What is blockchain?
Blockchain is the technology that makes Bitcoin and other cryptocurrencies possible by storing information in a mutually-shared ledger. These “decentralized” databases were initially used as a payment system by tracking account balances, but they can just as easily track ownership of property, the terms and status of contracts, and any other data that is likely to be disputed.
The video game industry is one of the first major adopters of this new innovation. The issue is one of enforcement: the real world won’t obey the rules of blockchain-based ownership unless mandated by law and accepted by general society. By contrast, video game developers have total power over their virtual worlds and are highly accepting of new technology.
Blockchain developers have been experimenting with this use case since 2014, in varying forms. These include for payment of and within games; putting game items on the blockchain; and even completely-decentralized virtual worlds. The blockchain has also provided new fundraising avenues by enabling Initial Coin Offerings and the pre-sale of tokenized game assets.
Now the mainstream video game industry is taking notice, with blockchain games appearing on the biggest video game platforms. The future of gaming will not be centralized!

Payment solutions have long been a staple application of blockchain technology. By cutting out the middleman, the blockchain reduces transaction fees and time across great distances. This is especially valuable in the realm of online payments, where goods and services may be delivered from afar.
Such is the nature of the video game industry today, in which online connectivity is often required. Ownership of or subscription to a game can be associated with a cryptocurrency address upon receipt of payment, granting game access to the user automatically. This software has already been developed by a couple blockchain platforms.
Cryptocurrency can also be implemented inside the video games, themselves. This makes it easier for players to transact at will, and also attaches a real-life value to the in-game economy. The coins can thereafter be traded for those in other games, similar to exchanging currencies when crossing between countries.
Everyone has heard of initial coin offerings, by now, the wildly successful crowdfunding method of which many are still skeptical. Similar to the dot-com bubble, a majority seem to have failed, but those remaining include several blockchain games.
ICOs have provided developers a means to finance their games by reaching a new market of backers; a portion of the initial supply of cryptocurrency is held by the development team and can be pre-sold off-chain before launch. Since these coins or tokens are necessary to play the game, they will be acquired by players in addition to speculators who want to resell to them.
The blockchain community has been exploring new models, as well. Security token offerings (STOs) allow one to acquire a traditional stake in blockchain game companies, and many have raised substantial funding by pre-selling tokenized game items. This is similar to traditional video game industry tactics such as video game pre-orders, special edition bundles, and expansion packs.

Provable fairness is a concept originally pioneered by illegal gamblers in the dark ages of cryptocurrency, before blockchain analytics made it possible to trace transactions on blockchains like Bitcoin’s. The idea was simple: prove that online casinos aren’t cheating.
The dark web has since receded to obscure blockchains such as Monero, but provable fairness lives on. The blockchain allows one to track the flow of all funds, and smart contracts can ensure all payouts are properly accorded to the players and the house. Randomness can be verified by using open source algorithms based on cryptography.
This can be applied to non-gambling games, as well, where chance is a common factor. Instead of rage-quitting, the blockchain gives players a chance to verify that the game proceeded fairly, such as by counting critical hits and misses, watching your loot rewards when farming, and handling coin flips and dice rolls.
Read more: https://blog.blockchaingaming.com/terminology/provable-fairness/

True ownership is a term coined by EverdreamSoft, the developers of Spells of Genesis. They went on to inspire a plethora of other blockchain games, including Beyond the Void, Force of Will, Augmentors, and more.
The concept is to give players more control over their video game assets, such as weapons, armor, and vanity items like skins. Instead of a central server, ownership is tracked on the blockchain, making it impossible for the developers or hackers to take them from you.
This also makes items easier to freely trade without restriction—basically, more “yours.” Additionally, tracking item ownership in a decentralized and transparent way makes it easier for different game companies to work together. Already, there are now tokenized game items that can be played with in more than one blockchain game, and this cross-pollination will continue to expand.
The best way to mine for cryptocurrency has been a topic of debate since the creation of the first altcoin. There are many variations of proof-of-work, wherein computers mine for coins by crunching numbers, while others advocate a proof-of-stake system in which new coins go to the holders. Some also incentivize things like recycling, folding proteins to cure diseases, and generating solar power.
Blockchain games incentivize playing. Coins newly generated or taken from fees can be redistributed via gameplay to the players, giving them a chance to earn cryptocurrency. When game items are on the blockchain, it’s easy to sell your loot for cryptocurrency, as well, all of which can ultimately be exchanged for cash.
Playtime can even be used to secure a blockchain network, a process known as proof-of-play. This is where the right to confirm transactions and build the next block goes to the winner of the game, who subsequently earns the block reward. This unique form of mining incentivizes imagination and fun, as opposed to burning electricity or hoarding money.
Read more: https://blog.blockchaingaming.com/terminology/human-mining/

The oldest and hardest goal in the blockchain gaming industry has been to develop a completely decentralized game, a persistent online world with no server. Early experiments such as Huntercoin and Motocoin proved epic, but were held back from the mainstream by installation difficulty, hardware requirements, and the inability to deal with artificial intelligence.
The community has continued trying to place the virtual world on the blockchain, however. Part of the appeal is eliminating server downtime; other reasons include hosting cost reduction and improved security against hackers. They also come with the standard benefits of token economics, true ownership and provable fairness.
Most exciting, however, is the potential for decentralized autonomous worlds, with no mods or admins. This makes them feel more alive—organic virtual worlds that evolve naturally and create their own stories. Every battle is significant, the elite are players, and the developers can’t interfere without the consensus of the community.
Read more: https://blog.blockchaingaming.com/terminology/decentralized-mmos/
Gaming industry use cases





