Cryptocurrencies may be the best thing since sliced bread but they still have very limited liquidity in the grand scheme of things. What is liquidity? Well, it’s the classification we give to various assets to determine how fast they can be sold or how often we can use them in exchange for other goods and services.
Right now, cryptos have very limited liquidity as they can either be used to buy other cryptos or just to buy fiat currencies. In order for the blockchain become what it’s currently being predicted to be in 10 years, we need to increase its reach to various goods and services without having to go through an exchange.
Basically what I’m trying to say is that as long as people are able to pay with Bitcoin without having to change it into USD first, cryptos will remain relevant for pretty much the end of times.
But right now, there are very few industries that cryptocurrencies can be adopted due to technical issues. Things like retail stores where most goods are purchased are still very popular with people who prefer using cash, and it’s not like these stores can prevent the usage of cash. Next comes the services that require customers to be present offline. These services are also much more popular through cash remuneration.
Right now, all that Bitcoin and cryptocurrencies could be looking for, is adoption on a digital level, for which the economy is still being developed.
How does the entertainment industry participate in this?
There are not too many segments of the entertainment industry that can adopt cryptocurrencies at the moment, in fact, there are only two that I can think of which will definitely succeed. Oh, and by the way, they’re both in the process of adopting it on a massive scale.
The gaming industry’s shortcomings
Let’s talk about video games and the method that most players use to purchase them.
When it comes to PC games, most players choose to buy them on Steam, a virtual game library, rather than purchase physical disks and store them somewhere and potentially expose them to degradation.
Steam was pretty much just as revolutionary of an idea as blockchain at one point. Most industry experts were saying that nobody would even bother to buy games online, but surprise surprise, it’s the biggest video game marketplace.
The value of Steam was that games could survive pretty much forever, while physical disks always had the chance of either breaking, becoming too fragile or simply degrading over the years.
Many don’t know that Steam actually used to accept cryptocurrencies as viable payments on its platform. It was one of the few major liquidity sources available in the modern markets, where crypto enthusiasts could dump their assets by the millions and just purchase every single game they could get their hands on.
I still remember the day I deposited some ETH and bought the Witcher 3. It was truly one of the moments where the value of the adoption of cryptos became clear. Unfortunately though, In around December 2017, Steam announced that they would stop accepting cryptocurrencies as viable payments due to the increased volatility of the digital assets and overall uncertainty.
A month after this announcement, the crypto winter began.
But now that the markets have “calmed down” somewhat, Steam could be considering another go at accepting crypto payments. Some gamers who are also big crypto fans say that simply adopting a native stablecoin would be just as beneficial for them as when Steam was accepting BTC.
How much could Steam expect through crypto transactions though? In 2017 they got around $4.3 billion in revenue, and around 20-30% of that was through cryptocurrencies. In 2019, their revenue is projected to be $5 billion at least which guarantees that at least $1 billion worth of cryptocurrencies will find a liquidity source, thus promoting market growth immensely.
Utility tokens in the dark side of the gaming industry
Utility tokens in the gaming industry have already been a thing for about a year now. Crypto companies creating these tokens, usually offer them as intermediaries between the player and items they can buy through microtransactions, a sales strategy that is fast gaining popularity in the gaming world.
Emphasis is on Utility token though, it’s important to note that security tokens are not welcome in the gaming industry, not by the developers, nor by the users themselves, however, there have been numerous cases of the “dark side of gaming” taking advantage of that type of coins.
Most of this trend can be seen through online news websites and blogs. In fact, several bloggers have already commented on the issue.
Jenna Norton, the editor of a newly established casino online news website said:
“Throughout my 5 years of editing articles online and delivering quality news to the community, never have I ever seen a focus on a topic as much as the industry is now on cryptocurrencies. Three or even two years ago, the news was all about regulations or company officials changing offices, opening new venues and etc.
Now, every second piece talks about a new token entering the gaming market, or a casino developing its own native utility tokens. The technology has hi-jacked the industry completely.
Why do you think this is happening?
Well, first of all, it’s about these players spending their coins on something they enjoy, and since there aren’t too many things to use cryptos for, they use it for deposits on these casinos.
The second is to avoid the taxman or the bank.
What do you mean?
People like to buy these coins on their preferred platforms and then withdraw them through payment providers that have nothing to do with banks. Not only are they able to avoid the watchful eyes of their local tax agencies, but they also keep their credit scores intact.
Do banks decrease credit scores because of wagering?
Oh yes, it has always been the case. Regardless of what a person is wagering they will always be added to the bank’s blacklist and refused any small or middle-sized loans. I’ve even seen people who were refused a mortgage because of past wagering activities.
Cryptocurrencies help these people avoid the bank’s database, thus playing their games without damaging their reputation with the lenders.”
When will cryptos fully adopt the entertainment industry?
As you can see from the interview with Norton, people are starting to use utility tokens for various reasons in the gaming world, even if it isn’t the most user-friendly of segments.
As long as cryptos continue their introduction of value to the market, they will remain relevant, and thus, enter the market in full force by becoming a universal microtransaction or Steam purchasing tokens.