Concept

Blockchain technology, such as cryptocurrencies and NFTs, are potential monetization routes for
video games. Many live-service games offer in-game customization options, such as character skins
or other in-game items, which the players can earn and trade with other players using in-game
currency. Some games also allow for trading of virtual items using real-world currency, but this may
be illegal in some countries where video games are seen as akin to gambling. This has led to gray
market issues such as skin gambling, and so publishers typically have shied away from allowing
players to earn real-world funds from games.[1] Blockchain games typically allow players to trade in-
game items for cryptocurrency, which can then be exchanged for money, which sidesteps problems
associated with gray markets due to blockchain's accountability.[2]

History
The first known game to use blockchain technologies was CryptoKitties, launched by Axiom Zen in
November 2017 for personal computers. A player would purchase NFTs with Ethereum
cryptocurrency, each NFT consisting of a virtual pet that the player could breed with others to create
offspring with combined traits as new NFTs.[3][2] The game made headlines in December 2017 when
one virtual pet sold for more than US$100,000.[4] CryptoKitties also exposed scalability problems for
games on Ethereum when it created significant congestion on the Ethereum network shortly after its
launch, with approximately 30% of all Ethereum transactions at the time being for the game, and
with the congestion delaying players' transactions. Axiom Zen feared that Ethereum would further
struggle after they launched the mobile version of the game, particularly with an influx of users from
China.[5]
Another early example is The Sandbox, launched by Animoca Brands in 2021. In the blockchain-
supported game, players could make in-game items by using the game's toolbox and then sell them,
using a game-specific cryptocurrency, to others who could display them in their virtual landscapes.[2]
Axie Infinity, released in 2018, is an example of a "play-to-earn" game, where the game incentivizes
players to purchase and then improve NFTs through in-game activities which are then resold to
other players by the publisher, with the player receiving compensation for their work. In the
Philippines, where the game was most popular, some players were able to earn enough to earn their
cost of living by playing and participating in the game's financial structure.[6]
By the early 2020s there had not been a breakout success in video games using blockchain. Such
games tended to focus on using blockchain for speculation instead of more traditional forms of
gameplay, and this offers limited appeal to most players. Such games also represent a high risk to
investors as their revenues can be difficult to predict.[2] However, limited successes of some games,
such as Axie Infinity during the COVID-19 pandemic, and increasing corporate interest
in metaverse content, refueled interest in the area of GameFi—a term describing the intersection of
video games and financing, typically backed by blockchain currency—in the second half of
2021.[7] By the end of 2021, several major publishers, including Ubisoft, Electronic Arts, Take Two
Interactive, and Square Enix stated that blockchain and NFT-based games are under serious
consideration for their companies in the future.[8]
In October 2021, Valve Corporation banned blockchain games, including those using cryptocurrency
and NFTs, from being hosted on its Steam digital storefront service, which is widely used for
personal computer gaming. The company claimed this was an extension of their policy banning
games that offer in-game items with real-world value. Valve's prior history with gambling,
specifically skin gambling, was speculated to be a factor in the decision to ban blockchain
games.[9] Valve's CEO Gabe Newell explained in a later interview that while he believed blockchain
technology was legitimate, the company felt there were too many bad actors in the market at the
time to allow cryptocurreny or NFTs onto Steam. Newell said, "The ways in which it has been utilised
are currently all pretty sketchy. And you sort of want to stay away from that."[10] Journalists and
players responded positively to Valve's decision, as blockchain and NFT games have a reputation
for scams and fraud among most PC gamers,[1][9] while blockchain game publishers and developers
urged Valve to reconsider their position.[11] Epic Games, which runs the Epic Games Store in
competition to Steam, said that they would be open to accepting blockchain games, in the wake of
Valve's refusal.[12]
Ubisoft announced its foray into blockchain gaming with its Ubisoft Quartz technology which is based
on the Proof of stake Tezos cryptocurrency, which Ubisoft claimed was more energy efficient. Quartz
allows players to purchase and sell Digits, which are special character customization items within the
publisher's games, with this service first launching for Tom Clancy's Ghost Recon Breakpoint in
December 2021.[13] On the same day, Ars Technica stated that "Ubisoft's… plans make no sense"
because Quartz system is so deeply controlled by Ubisoft that a simple conventional internal
database might be a better fit.[14] Users criticized the technology because Ubisoft terms of service
state that the company has "no liability" for claims or damages and is aware that the blockchain
"may be subject to specific weaknesses, which make them possibly targets for specific cybersecurity
threats” and disclaim "liability in the risks implied by the use of this new technology."[15] On December
9, Ubisoft de-listed the announcement video on YouTube, following viewer backlash and dislike
bombing.[16] French trade union Solidaires Informatique criticized Ubisoft's plan for Quartz, stating
that blockchain technology is "harmful, worthless, and without future", and that it is "a useless,
costly, ecologically mortifying tech which doesn't bring anything to videogames".[17]
Peter Molyneux announced in December 2021 that his development studio 22cans was working to
include blockchain and NFTs within their planned game Legacy, a business simulation game.
Players of Legacy could create parts that could be sold and purchased from other players in order to
complete assemblies of units, using LegacyCoin based on Ethereum cryptocurrecy.[18] Prior to
release, speculative buyers were able to purchase Land within the game on which players would
establish their in-game factories, with LegacyCoin sales of this land reaching more than $50
million within a few days of Molyneux's announcement.[19]

Criticism
Xbox head executive Phil Spencer said in regards to blockchain games "that some of the creative
that I see today feels more exploitative than about entertainment".[20] When the gaming
communication platform Discord suggested possible Ethereum integration into their client in
November 2021, users criticized the inclusion of cryptocurrency and Discord backed off, affirming
they had no set plans for its inclusion.[21]
MMO developer Damion Schubert argued that most pitches for games for NFTs could also be
achieved without the use of NFTs and that the non-NFT options would be easier to implement.[22]
In November 2021 Rob Fahy wrote in Gameindustry.biz that the "play-to-earn" business model is
similar to earlier systems that encouraged the rise of gold farming which later led developers to shift
to selling "gold" to players directly in real currency. He argued that the business model could
potentially reintroduce artificial scarcity of in-game currency and in-game items or characters, and
that in-game marketplaces will likely have a payment system where a game developer takes a cut
when players sell a marketplace item to each other.[23]
In December 2021, GSC Game World had announced their intent to include NFTs as part
of S.T.A.L.K.E.R. 2, but due to complaints from players, a day later they announced that they would
no longer be pursuing NFTs within the game.[24][25]
In December 2021, during The Game Awards, Josef Fares, director of It Takes Two, stated that he
would rather get "shot in the knee" than include them [clarification needed] in any of his games.[26] Games
journalist Jason Schreier characterised the blockchain "play-to-earn" model as a pyramid scheme.[27]
The Game Developers Conference's 2022 annual report stated that 70% of developers surveyed
said their studios had no interest in NFTs, while 28% said they were very or somewhat interested in
them, and only 1% said they were integrating them into their games. In addition 72% of developers
said they weren't interested in cryptocurrency as a payment tool for games, while 27% said they
were very or somewhat interested, and only 1% saying they were already doing so.[28]
Square Enix's new year letter, which expressed interest in NFTs in video games, received heavy
backlash from fans, with many additionally expressing disdain at the letters comparison of "play to
have fun" and "play to contribute" players.[29]