How blockchain can save loot boxes

Modern gaming has made a big journey in terms of visuals, structure, plot, and economy. Games of today are drastically different from the ones, say, 10 years ago.

Back then, games were too costly. In fact, the initial cost of purchasing the game was the main flow of revenue for the companies. However, with new trends and ideas of today, publishers have started a whole new journey.

The majority of modern publishers have made their games totally free. Anyone can get them and play without the requirement to pay a nickel for anything. You might ask: how then do the publishers get profit? From in-game purchases!

With in-game purchases, and more specifically, loot boxes, the game creators have created a completely different source of cash flow which, according to many publishers, is much more lucrative than the previous method.

However, the loot boxes have their own complications. Given their specific characteristics, they have appeared in the regulators’ radars.

In this article, we’ll see what the regulators are so concerned with loot boxes and how blockchain technology can save them.

What’s the problem?

We’ve mentioned that there’s a certain set of characteristics that throw loot boxes into the field of view of governments, but what are they exactly?

In general, regulators are suspicious that this new form of monetization looks a lot like gambling. Now, there’s a certain treatment of gambling in different countries.

For example, you can play Australian casino games online and not be susceptible to any legal complications; on the other hand, in certain US states like Washington, Montana, and many others, you might face serious consequences for online gambling.

When it comes to loot boxes, the first issue here is to specify that they’re a form of gambling. When there’s an agreement that they fall into the category, then there might be some milder treatments considering that the publishers admit that themselves.

But what exactly renders this gambling-like nature of loot boxes? First off, there’s an entrance fee. To acquire any kind of loot box, you either have to pay with actual money or you have to reach a certain level of mastery to get them. But, most of the time, they’re acquired with money. This resembles the casino entrance fees and is the first, and probably the most important, step in regulators’ perspective.

Another important characteristic is the reward incentive. The reward can be monetary, as well as virtual. Most of the time, loot boxes in the popular games like PUBG, Fortnite, etc., offer different kinds of skin packs, weapons, emotes, etc. which are then used to customize your character. The same goes for the casinos that also offer monetary prizes, jackpots, and bonuses.

Yet another resembling area is chance or luck. When purchasing a loot box, you don’t know what you’re going to get. Everything is based on a random probability and cannot be influenced by external intervention. The similar is true for casinos. The probability of hitting the exact number or aligning symbols on the slot machine is totally unpredictable.

These three characteristics lead regulators to believe that loot boxes are yet another form of gambling that has to be limited. Because of this, many publishers are considering going back to their previous economic models of paid games and free gameplay.

Blockchain can solve the problem

However, with blockchain and cryptocurrencies, things might be looking up for them.

As you already know, cryptocurrencies are embedded in a secure system called blockchain. Every single currency like Bitcoin, Ethereum, EOS, and others are based on this system and have their own terms of incentive mechanisms.

With the majority of cryptocurrencies, the most popular way of earning them is by “mining”. “Mining” uses the computing power of your GPU or CPU to generate tokens and designate a certain value to them.

Game providers can use this technology to continue monetizing through existing business models. One of the main ways they can use blockchain is by allowing players to “mine” cryptocurrencies during the gameplay.

This process will only take the players’ gaming skills and techniques, not their computer’s CPU/GPU power. These tokens will then be used to purchase loot boxes, as well as other in-game assets.

Independently-generated value

At the end of the day, players will be able to generate value just by playing the game, and the publishers will be able to get the value while not charging the players a single penny.

One of the main benefits of gameplay-generated cryptocurrencies is that they’re totally free – the players don’t spend their money to buy in-game coins. They already have their own value and can be used in-game, as well as outside of it.

This way, the most important reason for regulating loot boxes gets alleviated. Regulators won’t be able to find a single player who has paid their own money to buy a loot box. And even though there still remain the other two characteristics – chance and reward – these are not sufficient for deeming loot boxes a form of gambling.

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