Crypto corner: How blockchain can boost esports

Esports is fast growing in popularity, with predictions that by 2021 the industry will see an annual growth rate of around 14% and the number of casual viewers and esports enthusiasts rising to 557 million.

But with this meteoric rise in popularity comes a number of challenges. Esports businesses face problems such as match-fixing, unfair distribution of prize money and working out how to engage a digital native fan base in a way that traditional sports have not left a blueprint for. Many are looking to technology to help and now that blockchain technology has matured, it can provide some exciting solutions to several problems in the industry.

Autonomy and trust

Unfortunately, as a young industry, esports is vulnerable to exploitation and is currently struggling with match-fixing. Managers can pressure players to either lose matches or fix a match outcome. Blockchain can help by taking some control away from managers, removing unnecessary intermediaries and giving players back their autonomy.

Blockchain allows for the creation of smart contracts, which can programme payments to automatically execute once pre-defined conditions have been met. Not only that, but as the transactions are immutable and transparent, this means players will receive payment without the risk of it bouncing. This, in turn, increases the trust between stakeholders as everyone can see what’s happening on the network, which gives them a greater incentive for remaining in the community.

Esports also involves multiple investors, from game developers to sponsors, teams to the media. The problem with having so many stakeholders is that there are a huge number of transactions, meaning information has to be repeated unnecessarily for each party.

Intermediaries must also be involved, as in business transactions like these it does not make sense for one party to hold all the information. Blockchain removes the need for intermediaries, allowing for a more fluid process when it comes to the transfer of players, prize money or media rights through programmable smart contracts. Not only does this increase trust in the relatively new medium, but it also removes concerns over unfair distribution of prize money or payments.

Securing micropayments

Micropayments and in-app purchases are growing alongside esports sites and esports apps for mobile. As a result, consumers require secure and verifiable in-app purchases. By using secure blockchain networks and digital signatures, consumers can be assured about the purchases they make. The use of micropayments also means that developers can receive secure payments quickly and is a great way for fans to support gamers and creators.

Digital collectibles

Trading cards and collectibles have always been a profitable revenue stream for traditional clubs. For esports, growing an industry in a digital age with a growing digital-native fan base which is generally younger than for traditional sports, means monetising fans can be difficult. Digital collectibles are an exciting solution for this. By creating digital trading cards, digital collectibles and memorabilia that fans can buy and trade, the industry can keep pace with the changing consumption habits of fans and ensure an even broader appeal.

Blockchain-powered crypto collectables utilising non-fungible tokens (NFT) allow businesses to create either unique or limited-edition collectibles, all provable via a secure and transparent digital ledger. We’ve seen this in practice with the wild popularity of the CryptoKitties game in 2017, but the same principles could easily be applied to digital sports collectibles.

These blockchain applications have a huge range of possibilities and lucrative revenue streams for the esports industry. Fans could purchase limited-edition player trading cards or earn incentives for collecting all team players. This is already underway in some cases, with Loaded recently releasing a digital collectible card and sticker set featuring some of the top gaming influencers.

Lars Rensing is CEO and co-founder of enterprise blockchain services provider Protokol. He has over four years’ experience in the blockchain industry, helping to lead and co-found Ark; the open-source blockchain platform which underpins Protokol’s blockchain services.