Decentralized Games: Appeal, Challenges, and Future

2009 introduced the blockchain and the first-ever cryptocurrency, Bitcoin. One of the greatest appeals of the technology was and continues to be its decentralized nature, which means that no single person or entity has control over it. Flash forward to 2024 and over 300 million people use blockchain for cryptocurrency. More than a means of investment, the technology is used in several industries, including energy, cybersecurity, smart contracts, and supply chain management. There are even casino games using cryptocurrencies and priding themselves on their safe and private transactions.

In this landscape, decentralized games have emerged as the next evolution of digital entertainment. So, what are decentralized games exactly? Which benefits do they offer and what are their challenges?

From DLT to NFTs and FTs: the elements of decentralized gaming

At the core of decentralized games is the use of DLT (decentralized ledger technology) to store vital gaming elements. Unlike traditional gaming, where centralized servers hold player data, decentralized games use blockchain networks. These games utilize distributed applications (dApps) to connect players' wallets to the game software.

Decentralized games typically feature assets like NFTs (non-fungible tokens) in the form of avatars, skins, specials, and more. In the game Pixels, for example, players get the chance to acquire their own NFT farmland and NFT pet, which they can sell or trade.

Some decentralized games encourage players through DAOs (decentralized autonomous organizations). In other words, players may acquire the game's governance token, stake their tokens, and vote on proposals that shape the game's future. This democratic approach contrasts with traditional gaming, where these decisions often rest solely with game makers. The sci-fi game Alien Worlds is a perfect example of this model, as players are welcome to decide what is “canon” and what is not.

Ownership, privacy, and other benefits

An integral aspect of decentralized games’ appeal is the promise of ownership. As mentioned before, players get to truly own their in-game assets, which are represented by blockchain-based tokens. Yet, there are several other advantages, including:

• Privacy and security. Thanks to blockchain's cryptography and consensus mechanisms, players control their identities and data, reducing the risk of hacks or data breaches associated with centralized servers.
• Emphasis on creativity. Decentralized gaming platforms, like Ethereum and Polygon, enable players to unleash their creativity. Smart contracts allow for the creation of unique games, assets, and experiences. In turn, this fosters collaboration within gaming communities.
• Rewards and incentives. Finally, decentralized gaming introduces incentives, such as tokens or NFTs, for player participation and contribution. Those assets have in-game and real-world value.

What about the challenges?

Many decentralized games face challenges related to slow transaction speeds and high costs. This seriously limits their ability to accommodate a growing player base. In 2022, a third of the investments in the field were specifically directed toward tackling this issue and building better infrastructures.

Additionally, while decentralized games promote inter-game item trading, achieving interoperability across different blockchain platforms remains a huge challenge. Games built on one blockchain may not seamlessly interact with those on another. As a result, this impacts the potential for a universal gaming ecosystem.

Finally, decentralized games require players to understand cryptocurrency wallets, protect passphrases, and engage in token transactions. The jargon and technical requirements may pose an entry barrier for prospective users.

The future

It is difficult to predict what the future has in store for decentralized gamers and developers. The latter group remains positive, with some claiming that 20% of the gaming industry will likely integrate blockchain within the next 12 months. Beyond speculations, gamemakers will be working on tackling the aforementioned issues with the hopes of appealing to a wider audience.

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