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Gaming & Global Stablecoins: New Rails, Reach & Revenue Opportunities

Learn how digital dollar stablecoins can create new in-game payment infrastructures and revenue opportunities for game developers and gamers.

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Online Gaming: A Booming Industry

Online gaming is a booming industry. Millions of gamers worldwide battle it out in virtual worlds - from Fortnite to Minecraft and Counter-Strike to League of Legends - to win tournaments, level up their avatars, or beat the high score. But what has been missing in online gaming is a universal in-game currency that can be spent across games as well as outside of the gaming ecosystem. That’s where global stablecoins come into play.

2.5 billion people play video games. That’s 32 percent of the global population. The online gaming industry — which includes PC games, console games, and mobile games — is expected to generate annual revenues of $196 billion by 2022.

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From the early days of simple online games when the Internet became readily available in the 1990s to today’s arenas filled with professional eSports athletes competing in high stakes tournaments, online gaming has come a long way. 

Blockchain games only make up a tiny piece of the overall online gaming pie today. However, it is a gaming segment that is poised to grow in the coming years. 

Blockchain Gaming: The Next Generation of Online Games

Online gaming is one of the most touted blockchain use cases. The ability for players to wholly own in-game items -  thanks to the creation of non-fungible tokens (NFTs) - is an innovation that did not exist previously. Moreover, the blockchain brings an unprecedented level of transparency and decentralization to the online gaming sphere, to the benefit of the gamer. 

As a result, gaming DApps are among the most popular decentralization applications in the market today. 

According to the DApp Review Q1/2020 report, out of the 641 active DApps on the Ethereum blockchain, 180 (~28%) are decentralized gaming apps. What’s more, blockchain games are the largest category of active DApps on the Ethereum network. 

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On the EOS and Tron blockchains, blockchain games amount to 17% and 14% of active DApps, respectively, which is a testament to the growing demand for decentralized gaming experiences.  

Why Is the Demand for Gaming DApp on the Rise? 

According to a report by Dapp.com, the number of blockchain gamers has almost tripled from 2018 to 2019, increasing from 166,370 to 436,700 globally. The reason for the jump in demand can be attributed to: 

  • A growing e-gaming sector
  • Real ownership of in-game items
  • Increased transparency
  • Earning ability with decentralized payouts

As discussed earlier, the online gaming sector has been growing at a staggering rate, with almost a third of the global population playing digital games on a regular basis. Of course, this also spills over to blockchain gaming. Gamers are often at the forefront of technological innovation, and with blockchain games being an innovation in the gaming industry, many gamers are curious about what these new types of gaming experiences have to offer. 

The ability to have cryptographically verifiable ownership of in-game items is arguably one of the biggest drivers for gaming DApp adoption. Traditionally, the in-game economy surrounding skins has been opaque and little has been known about the supply of specific in-game items. Moreover, legacy games are centralized and do not provide players with actual ownership of in-game assets. Blockchain technology and non-fungible tokens have changed the game in this respect. 

The increased transparency of blockchain games is another contributor to the growth of this gaming sub-sector. The transfer of in-game items, as well as payments, can be transparently viewed on a public ledger, providing unprecedented transparency in gaming.

Finally, the ability to earn decentralized payouts is another factor that has driven gamers towards blockchain games. Crypto collectible games, where players can buy and sell virtual times, enable gamers to potentially earn an income from their gaming activities. Naturally, this is a highly appealing feature in today’s gaming world. 

To dive deeper into the disruptive nature of blockchain technology in gaming, let’s look at the most notable blockchain game in the market. 

CryptoKitties and the Rise of Non-Fungible Tokens 

Arguably, the first blockchain game to go mainstream was the crypto collectible game, CryptoKitties

Launched by Dapper Labs in late 2017, CryptoKitties enables players to buy, trade, collect, and breed virtual kittens on the blockchain. 

For example, a player can buy two CryptoKitties for a small amount of ether (ETH) on the game’s marketplace and then breed an entirely new, cryptographically unique virtual kitten using the two acquired kittens. The newly-bred CryptoKittie can then be traded or sold, provided it has enough unique features that are attractive to other collectors. 

CryptoKitties did not only birth the now popular crypto collectibles market, but it also put non-fungible tokens (NFTs) on the map. 

Non-fungible tokens (NFTs) are blockchain-based digital tokens that represent a unique item or asset. Most NFTs “live” on the Ethereum blockchain and have been created using the ERC-721 token standard. 

A non-fungible token can represent a movie ticket, a tokenized piece of physical art, a digital certificate, and, of course, a unique in-game item or asset. For die-hard gamers who are spending hours leveling up their avatar with new skins, complete verified ownership of their unique in-game items is a game-changer. 

According to a report by NonFungible.com, crypto collectible games make up the vast majority of NFT tokens in existence. Interestingly, most players prefer to hold onto their crypto collectibles once they have acquired them - almost 90% have not changed ownership in the past twelve months. 

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The total market value of all NFT tokens stood at $210 million at the end of 2019 and is expected to grow to $315 million by the year-end of 2020. 

ETH was Cryptokitties’ only means of payment when the game launched in November 2017.  While this made sense as the game operates on the Ethereum network and requires “gas” fees to transfer kittens from user to user, the digital currency’s extreme price volatility became a challenge for collectors as the values of their virtual kittens were correlated with the price of ETH. 

As more and more crypto collectible games adopt digital dollar stablecoins, such as USDC, we can expect more gamers to join this exciting new type of gaming experience because people generally know and trust the dollar, and prefer it to a volatile cryptocurrency whose price movements are unpredictable.

How Stablecoins Will Disrupt Online Gaming

The blockchain’s features of decentralization, individual asset ownership, unique digital items, and transparency are disrupting the gaming industry and changing the way players interact with in-game ecosystems. What has been missing, however, is a trusted, in-game currency that can be used cross-platform as well as outside of a game’s infrastructure, in digital dollars. 

That is where digital dollar stablecoins can come into play. 

Online gaming can benefit from stablecoins in four significant ways: 

  • Monetization of in-game currency
  • Create entire in-game payment infrastructures
  • New revenue opportunities for gamers
  • Enhanced revenue opportunities for game developers

Monetization of in-game currency

In-game currency is typically not worth anything outside the game in which it serves its purpose. Each gamer has to manage multiple different in-game tokens in the various games they play. Next to none of them, however, can be used to make real-world purchases as there are no native ways to monetize in game currency. While some players may sell in-game currency or items on platforms such as eBay, there is no simple and easy way for gamers to monetize their virtual cash. Stablecoin integration would alleviate this issue and enable seamless monetization of in-game currency. 

Create entire in-game payment infrastructures

Building in-game payment infrastructures that allow players to buy, sell, and trade virtual items and to enable game developers to make mass, programmed payments is complex and takes time. Using blockchain-powered stablecoins, in-game payment infrastructures can be built within a fraction of the time and at a much lower cost as the technology stack already exists. 

New revenue opportunities for gamers

Through the integration of stablecoins as in-game currency, gamers can easily spend their acquired in-game currency outside of the game. For dedicated gamers, this would enable them to monetize their gaming activities, which, in turn, would enable them to spend more time gaming. 

Enhanced revenue opportunities for game developers

For game producers, blockchain technology and stablecoins enhance existing revenue models. In an industry that is denominated by large game developers and publishers, improving revenue opportunities are a welcome sight for starting and smaller companies that are looking to compete with triple-A game producers. 

Example of enhanced revenue opportunities include:

  • In-game purchases - to upgrade an avatar or to acquire new items - can be integrated more easily and at a lower cost using blockchain-based payments. 
  • Game producers can also charge commissions for in-game economic activity, which can be seamlessly and automatically processed via on-chain stablecoin payments. 

In the last five years, several “gaming coins” emerged to address the challenges of the legacy in-game token ecosystem. However, none of them have succeeded, which can be attributed to slow adoption, high price volatility, and a lack of interoperability. 

Digital dollar stablecoin - like USDC - are better equipped to meet the needs of game developers, from global game manufacturers and to blockchain gaming ventures. 

The combination of decentralization, transparency, price stability, and the global recognition of the US dollar as a currency, makes stablecoins ideally positioned to become the go-to in-game currencies in the future of online gaming.  

USD Coin (USDC) and Online Gaming

USD Coin (USDC) is a fully reserved digital dollar stablecoin that is issued by regulated financial institutions and redeemable 1:1 for US dollars. 

The market-leading stablecoin was launched in September 2018 to provide a trustworthy and transparent global stablecoin that enables anyone in the world to store, send, and receive digital dollars via on-chain payments.  

USDC’s key features as in-game currency and a payment rail include: 

  • Price stability
  • Transparency
  • Regulated
  • Operates on the Ethereum blockchain (like most blockchain games) and is expanding to other leading blockchains 
  • Circle provides a suite of USDC solutions for game developers

USDC is a powerful payments solution for game developers who want to integrate in-game payment rails to enable players to buy and sell in-game items. 

USDC is a price-stable and transparent digital dollar stablecoins that is fully backed by reserved assets held in by regulated financial institutions that are attested by leading accounting firm, Grant Thornton LLP monthly. 

Additionally, USDC currently operates on the Ethereum blockchain, which is the leading network for blockchain gaming. Finally, in combination with Circle’s suite of platform services, game developers can leverage USDC to seamlessly integrate stablecoin payments infrastructure into their games’ ecosystems to enable a broad range of programmatic payments, payouts, and wallet balances for gamers. 

Circle’s Solutions for Game Developers

Circle enables game developers to seamlessly integrate digital dollar stablecoins into their in-game payment infrastructures and economies. 

The suite of Circle APIs combined with the Circle Business Account allows game developers to implement an entire dollar-denominated, in-game payments infrastructure that can be used across games as well as outside of the gaming sphere.

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Circle Business Account

The Circle Business Account enables account holders to accept 80+ global currencies and convert them into USDC to securely store, make, and receive on-chain digital dollar stablecoin payments. Game developers can use a Business Account to manage their tokenized US dollars and seamlessly pay third-parties.

Circle Payments API

The Payments API allows game developers to accept traditional fiat currency payments (debit cards, credit cards, ACH payments, etc.) that automatically settle in USDC. This enables games that use USDC as a native in-game currency to allow players to fund their gaming accounts using traditional payment methods in addition to digital currency. 

Circle Wallets API

The Circle Wallets API allows game developers to easily integrate digital stablecoin wallets into their game, which alleviates the need to build an in-game payments infrastructure from scratch or to build traditional banking relationships. Additionally, it enables the seamless transfer of funds to the game’s players as well as third parties. 

Circle Marketplaces API

For games that have a built-in marketplace, the Marketplaces API provides an ideal solution for payments management. The API enables game developers to make programmatic payments and mass payout to marketplace participants, thus streamlining payments for all stakeholders. For gaming companies that own multiple games and brands, it makes sense to streamline payments across brand identities as well as carry players’ spendable balances across games.

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