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According to the Fortune Business Insights report, the global gaming market was valued at 203.12 billion US Dollars in 2020. The global gaming market is projected to grow from $229.16 billion in 2021 to $545.98 billion in 2028 at a CAGR of 13.20% during the 2021-2028 period. Another report estimates that the full value of the gaming industry now exceeds $300 billion, more than the combined markets for movies and music, driven by a surge in mobile gaming and an emphasis on social interaction during the COVID-19 pandemic. Numbers may vary but all reports agree that the gaming industry is big and it is growing ever faster with the pandemic.
Interest in blockchain gaming has been growing steadily through 2021. Blockchain gaming, NFT games, and play-to-earn keyword searches saw a significant increase around the first week of July 2021. Gaming and blockchain are among the most attractive domains for investment. With the NFT boom, the obvious is becoming real. Games are now joining the blockchain-NFT ride and vice versa. “Play to earn” is the buzzword of both domains in 2021. GameFi is the next big thing.
In the centralized gaming industry, only the publishers and developers share in the success. Most gamers who sacrificed immense time and money in such games are left with almost no returns. Gamers interact with a system that they have no control over and have no way to realize their efforts. It led to the creation of a decentralized gaming ecosystem. GameFi, which is the combination of gaming and decentralized finance, is a system in opposition to the centralized gaming industry. GameFi allows anyone to access and earn rewards by playing games or participating in the GameFi ecosystems. GameFi has unlocked an opportunity for players, in which they play to earn, not pay to play.
In a nutshell, GameFi is the combination of three important parts of the blockchain space: decentralized finance (DeFi), non-fungible tokens, and blockchain-based games.
However, this isn’t to say that there aren’t challenges. Some of these challenges include:
The first challenge – and perhaps most important – will be that of creating proper value for players. In an ecosystem where gaming meets blockchains, what makes the rewards valuable? What is the value of NFT? Can they be traded, or should they be held?
One common theme with every trend that comes up in the crypto market is that platforms tend to have problems with user experience. DeFi had this problem, with many DeFi platforms being too difficult to be understood and used. NFTs had the same issue – the steps needed to create, sell or even buy an NFT remain overly cumbersome to this day.
Like it or not, every sub-industry under crypto will still be tied to the mainstream market itself.
Common problems across the current GameFi ecosystem are:
While blockchain games with complex game mechanics are being developed at a rapid rate throughout the GameFi ecosystem, there is still no comprehensive solution or support for non-blockchain games to be placed on the DeFi stack.
There exists no vehicle to transport value across games on different ecosystems. GameFi developers till now have focused on building an ecosystem of their games, and incentives based on those games, unintentionally creating the very centrality that they rally against.
Huge waiting times for finality, slow-paced games.
High barriers to entry, skyrocketing transaction fees.
Focus on money-making strategies as opposed to actual gameplay.
The complicated nature of blockchain discourages participation.