Virtual Gaming Tokens vs Blockchain Based Tokens: Sgame Pro a Game Changer?

Published on 23 July 2018 by Cryptovest Staff

Virtual gaming tokens have been around for a while now, but the Sgame Pro project is set to change things with blockchain-based tokens.

Fiat virtual currencies have dominated the gaming world for decades, be it gems in Clash of Clans or V-bucks in Fortnite - but they have little in common with their crypto-coin counterparts.

Could blockchain technology help change the paradigm of microtransactions in video games? And more importantly—what are the differences between virtual gaming tokens of the past and the blockchain-based tokens of the future?

History of In-Game Tokens

In 2003, South Korean game publishers were facing a problem - traditional publishing methods of shipping boxed games proved to be a risky task in a country where illegally downloading pirated copies of software was the norm. Protecting games from being copied and counterfeited proved to be more difficult than developing them. To solve this issue, one publisher borrowed ideas from the software as a service industry (SaaS) - the games were to be free to download and play. It was the in-game currency that cost money.

South Korean publishers were not the first to introduce in-game currencies, but they were the first to perfect them. For the first time, gold, gems, coins and other fantasy measurements of wealth could be bought at a fixed price from the publisher and spent in-game. This created vast virtual economies in games such as Second Life, World of Warcraft, and Maple Story. However, these in-game tokens have very little in common with blockchain-based tokens. And while the world’s perception of money is changing with the advent of cryptocurrencies, video games still rely on the same “microtransactions” model they have been using for the past 15 years. But this model is about to change as developers experiment with blockchain and consider better alternatives that will benefit both publishers and gamers alike.

Virtual Planned Economies vs. the Laissez-Faire Blockchain Approach

But this model is about to change as developers experiment with blockchain and consider better alternatives that will benefit both publishers and gamers alike.

  • Centralized: solely controlled by the publisher
  • Decentralized: controlled by the network’s community
  • Encourage irresponsible spending: due to one-way utility
  • Encourage responsible spending: due to multiple use-cases
  • Exist only within the game’s ecosystem:
  • Exist independently of the game’s ecosystem:
  • No value: only price, determined by the publisher
  • Market value: determined by the free market
  • Players have no control: over their tokens
  • Players retain control: complete control over their tokens
  • No incentive to save: there is no incentive to save or ‘hodl’ these tokens
  • Token utility: these tokens are like money, you can spend or save; both have benefits
  • No maximum supply: publishers can create infinite tokens
  • Supply control: controlled by the blockchain network, giving it real value

Virtual Gaming Tokens Destined for Failure

Virtual Gaming Tokens are directly tied to microtransactions - a business model where players can purchase virtual items or currencies through micropayments - financial transactions of small sums of money. While in-game purchases make sense for publishers, the one-way direction of virtual gaming tokens incentivizes irresponsible spending by players. Moreover, in-game currencies encourage a ‘pay-to-win’ mentality, and since this is their only utility, the model has been accused of promoting addictive behavior. Even publishing juggernauts such as Electronic Arts and Blizzard Activision have been criticized over this practice by the gaming community.

Watchdogs in America, Asia, and the European Union are looking into ways to regulate or outright ban microtransaction practices, which calls the whole existence of the business model into question. Moreover, traditional Virtual Gaming Tokens exist solely in the ecosystem of a single game, which isolates them as an expense as they are non-exchangeable and players cannot use them outside of the game.

Blockchain-based tokens avoid most of these pitfalls due to their inherent nature - being flexible, immutable and limited-supply transactional instruments with real-world value.

Sgame Pro and the SGM Token

One of the forerunners of the upcoming blockchain gaming revolution is Sgame Pro – a mobile gaming platform which rewards players with native SGM crypto-tokens for