Challenges NFT Gaming Companies Face From Crypto Use and Integration
Non-fungible tokens (NFTs) are a popular tool gaming companies use for many reasons, including the potential real-world value outside the game’s ecosystem. For crypto proponents, the possibility of earning from their NFTs is a strong enough motivation as these items can be traded to other players on public marketplaces.
It was found that 22% of the $10.7 billion worth of NFT sales recorded in the third quarter of 2021 were from in-game activities. Also, in February 2022, the popular NFT-based game Axie Infinity had sold more than $4 billion worth of NFTs since launching a year before.
Regardless of these successes, gaming companies still grapple with crypto-related challenges that significantly affect adoption even as the popularity of these games increases. The following are some of the most common challenges NFT gaming companies face:
1. Scalability
This is one of the biggest problems with many blockchains. Games that reach such high levels of adoption that they attract thousands of gamers eventually clog their networks and slow down gaming activity. On networks like Ethereum, high traffic directly results in significantly reduced transaction times and high fees. In December 2017, the CryptoKitties game was responsible for about 12% of all Ethereum network transactions and spiked gas fees.
2. Regulatory Problems
There is still a lot of regulatory uncertainty in the cryptocurrency sector. In regions where legislation exists, authorities sometimes introduce changes that may affect cryptocurrencies used in these games. For instance, the United States Securities and Exchange Commission (SEC) may classify a token as a security, completely upending its availability and use. Consequently, NFT gaming companies must continue to shape their operations to remain compliant with evolving regulations.
3. Gaming Integration
Gaming companies have to worry about easy integration for supported assets. While some games develop their own tokens, others may use cryptocurrencies already available on other blockchains, causing some difficulty with integration and compatibility. The need for integration is also common in the online gaming industry as Bitcoin casinos are becoming more popular among gamers. Although online casinos are expanding supported payment methods to include crypto, seamless integration and ease of use are reasons this option is not yet very widespread.
4. Security
While NFT games boast heightened security due to blockchain’s immutable nature, hackers have successfully exploited vulnerabilities in the past. In July 2022, hackers stole $620 million from Axie Infinity by compromising the game’s Ronin Bridge sidechain.
5. Inclusivity
One of the most common criticisms of the cryptocurrency sector is the lack of inclusivity. Accessibility in the crypto industry is fairly adequate as anyone can register as a player, buy crypto or NFTs, and begin gaming. However, reliance on the use of crypto excludes gamers lacking in digital literacy.
6. Market Volatility
The value of most crypto assets is very unstable and subject to changing market conditions. Although this volatility can be beneficial in a bull market, the value of a player’s portfolio can suddenly plunge in a bear market, causing players and NFT gaming companies to lose their funds and general investments.
