It’s almost undeniable at this point that cryptocurrency has entered a bear market. The price of Bitcoin is hovering at 2017’s all-time high and altcoins have seen drops ranging from 50% to 90% of the all-time highs seen in late 2021 and early 2022 (Source: World Coin Stats). But what about blockchain and NFT gaming? Is this new industry that experienced tremendous growth during the most recent cryptocurrency bull market dead? Or has it survived?
Unfortunately for blockchain and NFT gaming enthusiasts, this industry has also collapsed. This is not particularly surprising because blockchain gaming is so closely tied to the greater cryptocurrency market. This article will explain why blockchain gaming and NFT gaming have collapsed along with discussing the future of this industry.
Why Blockchain Gaming Got Big?
Blockchain gaming saw unprecedented growth during the crypto bull market that went from 2020 to 2022. This growth was fueled by a few different factors combining together to form a perfect storm. These factors include the following:
- A weak job market due to COVID-19 forced many people to resort to alternative means of making money.
- It’s possible to make a full-time income with blockchain gaming.
- A sharp increase in people working from home due to the COVID-19 pandemic. Many people play video games, including blockchain games, while working from home.
- Axie Infinity released the Ronin wallet in April 2021, which greatly reduced gas fees. This reduction in gas fees saw an influx of players to the platform.
- A stream of institutional investors into blockchain gaming.
- This is particularly noticeable in the closely related “metaverse” industry with companies like Facebook changing their name to Meta and investing billions into building a digital universe.
- An increased understanding of cryptocurrency and blockchain technology. Blockchain gaming has existed since at least 2017, but it was very niche and only really had appeal to those very familiar with the blockchain. Blockchain knowledge amongst the general public has increased so much over the past few years that more people feel comfortable using a crypto wallet or simply putting money onto the blockchain.
Now, there are likely more factors behind the rise of blockchain gaming, but the ones listed above appear to be the most significant. Of particular importance is the weak job market, particularly for young people searching for jobs, in most countries that have forced workers to seek out alternative means of earning money.
Blockchain gaming is a natural fit. Most young people have some familiarity with gaming, so being able to earn a full-time income with gaming was a natural fit.
This boom in blockchain gaming lasted for a few years. Unfortunately, all good things must come to an end, and blockchain gaming soon had too many foundational problems and the industry is currently in shambles. The next section will cover some of the reasons that the blockchain gaming industry collapsed.
Here’s Why Blockchain Gaming is Dead
There are a few reasons that blockchain gaming is currently dead. Some of the reasons are foundational issues that will take systematic restructuring to overcome while others can simply be chalked up to the cyclical nature of the cryptocurrency industry. Anyway, here are some of the reasons that blockchain gaming is currently dead:
It’s Basically a Pyramid Scheme
This is a controversial take, but the huge foundational issue with blockchain gaming is that at its core, blockchain gaming is basically a pyramid scheme. Critics of cryptocurrency like to say that cryptocurrency is a pyramid scheme, but that’s not the case because cryptocurrency has real-world uses that add value.
Blockchain gaming doesn’t.
It’s gaming with the goal of creating NFTs that have value or earning tokens that have value, but why do these tokens and gaming NFTs have value?
They have value because players want to purchase them to make more money. Eventually, the games stop attracting new players to buy NFTs and tokens and the moneymaking aspect of the game dries up. Blockchain games aren’t generally considered fun games, so there’s not much reason to play them if you can’t make money.
As mentioned previously, this is a foundational issue with blockchain gaming and there really does not appear to be any immediate solution to it. Blockchain games have mostly relied on an enormous ad budget to attract more players as that’s the only way the in-game economy can stay afloat.
The only solution, in our opinion, is creating a game so good that people want to play it for fun and not for financial purposes. Games like Runescape and World of Warcraft have been around for over a decade (two decades in the case of Runescape), so it is possible to build games that can stay relevant for long periods of time. It’s just difficult and even more difficult with the limitations that come with building a game on the blockchain.
Blockchain Gaming is Closely Tied to Cryptocurrency
Blockchain games run on the same chains as cryptocurrency and use cryptocurrency as in-game currency. It’s no surprise that the price of NFTs and blockchain gaming tokens closely follows the rest of the cryptocurrency industry.
When the price of a cryptocurrency goes up, then the price of blockchain gaming tokens and NFTs increases as people gain more interest in the industry. The saying, “A rising tide lifts all ships” certainly applies to the impact the major cryptocurrencies have on the greater crypto industry.
The inverse is also true. As we have seen, a falling price of cryptocurrency can decimate the cryptocurrency gaming industry. This is why blockchain games must become popular for reasons other than making money.
The Future of Blockchain Gaming
The future of blockchain might look grim, but it’s actually not as bad as it looks. Popular blockchain games like Axie Infinity still have a thriving player base and have continued to do alright during the bear market. However, less popular blockchain games have been completely decimated, though.
As with most things in cryptocurrency, the top projects will recover while the lower-tier projects will not make it through the bear market. Blockchain and NFT gaming will have another heyday and will likely become the future of gaming as players slowly realize that it’s not necessary to be a professional gamer or streamer in order to make an income playing video games.
