Blockchain technology has disrupted the video game industry with the ‘free to earn’ model, which allows players to earn rewards and money simply for playing. This system creates a decentralized market where NFTs – unique digital assets – are bought and sold, expanding options for users. Although this innovation offers opportunities, it also poses challenges, especially for minors, such as access to transactions without sufficient regulation, in a market that is still in full development.
Blockchain technology is revolutionizing the ‘play to earn’ model by giving players real ownership over the digital assets they obtain within the game, which radically changes the experience, says Javier Visedo, Blockchain and Web3 manager at NTT DATA. “Previously, any item or currency obtained in a video game was only usable within that ecosystem and depended completely on the platform,” says Visedo. With blockchain, these assets, such as tokens or NFTs, are player propertywho can sell them, exchange them or use them in different games, creating an open and decentralized market, he comments. “This aspect of real ownership not only increases the incentives to play, but also increases the level of user engagement. Knowing that your efforts within the game have tangible value outside of it motivates players to continue participating, generating a virtuous circle,” he says.
A notable case is CryptoKitties, which in 2017 introduced NFTs into its gaming dynamics, attracting an investment of more than 725 million in 2022 to boost its development, details Álvaro Manzano, head of the media and entertainment industry at Accenture in Spain and Portugal. “Blockchain technology allows for greater player loyalty and the reduction of fraud by guaranteeing transparency,” says Manzano.
For Tino Martínez, software engineer, blockchain specialist at Dekalabs by Bit2Me, the fact that blockchain guarantees the transparency and security of transactions increases the trust of participants, in addition to allowing the implementation of decentralized governance, encouraging communities to participate in the development and evolution of games.
Thus, the ‘free to earn’ model is situated at the convergence of blockchain and video games, two rapidly expanding industries. The blockchain market is expected to grow by 68% annually and the video game market by 10% until 2030, according to recent studies. “Blockchain-based games represent a significant evolution in the world of video games, offering a new economic and digital ownership model for players and developers,” says Martínez.
From Binance, Javier García de la Torre, director in Spain and Portugal, considers that this model has great potential to create new economic ecosystems within video games. However, as these markets continue to grow, it is essential to implement robust measures that protect younger players from potential risks, such as exposure to inappropriate content, excessive spending or possible fraud and scams, he explains. “One of the main protection measures that we consider crucial is age verification and parental control mechanisms,” says García de la Torre. Blockchain platforms and NFT-based games must implement strict customer verification protocols (KYC), to ensure that players meet the minimum age requirements, he adds. “In addition, parental control options should be available to monitor or limit in-game transactions and purchases, helping parents manage their children’s activities within these virtual environments,” he emphasizes.
From the ATH21 office, his partner Cristina Carrascosa affirms that these models are regulated by different specialties, even though it may not seem like it. “At the cryptoasset level, a first essential analysis should be carried out to determine whether or not the asset being used for rewards falls within the objective scope of MiCA, the European Regulation on Cryptoassets,” he says. «NFTs are not ‘non-fungible’ by design, but must meet very specific requirements to be exempt from the aforementioned regulations. If, on the other hand, they are utility tokens that also want to be offered through exchanges, they must comply with the regulations, and their issuers must obtain authorization to market them once the transition period of its application has passed,” explains Carrascosa. For the expert, the great risk in these models is the participation of minors. “European regulations, such as the Payment Services Directive (PSD2), protect minors from participating in financial transactions, which could conflict with ‘free to earn’ mechanics,” he says.
Regarding personal data, Carrascosa explains that in Europe any platform that handles personal information of users (including minors) must comply with strict security and privacy regulations.
From NTT DATA, Visedo believes that one of the important challenges for these models is that blockchain is a complement to the game and not the main focus. Many games fail by focusing on blockchain technology rather than gameplay. Success depends on creating a fun game, where blockchain provides value without being the protagonisthe points out. “If the gameplay is not solid, players will lose interest regardless of technological innovations,” he says.
Other challenges, according to Accenture’s Manzano, include ensuring the security of digital assets, preventing transaction fraud and ensuring the sustainability of blockchain infrastructure, all while offering a smooth and engaging experience for players unfamiliar with cryptocurrencies. «The success of ‘free to earn’ games will also depend to a large extent on the ecosystem, with risks associated with the volatility of cryptocurrencies and the perception of the community of developers and experienced players, who demand new standards in web 3.0. Identity must be the cornerstone of the entire new system to be able to scale towards a new model and multi-platform gaming experience connected to the user’s digital ecosystem,” concludes Manzano.
#doubleedged #sword #blockchain #video #games
