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While our recent focus at Pink Sky Group has been on decentralized finance tools and the role they play in progressing the cryptocurrency market, we have also paid brief attention to the gaming industry and its nascent union with blockchain technology. This article will dive deeper into this union and explore its benefits from both a gaming perspective and the perspective of the market at large.

Getting started with blockchain and cryptocurrencies can be an intimidating process. When I first heard the word “bitcoin”, there were very few avenues available to purchase it with fiat; the process that has since become so simple was, initially, unnervingly complex and had a steep learning curve with very real financial consequences. While this process has since been simplified, the inherent nature of the technology and the very features which attract so many to blockchain remain large inhibitors to the masses. While absolute control of one’s own assets may seem appealing to those who have made the leap, gaining the knowledge and work that true digital ownership entails (proper key storage, security best practices, et cetera) remains a daunting task to many.

Gaming provides fun, low-risk incentives and avenues to learn about blockchain. When the cost of a user error is just a few game credits or an in-game asset as opposed to a potentially sizable investment, the risk of making a mistake while learning best practices for a new technology becomes much more acceptable. More importantly, users of these games still have the opportunity to make significant real-world profits from their gameplay: something not typically offered by console-based games.

Since CryptoKitties’ meteoric rise to popularity, a number of projects have joined the market. Some, such as Neon District and Gods Unchained, utilize blockchain technology to allow users so secure ownership of their own in-game assets; others, such as Decentraland, also provide infrastructure and a sandbox-like infrastructure for players to explore and build upon; and some projects simply provide high throughput infrastructure upon which blockchain-based games can be developed such as POA Network (previously discussed in our article “Thinking Fifteen Moves Ahead: MakerDAO, xDai, and POA Network”.

The esports market’s sustained growth continues to attract investors, fans, and blockchain technologists alike with some projects — such as Unikoin Gold — having delivered a working product as early as last year. At its core, blockchain offers gamers the same features and protections that it offers to those in finance, namely: secure, immutable, and provable ownership of assets; this alone is an attractive value proposition for the US$50 billion global in-game assets and virtual goods market. Add to that the ability for players to create their own items (CryptoKitties), bet on matches (Unikoin Gold), or monetize their assets (Decentraland) and you have not only a wide gateway for adoption, but a formulae for changing the paradigm of an entire industry.

The intersection of blockchain and gaming is an exciting one, and one which Pink Sky Group expects to cause significant growth in both industries. The ERC-721 token standard has already seen usage by Major League Baseball to tokenize collectibles, and the leap to using cryptocurrency is a short one for many gamers who are already familiar with the notion of in-game virtual currencies. More importantly, gaming provides a valid use case for blockchain and blockchain-based tokens that can exist outside of the SEC’s purview; this is already evident to major-league gaming companies such as Epic Games (the company responsible for the development and success of Fortnite) and, as blockchain’s place in gaming becomes more accepted, we expect to see many more gaming industry leaders join the playing field.

NB: This article may contain terms with which you may not be familiar. Pink Sky Group maintains a glossary of blockchain-specific technical terminology for your convenience, which can be found here.

1. Tim Prentiss, “Round One Of FOMO3D Comes To An End”, ETHNews, August, 2018.

2. Evelyn Cheng, “Meet CryptoKitties, the $100,000 digital beanie babies epitomizing the cryptocurrency mania”, CNBC, December, 2017.

3. WAX.io, “How on earth is trading virtual items in video games a $50 billion industry?”, Medium, December, 2017.

4. Retrieved from: mlbcryptobaseball.com

Information is Opinion and Provided “AS IS.” The information provided herein is the opinion of Pink Sky Group. Certain information has been provided to Pink Sky Group by other third parties. Pink Sky Group has relied on information provided to it by such parties that it has not independently verified. Pink Sky Group cannot guarantee the accuracy of any such information and does not represent that such information is accurate or complete.

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Forward Looking Statements. This post contains forward looking statements based on Pink Sky Group’s expectations and beliefs. Those statements are sometimes indicated by words such as “expects,” “believes,” “will” and similar expressions. Any statements that refer to expectations, beliefs or characterizations of future events or circumstances, including any underlying assumptions, are forward looking statements. Such statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Actual events or circumstances could differ materially and adversely from those expressed or implied in any forward looking statements as a result of various factors.

Disclosure: Pink Sky Capital is an investor in Neon District.