We’re nearing the end of September 2019 and Bitcoin has seen a much better year than any other altcoin so far. The currency closed at $3,737.43 the 1st of January this year and, as I’m writing this, currently sits at $10,251.64, a 274% increase in about ten months. Ethereum, on the other hand, closed at $137.80 on the 1st of January and now sits at $212.06, only a 154% increase. The story is worse for Ripple, the third-biggest cryptocurrency in terms of market cap, which has gone down from $0.36 on the 1st of January to $0.31.
The 2019 dominance of Bitcoin is most evident in the percentage it takes up of the total market cap of the cryptocurrency industry. Over the course of almost two years, from the beginning of January 2018 up until today, Bitcoin’s dominance has gone up from an all-time low of 33% to 68% today. The last time it was this high was when Bitcoin reached its all-time high of $19,891 in December of 2017. These numbers indicate that people and companies interested in cryptocurrencies are mostly interested in Bitcoin and nothing else.
Bitcoin’s dominance has implications for decentralized gaming too. After all, Bitcoin is not a DApp platform that you can build DGames on. Depending on who you ask, Bitcoin is a store of value or a means of payment and that’s it. If you want to play DGames, you need to turn to Ethereum, EOS, or TRON. But if everyone’s interested in Bitcoin, there’s no money flowing into those platforms, which disincentivizes DGame developers from creating DGames.
David Johansson, the CEO of Blocklords, told me about this problem. He explained that DApp enthusiasm is at an all-time low, because Bitcoin had surged and the alts hadn’t followed. This was surprising to me, as the quality of every new DGame I tried out only seemed to increase.
It turns out that all but the largest DGames struggle to generate money, either from investors or from gamers themselves. The altcoin market still nearly isn’t big enough to sustain game studios with multiple people working full-time on a DGame. If Bitcoin continues on its current run, it could end up squeezing the alts even more, until it becomes even more unsustainable for DGame projects to continue.
Good Scenarios For DGaming
The ideal scenario for DGaming would be for the entire market to grow, as it did in 2017. Bitcoin surged and so did hundreds of altcoins. To be sure, much of the altcoin growth was fuelled by ICOs (and thank God those are gone) but it introduced people to cryptocurrencies that weren’t simply Bitcoin. People started to understand the differences between projects in the crypto industry.
If Bitcoin surges and the alts follow suit, it means that more people are spending more money on cryptocurrencies. The pie is growing bigger, and that’s where the industry needs to go if it wants to go mainstream. Unfortunately, the more likely scenario in the short-term is that money will flow out of alts when Bitcoin surges, as investors are eager to get in on the BTC price.
Another good scenario for DGaming is for Bitcoin to go sideways. Investors are used to the sudden climbs and steep drops of cryptocurrencies, so when Bitcoin is boring, money flows into alts. This is when investors are more willing to listen to DGame developers and give them the seed capital they need to get going. Bitcoin dominance falls and alt dominance grows.
Altcoins Are Tied to Bitcoin
In all these scenarios, you need to consider that most altcoins are still tied to Bitcoin (or Ethereum). You need to exchange fiat for either Bitcoin or Ethereum first, which you’ll then exchange for the altcoin you want on a secondary exchange.
For example, I most recently reviewed Skullys, which has PO8 as its internal cryptocurrency. While you can most items for Ethereum in the game, you receive a 50% discount if you use PO8. You can buy PO8 directly from the developers on the game’s website with Ethereum. You can also exchange PO8 for Bitcoin or Ethereum from other people on the DOBI exchange, currently the only secondary exchange where PO8 is listed.
Here’s the rub: if Bitcoin surges, not only will you get much less PO8 for your BTC, but it’ll be hard to find people who want to trade PO8 in exchange for Bitcoin. The PO8 you earned playing the game is worth less and you have a liquidity problem too. And this isn’t just a problem for gamers either. If the developers take a percentage of sales, their PO8 earnings will decline too. You see the difficulty?
While I’ve chosen Skullys as an example here, there are hundreds of other DGames that are in exactly the same situation. It’s also one of the main reasons why DGame developers want to untie their altcoin from Bitcoin by giving DGamers the option to buy either their cryptocurrency or their items with fiat.
Steem Monsters does a good job at this. Their cards packs cost $2 and they give you plenty of ways to buy it. You can buy a pack with Visa, MasterCard, and AmEx, all through PayPal, or you can buy it with several different cryptocurrencies. They make it easy for the gamer. Smart.
What Steem Monsters is doing is smart in a different way too. They fix their price with dollars. Every card pack will cost you $2. Considering that everyone starts from fiat, this means you’ll face no volatility in price. Other DGames I’ve played price their non-fungible tokens (NFTs) in crypto, which I think is a mistake.
After all, a planet priced at 0.05 ETH in 0xUniverse only costs $9 when Ethereum sits at $180, but the same planet will cost $20 when Ethereum moves up to $400. This is great for NFT sellers, but awful for buyers, and in particular for people just looking to play a game without having it cost a lot of money.
Pricing your NFTs in a cryptocurrency might be interesting for NFT investors, which probably still constitute a large chunk of people playing DGames today, but it creates the risk of making your DGame unjustifiably expensive for people who simply want to play your game. It’s a deterrent for new entrants to the DGaming industry, which is the last thing you want in an industry that desperately needs more players.
Let’s Grow the Pie Instead
The correlation between alts and Bitcoin almost feels unfair, given the many fundamental differences between different blockchain projects, but there’s no denying that most people think of blockchain as “crypto” or “Bitcoin” and not as “Ethereum, TRON, Decentraland, Blockchain Cuties, EOS, etc…”.
In order for a DGaming project to cut their links with Bitcoin, a few things need to happen. First and foremost, its developers need to create a great game. It needs to be fun to play, look good, and have players come back for more. Start small and gradually move toward your vision, but get players in first. Make it as easy as possible for them. Don’t think they’ll experiment and click around, because most won’t. Guide them through the process of playing your game step by step, and make it as intuitive as possible.
Secondly, it’s probably wise to price your NFTs in dollars and make it as easy as possible for players to purchase NFTs. Give them many different cryptocurrencies to buy your NFTs with and give them the possibility to purchase items with fiat too. Your project doesn’t necessarily have to have its own crypto. If asset ownership runs on a blockchain, that’ll be plenty to begin with.
I understand that it might be tempting to think of all the things you can do with blockchain technology, but your game needn’t be the perfect DGame from the start. If your game mechanics aren’t on the blockchain, gamers will forgive you. If you don’t have your own cryptocurrency, gamers will forgive you. If you’re still working on a secondary marketplace and use OpenSea in the meantime, gamers will forgive you.
But if you’re trying to create a full-on DGame where everything runs on a blockchain and where your NFTs are priced in crypto, you’ll create so many barriers of entry that it’ll discourage most gamers and you’ll end up with a game that no one plays.
Ultimately, we want the DGaming market to detach itself from Bitcoin, because it’s risky and because a DGaming project is something very different from Bitcoin. No longer should a Bitcoin surge or drop impact your game and your ability to get funding. All that should matter is how much fun your game is and how uniquely it differs from traditional games.