum blockchain. Cards of various rarities can be bought, sold and traded as NFTs. Players build decks and earn $GODS tokens by playing and winning. These tokens can buy new card packs or contribute to in-game management.

Gods Unchained plays like popular online card games like Hearthstone and Legends of Runeterra. In this player vs. player format, you use decks of cards to outsmart opponents and win.

To expand their collection, players purchase random packs of NFT cards using the game’s native currency, $GODS tokens. This currency can be bought from a market or earned through gameplay. Once acquired, players have full ownership of these NFT cards, and a dedicated marketplace facilitates buying and selling.

Gods Unchained integrates blockchain technology to elevate a familiar game model. Unlike Hearthstone or Legends of Runeterra, where players do not fully own their cards, Gods Unchained uses NFTs to reap the benefits of physical card games like Yu-Gi-Oh! and Magic the Gathering. This includes the freedom to trade, buy and sell cards in the digital realm.

Virtual plots of land can be represented as NFTs, which allow players to buy and sell on the secondary market. Many web3 metaverse projects let players buy items using cryptocurrency, creating a decentralized marketplace for virtual assets and experiences.

Example: The Sandbox

The Sandbox, a decentralized virtual world with more than 27,000 landowners in its alpha phase, now hosts nearly 700 live player-created games with 50,000 to 100,000 monthly active users. Powered by the $SAND token, Sandbox features a user-friendly Game Maker that empowers creators in game design, asset creation and world building.

Recent partnerships with more than 400 top brands, including FaZe Clan, The Walking Dead, Snoop Dogg and Ubisoft, have expanded the platform’s appeal. The metaverse now has over 20 branded avatar collections, allowing players to express themselves through digital identities.

The Sandbox is a metaverse game with unique play-to-earn elements. Players can buy and sell land for games and virtual experiences. You can also design game assets in Sandbox’s VoxEdit software, which can be sold in the Sandbox Marketplace and used to build scenes or games.

(3) Gaming DAOs

DAOs (Decentralized Autonomous Organizations) affect web3 games in several ways. Investment DAOs work together to invest in web3 gaming projects, pooling resources and expertise.

Video game publishing companies structured as DAOs let employees participate in business decisions by voting, creating a more democratic workplace while sharing in company profits.

Web3 game projects like Decentraland use governance tokens to let players actively shape the growth and development of the game. Through these tokens, players participate in decision-making processes in a decentralized manner.

The future of web3 games?

Web3 offers a glimpse into the future of gaming, promising a decentralized and transparent environment where players have greater control and ownership over their virtual experiences.

The potential benefits – true digital scarcity, secure transactions and player-driven economies – could reshape the gaming landscape. But challenges remain: scalability issues, regulatory concerns and the need for widespread adoption.

With continued innovation and collaboration within the gaming and blockchain communities, web3 can usher in a new era that empowers gamers and developers. As technology and games evolve, whether web3 is gaming’s future remains an open question that awaits further exploration and development.

This article was inspired by an original blog post from Hedera you can read the full post on their website here for more information.