Why the Play-to-Earn Space Needs Privacy & Scalability

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Horizen is building blockchain ecosystems enabling play-to-earn to achieve mass adoption

The play-to-earn space is booming. As of writing, the market capitalization of play-to-earn tokens is around $28 billion, while the space only took off in 2021. What’s driving this growth? In part, it’s the sense of satisfaction that comes from earning real-world rewards through play. 

With blockchain, it’s possible to create trustless systems where users can earn rewards in the form of fungible or non-fungible tokens for playing games, contributing to social networks, or performing other tasks. Removing the need for centralized platforms to control these activities. As a result, users can be directly rewarded for their contributions without going through a third party. Additionally, players can exchange these tokens for real money.

This is why blockchain ecosystems like Horizen are building next-generation blockchain ecosystems that will enable the play-to-earn space to achieve mass adoption. By offering the best-in-class tools for developers to launch highly customizable, scalable, and privacy-preserving games and gaming economies on the blockchain. 

Play-to-earn is more than just gaming

People in developing countries like Venezuela and the Philippines realize that play-to-earn is more than just gaming: It’s an opportunity for financial freedom. After all, many players earn thousands of dollars a month, and one-quarter of these players are unbanked or underserved by the traditional financial system. 

Centralized platforms are failing these users, as they often take a large cut of the profits and make it difficult to cash out rewards. Blockchain-based platforms can solve this problem by allowing players to earn and exchange tokens without going through a third party. This allows users to earn more and gives them access to a wider range of games and tasks.

But as the space grows, it’s facing new challenges. Privacy and scalability are two key issues that need to be addressed. Let’s look at these key challenges and potential solutions.

Privacy challenges

Privacy is a concern for many players, who worry about their personal data being mishandled or stolen. Additionally, some players feel uncomfortable about being targeted for marketing purposes. Practically everywhere in the world, most people are concerned about their online privacy, and people realize that data collection and tracking have gone too far.

Since play-to-earn games don’t want to invade their players’ privacy overly, they need to be careful about how they collect and use data. This leads to consequences such as cheating through multiple player accounts.

As we’ve established, many users rely on play-to-earn to make a living, particularly in countries like Venezuela, where the monthly minimum wage is less than $4 (no, that’s not a typo). Therefore, issues like making multiple accounts are akin to financial fraud that have real-world consequences: Less money and a loss of fairness, which goes against the ethos of blockchain.

If play-to-earn games could validate their players’ identities while protecting their privacy, they could more easily combat cheating.  A signature feature on the Horizen network is its use of zero-knowledge proofs to validate transactions without compromising their privacy.

Currently, Horizen uses a form of zero-knowledge proofs called zk-SNARKS to allow transactions that occur on its many sidechains to be validated on the mainchain without the mainchain nodes knowing the details of the transaction (i.e. addresses or values transferred).  

This same application could be applied to enable activities that occur within a blockchain game i.e., details about who owns certain skins or what individuals or entities were involved in a transaction involving in-game NFTs to be kept private. While still being able to publicly verify that the transactions within the game were honestly validated.  

Ultimately, since play-to-earn has become an income for many, it’s imperative to safeguard people’s privacy. As the metaverse turns into a digital twin of our physical lives, this privacy imperative becomes even more critical.

Scalability challenges

Scalability is another challenge facing the play-to-earn space. Many games are struggling to keep up with the demand for in-game rewards, leading to long wait times and frustrated players.

As play-to-earn games become successful, they cause network congestion and skyrocketing transaction fees, debilitating the usefulness of the blockchain.

Many use-cases become infeasible at scale due to the high costs of on-chain transactions. For example, micropayments for digital content and services are popular on the blockchain. But they become economically infeasible at scale. This is why scalable solutions are vital. With Horizen, developers can create their very own sidechain application, such that they don’t need to compete with others for bandwidth on the same chain and can scale as needed.

The future of play-to-earn

Blockchain gaming is still in its early innings, as the gaming market as a whole is expected to reach over half a trillion dollars by 2028. Traditional popular video games like Grand Theft Auto, Fortnite, and Minecraft are a lot more interactive and advanced than most play-to-earn games today, which are primarily retro-style, 2D games.

However, with the increasing interest in blockchain gaming, we expect to see more complex and sophisticated play-to-earn games soon. These games will need to overcome scalability challenges to provide a satisfactory experience for the hundreds of millions of gamers that aren’t yet in the play-to-earn space.

In other words, current play-to-earn games largely target those looking mainly for money, rather than regular gamers. Network congestion will become an ever-greater issue once play-to-earn games become attractive for regular gamers.

One way to overcome this challenge is through the use of sidechains. Sidechains are separate blockchains connected to the main blockchain, used to offload specific tasks or data that would otherwise congest the main chain.

Currently, for a player to earn money from a play-to-earn game, they need to share their personal information with the game developer or platform. This leaves players vulnerable to data theft and other malicious attacks. This is due to the inherently public nature of the Ethereum blockchain.

One way to overcome this challenge is through the use of zero-knowledge proofs. These are proofs that allow players to prove that they have done something without revealing any information about themselves.

Horizen combines zero-knowledge proofs with sidechains to enable gaming platforms that are scalable and secure. This will allow for the development of more complex and interactive play-to-earn games that regular gamers can enjoy and is one of the many reasons that blockchain-based game developers are beginning to look at Horizen as their blockchain of choice.

Disclaimer — This is a sponsored article. DappRadar does not endorse any content or product on this page. DappRadar aims to provide accurate information, but readers should always do their own research before taking action. Articles by DappRadar can not be considered as investment advice.

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