Since news of Bithumb’s $31 Million hack first broke on June 19, over $39 billion has been wiped off the total market capitalization of all cryptocurrencies, according to industry website CoinMarketCap. While Monero is the only large cap altcoin that shows signs of recovering (up 4.14 percent over the past 24 hours), Bithumb’s woes are just the latest in a series of high profile hacks that serve to highlight the dangers of storing cryptos in exchange-based wallets. Adding to these concerns, news that Japan’s financial watchdog, the FSA, has ordered six of the country’s exchanges to make security improvements has contributed to the current climate. With this in mind, I thought it would be interesting to consider whether the next altcoin bull run could come not from hodlers and investors but from players of blockchain based games and in-game tokens. Here are three reasons why I believe that token-based blockchain games could blaze a trail going forward.
#1. Blockchain games on the verge of solving scalability
Arguably the most famous blockchain game – CryptoKitties – stands as testament to the challenges faced by DApps running on the Ethereum network. After raking in $12 million last December, interest in the game – which sees users breed and trade digital cats – has plummeted. The gas price has risen fiftyfold over the past six months and blockchain analytics site Diar estimates that the average price of a single digital cat stands at just under five dollars.
However, a new game called Axie Infinity is aiming to overcome the scalability challenge that has plagued blockchain games such as CryptoKitties. BitGuild Portal’s latest release is using ZombieChain, a DPoS dAppChain so that players can keep their gaming fast paced and action packed. Being a sidechain, ZombieChain has sub second block times that let Axie Inifinity players battle their digital ‘Axies’ to their heart’s content without running into the constraints of the Ethereum blockchain.
#2. Blockchain-based gambling is a major growth area
Baidu recently released the beta version of their own blockchain based game, “Du Yuzhou”, or Du Universe, currently available in Chinese language only. As writer Josh Ye recently explained on his blog, the purpose of this game – where users can collect ‘elements’ to grow their digital planets – isn’t immediately obvious. After all, cryptocurrencies are banned in China and Du Universe elements cannot be bought or sold for real money. According to Ye, thousands of Chinese players are already using Du Universe to gamble on the outcome of World Cup matches by betting their elements on an in-game planet called the ‘Soccer fairy’.
As blockchain games that cater to the gambling industry are developed and released, there is a real potential for these games to form a serious industry. This increase in popularity of games such as Du Universe that permit gambling is a good reason to suggest that the next major altcoin bullrun could be spurred by these types of games.
#3. As interest in ICOs fade, blockchain games offer new ways to profit
As reported by Fortune, nearly half of all ICOs launched last year have already failed. Given the amount of hype, misinformation and outright scams that have occurred within this area, it’s almost impossible to foresee a situation where the next altcoin bull run is driven by investor speculation in ICOs.
For example, at the time of writing, the world’s first cross-blockchain altcoin Metronome is undertaking a descending price auction. The price of one MET altcoin was valued at 2 ETH at the start of the auction and will continually decline over time until either no more tokens remain or the auction ends. This type of auction lets investors buy in at a price they consider to be fair. Arguably, it will become more commonplace moving forward as investors are increasingly skeptical about unverified hype and claims.
Within this new environment, I believe that blockchain-based games, and their incentives, will become increasingly attractive and could help to spur growth. In-game tokens give game developers a way of democratically sharing profits among their users,instead of having them buy tokens with the expectations of them rising in value. BitGuild Portal’s new game, ETH.TOWN is a case in point. In this game, players become virtual realtors and buy out virtual floors for certain crypto-companies in a giant crypto-business tower. Players can earn profits if their price is beaten and gain exclusive membership to an investors club with they buy out an entire floor.
In order to participate, players use ETH.TOWN Token – ERC-compatible tokens that can be traded on EtherDelta but cannot be purchased from the game or the game’s organizer. They can be won as a bonus for making in-game purchases or even traded by players. As players try to outwit each other and get bonuses, they are, as token holders, automatically awarded a share of the profits generated from the game. This type of profit sharing is the third reason why I believe that the next altcoin bull run could come from blockchain gaming.