A few years ago, there was a drive by the powers that be in the blockchain and gaming industry to combine the unique qualities of cryptocurrencies with the widespread nature of the gaming industry in a digital revolution. The decentralized, play-to-earn models were raising all sorts of excitement from many around the world. This news brought many startups into being, brought capital in, and gamers were eagerly waiting for their chance to win money whilst doing what they enjoyed. 

Despite this promise, the hype has died down. The prospect that was promised has somewhat fizzled. The initial success of Axie Infinity and The Sandbox is now nowhere to be seen, and while crypto investing remains prominent and flourishing, these crypto games have seemingly fallen flat. But why has this happened? 

Games Die, But Investing Remains

It’s important to identify from the outset that crypto itself has not died by any means. Crypto investing continues to blossom and boom across the globe. There is always new crypto to buy that can prove to be lucrative for investors. The old faithful Bitcoin and Ethereum have proven themselves in dominant financial settings that they can hold their own. Indeed, huge investors and billionaires continue to use the likes of Bitcoin for their investments. 

What cryptocurrencies have done well to continue to garner support and investment is to focus on their decentralized principle. This means that despite going through peaks and troughs, the functioning decentralized nature of crypto remains the same. Trading in crypto will not require intermediaries or hidden third parties; it will be straight up, which is their model. The maturing of this DeFi ideology seems to be growing amongst investors, which allows for continued money to be pumped into the digital assets. This continual money has also allowed cryptocurrencies, namely Bitcoin and Ethereum, to create staying power and be regarded as ‘digital gold’ by many. This is especially true in countries or areas facing inflation and capital issues, where the global reach and decentralization of crypto allow people to invest in an alternative to traditional fiat currencies. 

So, Why Has Crypto Gaming Died A Bit Of A Death? 

There are a few major contributing factors that would suggest crypto gaming has fallen out of favour. The main reasons all point towards this idea essentially not matching the promises and expectations of the players when it began to kick off around 2020/21. During this time, it was hailed as a whole new concept that is bound to be prolific. Consistent let-downs and uncertainty surrounding it have resulted in a backlash that appears to be insurmountable. 

Play-To-Earn or Grind-To-Survive

A massive draw to crypto gaming was the notion of play-to-earn. Initially, this was hailed as a revelation by many in the video gaming world who could foresee a future getting paid for their hobby. However, it hasn’t quite transpired like that. 

The idea behind it was simple. Players would earn crypto or NFTs when playing games. This would work as a win-win system whereby the players had financial incentives and the developers could benefit from more users playing their games. However, the majority of these games became unsustainable. The release of earnings would only come when new players joined. As soon as the user growth slowed down, the earnings took a hit. This exact thing happened with Axie Infinity, which became valued in the billions before crashing and burning due to a stall in player engagement. 

This pressure for the developers soon burdened players. The game was meant to be fun and exciting, but soon turned into a slog where players were grinding out hours of play for little earnings. This, combined with the lack of immersion and depth in gameplay, meant the entertainment value was missing for this kind of game, and as soon as the profits finally dried up, players left the platforms. 

Then Come The Hackers

This hype for crypto games saw lots of attention at the time. Most of this attention was promise and goodwill, but for some, it was an opportunity to prey and manipulate. Whilst many were spending their time speculating on the crypto market and emerging from Discord chats with an inclination of what to do for the next big boom, even in the crypto gaming world, there were other, more evil intentions from a small percentage that were ready to exploit the system. The anonymity and immutability of crypto lent themselves to hackers and scammers during this boom. The transactions that were being carried out were the perfect environment for malicious personnel to hack servers, people, and access private data. 

These types of hackers were not just small-time college students. They meant business. This is probably best indicated through Sky Mavis, the Axie Infinity developer, which faced a $600m hack from a crooked nuclear state. 

This level of hacking was large-scale and pretty scary for the average gamer looking to get into crypto gaming. The risk of hacking during this period seemed to instill fear in many and put them off even trying crypto gaming. 

It Wasn’t Just The Hackers Who Unsettled Crypto Gaming

Whilst the hackers certainly put many off crypto gaming, the legal authorities on the other side were also a big influence on the future of crypto gaming. Regulatory bodies and legal frameworks were strongly pushing against crypto gaming. For many games, they landed in a gray area between unlicensed gambling and unregistered businesses. This level of backlash from the authorities due to fears of the unknown of crypto gaming was reflected in user uptake and seemed to steer players clear of engaging in crypto games, and stopped developers from developing future games for fear of backlash from authorities. 

Did The Numbers Ever Add Up?

Ultimately, these games were built for traders, not players, and relied too heavily on unstable tokenomics. Developers would launch games with utility tokens attached to them with the promise that they would rise in value, but with no one backing the games, these coins would fizzle out rapidly. This vicious cycle would create market volatility and financial unpredictability, which many gamers were not willing to risk. 

Whilst the spark and incentives used in the games lacked spark, so too did the content. Due to the games being developed by financial engineers and blockchain developers rather than game designers and experts in the industry, the games lacked immersive stories or aesthetic graphics and instead resembled spreadsheets or financial dashboards. This took the fun out of the gaming element of crypto games and alienated promising gamers who were looking for a fun time. Crypto investors did not want the faff of immersing in a game for the return of digital assets. The result of this is that both parties were never truly satisfied, and as such, the interest in crypto games waned. 

Is This The End For Crypto Games?

The games were hyped, but ultimately put the financial aspect of the games first rather than the gaming aspect, and that’s a surefire way to anger gamers who value the development of software. But all is not lost. The idea in its essence could be used effectively, but for crypto gaming to succeed, it needs to put gamers, gaming, and gameplay at its forefront. The blockchain should be feeding the experience but not dictating it. The games should be accessible and stay away from tokenomics. Games such as Shrapnel and Pixels seem to be creating a new wave of crypto games that appear to be more promising. Whilst crypto remains going strong, there is always a chance that crypto gaming could rise back in popularity, but it will have to be new and improved when it does.