Crypto Crash Shows Unearned Trust in Web3, NFT and Blockchain Gaming

It is impossible to ignore the absolute carnage that is taking place in the crypto market between crashing prices of Bitcoin, Ethereum and most other coins, exchange closures due to volatility with no regulatory bodies to calm the panic, and now new crypto layoffs. Basics such as Coin Base.

While I don’t like to see anyone suffer the loss of a job or income, this is becoming a huge “we told you so” moment, especially from the gaming community. For most of the year, we have been attacked from all sides by evangelists who said that web3, blockchain-based gaming, and NFT-powered economies were the future of the industry.

Now what is happening with the larger crypto industry should shatter any real argument that these dime projects are in a position to significantly influence the course of the industry in any way. If they seemed sketchy before, despite supposedly high market capitalizations and high potential returns, what is clear is that they can evaporate in an instant, and many of them already have.

There are a few different web3 game concepts that have been pushed over the last year:

  • The “play to win” concept in which game economies are set up so that players work to earn coins with tangible value. The prime example of this was Axie Infinity, but even before this current crypto crash, that game’s feudal-style economy completely collapsed.
  • Then there’s the web3 metaverse, which puts about 200 PR pitches in my inbox every day. This is based on shared virtual spaces like Decentraland, which made headlines because they were selling millions in “metaverse” virtual real estate, and once again, these are games with concurrent player counts outside the top 300 games on Steam (1,200 people are currently on Decentraland as I write this), and now you’re not hearing stories of nearly as many high-profile purchases.
  • Then there was the concept of NFTs infecting more mainstream games, something only Ubisoft really attempted, and only in a small capacity in a game that was already dropped from support with the later release, Ghost Recon Breakpoint. Other companies that previously expressed confidence in web3 and NFT, such as EA and Square Enix, have already partially or fully retracted those ideas, and at every “future of gaming” showcase at Summer Games Fest, the E3 stand-in that is happening now, you hear nothing, absolutely nothing, about crypto, web3, blockchain or NFT.

All of these concepts share the same core problem:

Web3 games continued to pitch this idea that they could create sustainable economies involving currency, digital items, or virtual real estate, which would be a value-added proposition to the inherent concepts of games. But what the largest market has shown is that even the the majority Established forms of crypto, heavyweights like Bitcoin and Ethereum and the exchanges that support them, are still the Wild West and can fluctuate wildly, if not completely collapse. If we can’t trust the relative stability of Bitcoin with these massive crashes, why should we believe in Axie’s “mild love potion” or the land value of virtual real estate in Decentraland? You shouldn’t. You never should have. And most of the major players never did.

I can’t imagine a web3 games project in the next few years that projects any amount of confidence that it’s not going to go bust in a few months. And even if the elements of playing to win and make money are minimized, as they are beginning to be, then you are simply left with… games that are not as fun as the NFT/blockchain-free offerings of the rest of the industry. This was always how this was going to end.

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