A decade ago, few people had heard of either cryptocurrency or eSports. Today, it's hard to escape a conversation about either of them.
But these two hot technological advances aren't frequently mentioned in the same breath. Crypto enthusiasts tend to focus on the rapid rise (and subsequent decline) in value of Bitcoin or Ethereum. eSports fans get distracted by the big paydays of professional eSports, including the $25 million prize pool at DOTA 2's The International and the $100 million Epic Games is paying to Fortnite's best players in 2018-2019.
Cryptocurrency and eSports are moving closer to each other, however, as the two mature, opening up areas of play for a broader audience and continuing to disrupt the status quo of their two industries.
To understand why, it helps to have a basic understanding of both eSports and cryptocurrencies. eSports, in a nutshell, pits video gamers against each other in both team and individual tournaments. Watched globally both online (on services like Twitch) and on television (including ESPN, NBC and TBS), it's one of the fastest growing sporting events today, but beyond the big money pro tournaments, there's an active community for everyday gamers to challenge themselves and each other.
Cryptocurrencies, from Bitcoin to lesser-known options, all work on the same principal: They're virtual tokens that can be exchanged for goods and services from select retailers, contractors and online trading houses. Rather than going through a bank or financial institution, though, the tokens are exchanged directly from person to person via a secure, decentralized backend system called blockchain (essentially a linked collection of computers that all have to approve an exchange before it can occur).
So how does all of this relate to making money playing video games? Well, first, consider that eSports, unlike the NFL or Major League Baseball, is something that's truly global. Players can participate in tournaments that are hosted anywhere. Instead of collecting winnings in the host country's local currency, though, those who receive cryptocurrencies can quickly convert that to their local dollar, Yen or won.
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Similarly, eSports teams sometimes use cryptocurrencies and the blockchain to raise funds from fans, regardless of their location or their local currency.
The truth is, both eSports and cryptocurrency are early in their lifespan, so while there's a wide range of possibilities, most of those are still in the theoretical or experimental phase. One that's truly out in the wild, though? Gambling.
Visitors to Unikrn, a Mark Cuban-backed eSports betting site, wager virtual tokens called UnikoinGold on matches they either observe or participate in. Using the Ethereum blockchain, Unikrn can process up to 9,000 bets per second, says Ryan Jurado, the company's head of global content & communications. And because that's all recorded on the blockchain, there's less room for communication errors.
"We have the safest wagering experience," says Jurado. "Traditional wagering does a perfectly fine job, but being able to incorporate blockchain makes everything easier for the customer, makes everything easier for us and makes everything easier for regulators. And it lets us unlock new functionality down the road."
UnikoinGold can be exchanged for real world cash on cryptocurrency exchanges, but most players don't wager for financial gain. They use those tokens to enter Unikrn giveaway contests, which offer gamer-centric items ranging from headphones to character skins to trips to major eSports tournaments.
That habit of keeping UnikoinGold in the Unikrn system isn't a bad thing given the volatility of crytocurrency exchange rates in recent months. And Unikrn prefers it that way. The company isn't to create an investment vehicle, says Jurado. Rather, it wants to use blockchain and cryptocurrency to build a community that makes a habit of returning.
"Bitcoin is a cryptocurrency where, pretty much, the only thing it's used for is exchanging value," he says. "That's not really the case for a utility token like UnicoinGold. What we've done is build a platform around it. And, really, that's the future of cryptocurrency. ... An increasing amount of activity in the blockchain sphere is going to be driven by innate experiences and use cases. We're very focused on making sure we're unlocking those use cases."
Unikrn is hardly alone in marrying cryptocurrency and eSports. UltraPlay offers wagering on some less prominent games using eGold, its own token. Startup ReadyUp, founded by eSports star Jonathan “Fatal1ty” Wendel, is a digital platform designed to recruit players and managers. In 2019, it plans to launch a marketplace letting users monetize their coaching skills and content via cryptocurrency. And Gimli is a crypto-based eSports betting platform that lets streamers and gamers get a cut of the bets viewers make.
The business models of these companies are all slightly different, but the goal is the same, to better integrate the cryptocurrency/blockchain worlds with eSports.
"When the internet was launched, it was a novelty," notes Jurado. "Fast forward 10 years and everyone's doing their banking on the internet, and every aspect of their entertainment and social lives. As blockchain and crypto technology ages, so do the amount of utilities that people have brought to them."