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IMX Knowledge Base
11/7/2023

Blockchain Gaming: The Ultimate Guide to Gaming’s Evolution

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TL;DR

Once a niche interest explored in bedrooms and dimly lit arcades, video gaming has since grown into a global phenomenon. With esports skyrocketing in popularity, elite players now command vast arenas, drawing fans from across the globe and generating millions in revenue. More than a hobby, gaming has now become a passion, a career, and for many, an ever-consuming way of life.

The business impact is nothing to sneeze at either. Forecasts suggest a rise to $268.8 billion dollars in global video game revenues by 2025, a jump from $178 billion in 2021, with in-game purchases projected to generate over $74 million dollars in the U.S. alone, in the same year. 

But every rose has its thorn. 

For years, the Web2 (read: traditional) gaming industry operated on a top-down model, exposing a fundamental misalignment in value exchange between players and game creators. 

It works like this: Gamers spend countless amounts of money and time on their favorite titles, only for this progress to be abandoned when a new game is released. Simultaneously, gamers spend billons of dollars of in-game assets like skins and downloadable content, without the ability to ever extract value from these assets or take them with them across different virtual environments. 

Now with blockchain gaming, the tides are shifting. Power is being put back into the hands of the players, giving them true digital ownership of their assets and in-game experience.

In this guide, we’ll explore:

  • The evolution of gaming
  • The concept of in-game assets
  • The basics of blockchain gaming
  • The advantages of blockchain gaming

What is Blockchain Gaming? 

Blockchain gaming integrates blockchain technology into video game design, unlocking new potential for digital asset ownership and tradability. Just as a blockchain provides a decentralized record of transactions for cryptocurrencies, it can also securely log ownership of in-game items like skins, weapons and  virtual real estate. These digital assets are tokenized as non-fungible tokens (NFTs) with unique blockchain identifiers, providing verified scarcity and transparency of supply.

This may sound confusing, but don’t fret. We’re here to make sense of it all. By the end of this guide, you’ll have a full understanding of everything you need to know to venture into the world of blockchain gaming. 

But to fully grasp blockchain’s potential in the future of gaming, we must first revisit the past.

The Evolution of Blockchain Gaming

In the early days of gaming, access to computers was limited to large institutions due to prohibitively high costs and size restrictions. To generate public interest, pioneers developed simple yet engaging games like OXO (tic-tac-toe) and Tennis for Two. But it was Spacewar!, the first game playable on multiple computers, that truly catalyzed the gaming revolution in 1962.

From there, distinct eras emerged defined by iconic genres. The late 1970s to early 1980s were neon-lit arcade days, with addictive quarter-munchers like Space Invaders, Pac-Man and Donkey Kong. By the mid-90s, expansive role-playing fantasies like Final Fantasy 7 transported gamers to magical realms. Massively multiplayer online games (MMOGs) like World of Warcraft brought people together in persistent virtual worlds. The 2000s were a thrilling era of competition, with titles like Mario Kart and NBA 2K capturing the spirit of racing and sports. And as the decade turned, sounds of war filled living rooms in strategic shooters like Counter-Strike and sprawling war sims like Call of Duty.

Amidst these trends, player creativity thrived through “mods” - player-made alterations that allowed assets to be used across games. Garry's Mod celebrated this spirit of endless possibility built on Half-Life 2's engine. And an innovative Warcraft III mod evolved into Defense of the Ancients (DotA), pioneering the multiplayer online battle arena (MOBA) genre.

Steam Workshop::Garys mod Mods
Garry's mod, a sandbox game developed by Valve pioneered user-created content via the Steam workshop, has sold over 20 million copies.


As online connectivity and virtual worlds grew, developers recognized the potential of tradable items and currencies that spanned beyond individual games. This gave birth to robust in-game asset systems that could enhance multiplayer dynamics, incentivize gameplay, and create deeper bonds between players and their avatars. Blurring the lines between games, virtual economies and the real world, the age of tradable in-game assets was born.

Digital In-Game Assets

In-game assets are virtual items that players earn and use in-gameplay, ranging from cosmetic skins and weapons to functional power-ups and abilities. In multiplayer games, assets also take the form of tradable currency or commodities that players obtain through quests, defeating enemies, or hitting milestones. From there, these assets, currency or items, can be bought, sold, and traded on in-game marketplaces for virtual money.

While early video games were relatively simple, in-game assets can be traced back to role-playing games (RPGs) and MOBAs—genres prioritizing character customization, progression, and in-game economies. Witnessing the success of such economies where assets gained real-world value, titles like World of Warcraft (WoW) and Diablo introduced in-game asset systems, where the acquisition and trading of these valuable items became an integral part of the games’ interactivity and personalization.

Equipment Marker - World of Warcraft Addons - CurseForge
World of Warcraft became one of the most popular franchises in gaming history, with in-game items, cosmetics, and loot forming an in-game asset system and economy. Image Source: CursedForge


By shifting focus to player-driven economies, personal achievements and deeper immersion, in-game assets transformed rigid narratives and gameplay into dynamic virtual worlds.

Secondary Markets

As developers increasingly incorporate digital assets into their business models millions of players now flock to secondary markets to trade, buy, or sell their in-game assets outside of the primary game environment. 


In 2019, the total value of assets listed on these secondary markets reached a staggering $16.7 billion, with secondary market activity of games like CS:GO dwarfing in-game transactions by threefold.

This traces back to Valve's "Team Fortress 2" where in-game assets and actions like cosmetics, and crafting and trading hats became core to the in-game economy. Similarly in CS:GO, rare weapon skins gained immense value, with a recent rare skin fetching over $400,000.

Despite secondary market growth, a fundamental problem persists - players lack true ownership of assets. Regardless of acquisition method, most terms of service assert the developer or platform retains complete control over all asset’s IP and usage rights. For years, gamers have poured countless hours and dollars into titles, only to have their progress reset when sequels launch. At the same time, billions are spent on in-game assets and downloadable content (DLC) with no ability to extract value or retain them across environments. These broken models have limited players' agency and inhibited the evolution of persistent, interconnected virtual worlds.

The Rise of Blockchain Gaming

As secondary markets grow in prominence, the limitations of Web2 gaming become glaringly clear. For years, gamers have been unfairly exploited, with no ability to extract value or retain their assets across games. These broken models have limited players' agency and inhibited the evolution of persistent, interconnected virtual worlds. 

It’s time for that to change. 

What is a Blockchain?

A blockchain is a distributed digital ledger that securely records transactions across a decentralized network of computers, rather than a centralized authority or database. Once verified by the network, each transaction is linked or "chained" to previous transactions in a "block," creating an interdependent chain of transactions. With each new block added, the blockchain becomes immutable, meaning the record cannot be altered without consensus of the entire network and modifying all subsequent blocks.

With data storage and processing distributed across many devices, blockchains are highly resistant to tampering and fraud. The decentralized structure also ensures all users can access the same transaction history and independently validate legitimacy, reducing inaccuracies.

Beyond financial transactions, blockchains can store various data types including non-fungible tokens (NFTs). 

What are NFTs?

NFTs are unique digital tokens on the blockchain representing digital ownership or proof of authenticity for art, music, collectibles, and more. Unlike cryptocurrencies such as Bitcoin or Ethereum, which are fungible and can be exchanged one-for-one, NFTs are distinct and non-replaceable, making them useful for representing rare or limited-edition items.

In blockchain gaming, NFTs are uniquely suited for representing in-game assets like character skins, weapons, power-ups and more. Just as NFTs authenticate digital art ownership, they can confirm players' ownership of rare or limited-edition in-game items. 


At the heart of all NFTs lies smart contracts—self-executing computer programs that automatically verify and execute the terms of a digital agreement once predetermined conditions are fulfilled.

For example, an NFT’s smart contract can include details about the asset’s origin, current owner, transaction history, and any stipulations on its future sale or use. These contracts can be used for facilitating transactions of digital assets without the need for centralized intermediaries or automating the sending of royalties to creators when their works are sold, traded, or licensed across secondary marketplaces.

What is Play-to-Earn Blockchain Gaming?

Play-to-earn (P2E) gaming allows players to earn real-world value from their in-game actions and assets. Whereas conventional games lock value within siloed environments, P2E connects in-game economies to real markets. Players can own NFT-based assets, increase their value, and then exchange them for cryptocurrency. Some even earn full-time income through skilled P2E gameplay. This paradigm shift gives players agency over their time and money spent in these virtual worlds.


The model stands in stark contrast to traditional gaming systems where players spend money on in-game items or subscriptions without any means of earning it back. Games like Axie Infinity and Decentraland have popularized the P2E model, with players earning significant sums by participating in battles, leasing virtual lands, or trading assets.

By aligning incentives around ownership, progression and profit, P2E mechanics are reinventing gaming as an open economy.

Why Is Blockchain Gaming Important?

The introduction of blockchain and smart contracts flips the script on in-game economies, fundamentally aligning the incentives of both players and studios,  strengthening player engagement while enabling sustainable developer revenue.


Let’s break down these benefits a bit further.

True Digital Ownership

In blockchain gaming, each digital in-game asset’s proof of ownership is embedded directly into a decentralized ledger. When a player acquires an asset like weapons, avatars, or land, they’re not only receiving a digital representation, but also a corresponding token on the blockchain. Because  players have verifiable and tangible ownership of their asset, they also have full control over its sale, trade, or usage. These can then be sold on secondary markets and exchanged for cryptocurrency or fiat, offering players tangible returns on their in-game investments.

Tokenized digital assets reside in the players’ blockchain wallets – a secure vault and a personal ledger, reflecting users’ in-game acquisitions and transactions. Besides storing assets, blockchain wallets also enable direct peer-to-peer exchanges, allowing players to transact seamlessly without intermediaries or hefty fees.

Interoperability

Interoperability is the idea that assets from one game can potentially be recognized, used, or represented in another. Imagine wielding a rare sword from Fortnite in Call of Duty, or showcasing an exclusive avatar outfit across different virtual realms. This seamless transition of assets across gaming ecosystems enhances the player experience, reduces the worry of in-game assets becoming obsolete when a new title emerges, and encourages a more integrated gaming community.

Enforceable Royalties

For developers and creators, smart contracts automate secondary sales royalties, so when a player sells an NFT asset on a marketplace, smart contracts automatically direct a small royalty percentage back to the original creator. One-time purchases transform into renewable fountains of revenue, allowing studios to focus on expanding utility rather than churning sequels.

Meanwhile, players are empowered by true ownership of scarce digital assets, turning all assets into long-term investments that retain value across platforms. Rather than investing time and effort into games with nothing to show for it, players are motivated to collect, trade and showcase rare items for the long haul.

Immutable is Building the Home for Blockchain Gaming

As we remain steadfast in our mission to power the next generation of Web3 gaming, Immutable is proud to offer a full suite of robust infrastructure and tooling aimed to elevate the experience of blockchain gaming for players and developers across the globe. 

Using its EVM-compatible ZK-rollup technology, Immutable zkEVM, creators can bring their ideas to life with custom smart contract support, advanced gameplay mechanics and tokenomics, and a seamless trading experience. With features like Passport, Magic Wallet, Immutable Mint, and a Global Shared Orderbook, users can also effortlessly tap into broader communities and ensure consistent profitability, avoiding the fragmented liquidity that plagues many other blockchain ecosystems. 

Together, we are building a rapidly growing, but sustainable gaming ecosystem, perfectly tailored to serve players and developers alike. Immutable is the home for Ethereum gaming.

We can’t wait for you to join us.

Check out all the amazing games building on Immutable here.

Are you a developer or game studio? Get in touch with us to start building your blockchain game on easy mode today.

Stay up to date and join the biggest web3 gaming community by following us on Twitter and joining our Discord.

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