Gaming seen as an avenue for increasing crypto adoption

The last 12 months have been quite interesting for cryptocurrency. Bitcoin started 2019 at about $3,000 before rocketing to nearly $13,000 in late spring.

Then the bears came to market and prices fell for the rest of the year. Meanwhile, alt coins didn't fare much better. Total market capitalization did not finish the year as high as many were predicting six months earlier.

So what does 2020 hold? Obviously, no one knows. But you can bet that the most ardent cryptocurrency enthusiasts are hoping for more widespread adoption at the consumer level. Consumer adoption is, after all, the holy grail of cryptocurrency. Without it, cryptos like Bitcoin remain nothing more than expensive investments for the limited few who can afford to get in on them.

As far as adoption goes, there are not a whole lot of tools at the crypto community's disposal to achieve the kind of results they are looking for. However, there is one tool that many see as an avenue to getting the adoption ball rolling. That tool is gaming. More specifically, it is online gaming.

Gaming a universal activity

Search the globe for activities that almost everyone participates in and you'll be hard-pressed to compile a long list. There are not that many - apart from biological functions - that are nearly universal. But gaming is one of them. People play games everywhere. Even in remote areas of the world where technology is lacking, games still exist.

Playing games is part of the human experience. We do it for entertainment. We do it for the love of competition, for the purposes of learning new skills, and so on. As such, there are plenty of applications for gaming that go above and beyond playing just to play. This fundamental reality is that which gives cryptocurrency an open door.

How many people do you know who routinely engage in some form of online gaming? Some of your friends might be into role-playing games (RPGs). Others might prefer third person shooters. An entirely different group of friends might enjoy playing casino games like Mega Moolah, roulette and blackjack, and other games.

Here is the point: online game-play is so common these days that a lot of us take it for granted. It is such a normal part of our lives that we do not even think about it anymore. That is exactly the kind of thing the cryptocurrency community needs to encourage more widespread adoption of digital currencies.

Fungible and non-fungible tokens

In theory, games could be harnessed to promote cryptocurrency adoption by allowing players to win or earn tokens that could be removed from the gaming environment and used to purchase tangible goods and services elsewhere. Rest assured that this idea is not new. Game developers have been thinking about it for years. They have been hindered thus far by the differences between fungible and non-fungible tokens.

Fungible vs. non-fungible

Fungibility in the financial world is a concept that says individual units of a given commodity are identical and indistinguishable from all other units within that commodity. Gold is often used as an example of a fungible asset. An ounce of gold you own is identical and indistinguishable from an ounce owned by someone else. Both have the exact same value and are interchangeable any given time.

A non-fungible asset is just the opposite. The individual units of that asset are not identical, thus making them easily distinguished from other units of that asset. A good example is real estate. Imagine you own a portfolio of rental houses. That portfolio is your entire asset. Each property within the portfolio is a unit of that asset. Those properties are not identical and indistinguishable. They are quite different. As such, they have different values. They are also not interchangeable in their function.

Digital tokens as assets

Digital tokens, like BTC for example, were once considered fungible assets. That may no longer be the case with some tokens. After a major cryptocurrency exchange breach a number of years ago, developers began researching ways to flag tokens to indicate they had been hacked. Such flags would make those tokens unusable.

Flagging is not the norm, but some blockchains do have means of tracking the age and 'life history' of individual tokens. Any suspect tokens might be deemed of lesser value on the open market because their histories indicate they may have been used for undesirable activity in the past.

As you can see, the potentially non-fungible nature of certain digital tokens could be problematic for encouraging greater adoption. But technology is gradually limiting the threat non-fungible tokens present. We are now at a point where they should not hinder token use in a video game setting.

Promoting cryptocurrency in gaming

Let us assume that cryptocurrency developers do want to tap into gaming in order to increase adoption. How would it actually work? What would it look like? Are there any particular tokens that would be better to push over others?

The first thing to understand is that game developers would not utilize mainstream tokens in their games. In other words, the developer is unlikely to allow players to win BTC during the course of game-play. Incorporating Bitcoin into a game would be far too costly. It would also subject game developers to financial volatility.

Instead, developers would create new tokens unique to their gaming environments. For the purposes of this discussion, imagine a fictional token we will call 'GameToken'. As a software developer, you build the token into your brand-new RPG. Every player starts with a certain number of tokens during the very first session.

Tokens can be used to purchase objects needed to progress through the game. Along the way, certain things can be collected and sold for additional tokens. Players can also earn tokens by completing tasks. GameToken essentially becomes the currency that fuels the economics of game-play, just as fiat is the currency that enables daily economics.

Converting the tokens

Earning and trading tokens within the game would be considered on-chain activity. For the plan to succeed though, there would have to be either off-chain or cross-chain activity. Of the two, off-chain would be the easier to implement. This would be activity that takes place completely outside of the game environment.

Your players cannot use their GameTokens outside of your gaming environment. But if you allow them to convert their tokens to something else, say Ethereum (ETH) for example, they would then have a token they could use to buy something online. This represents off-chain activity in the sense that GameToken has been traded for ETH - which constitutes a separate blockchain altogether - for the express purpose of spending that ETH elsewhere.

Making this work would require funding the exchange of GameTokens to ETH. This could be accomplished in any number of ways. You could sell subscriptions to your game and use some of the generated revenue to purchase ETH for later exchange. You could require new players to purchase GameTokens during their first session, rather than giving them away for free. You could also give them the opportunity to buy additional tokens as they play.

Gaming is ripe for this sort of thing because players are already used to in-app purchases. They already play tons of games that require them to make purchases as they go. So why not exploit the practice as a way to encourage cryptocurrency adoption? It seems like a natural fit.

Games must be worth playing

The theoretical portion of this proposition seems quite doable. Gaming and blockchain technology are both advanced enough to make the technical aspects rather easy to accomplish. It is the creative aspects of the proposition that seem a bit more daunting. For all of this to work, games actually have to be worth playing.

One of the biggest challenges faced by game developers is consumer interest. The reality is that interest is quite fleeting. Gamers latch onto a brand-new title and play it to exhaustion. But once the novelty has worn off and they have figured out how to master the game, they lose interest and move on to something else.

Using the gaming experience to encourage cryptocurrency adoption requires holding player attention for a lot longer. You need them to continue playing the same game for months at a time, if not years. There are only a small number of games in the entire gaming universe that have managed to accomplish this.

However, there is a workaround. A developer could create tokens that are usable across every game in that developer's portfolio. That way, tokens can be transferred from one game to another as players abandon old titles in favor of new ones. This would require a bit more work on the developer's part, but it is feasible.

The cryptocurrency community wants widespread adoption of at least a few tokens. Such adoption has been elusive to date. Perhaps gaming is the open door the community has been looking for. If game developers are willing to incorporate digital tokens and associated rewards into their games, there is a cryptocurrency audience waiting to be tapped.