If I told you that you could make money by fighting demons, ogres, and faceless creatures full-time in an online world, you’d think I was lying. You’d be wrong, as the proposition is not technically a lie, but that wouldn’t make it less of a scam.
The term “gold farming,” which refers to the practice of earning tokens and coins playing multiplayer online games and then selling them for real-world currency value to time-poor but cash-rich players, first came to prominence in the late 2000s, and then in 2010 after a documentary portraying groups of young men making a living by playing online games was released.
A massively popular game like World of Warcraft, for example, which in 2021 had 10.08 million monthly active users and which counts at least 27,000 active players at any given moment, can be extremely profitable for gold farmers. Virtual items trade to the tune of $1.8 billion worldwide, and surveys show 20% of gamers admit to buying gold at some point or another.
Although gaming companies consistently try to ban the practice, and while it’s seen a significant reduction in popularity in the last decade, gold farming can still be quite remunerative. As the value of virtual currencies changes from country to country, farmers in China (where 80% of global gold farms are located) can exploit the exchange difference and sell to players in America or Germany, which ensures a mainstay market for these strange practices at the border between immoral and illegal, virtual and real.
It’s not just gold farming that plagues the gaming industry. Bot accounts, scams, phishing, hacking, malware disguised as free downloads, and even child exploitation are lesser-known problems compared to the “usual suspects” such as bullying and addiction, but that doesn’t make them any less pervasive.
Eager scammers have also been known to sell accounts, fake profits, and even try to entirely bypass gaming rules for youths. In China, scammers can take advantage of the strict laws regulating playing hours allowed for kids and teenagers under 18, promising hacks and tricks to circumvent the government-imposed restrictions in exchange for high fees.
In 2018, the Battle Royal genre game Fortnite alone was estimated to have grossed scammers almost $1m in annual revenue, and in 2022, conservative estimates see “some of the highest earning fraudsters making around $7.4 million a year”.
Also in 2022, “gaming companies experienced 260% more online attacks, including an 85% increase in fake account registrations,” compared to the previous year. Almost entirely all (99%) attacks are coming from automated bots rather than real humans, and 87% of fraudulent activity was fake new account fraud.
AI-driven fraud prevention solutions give game companies a fair chance at identifying legitimate players and reducing transaction wait times. This can be significant if a human needs to manually monitor transactions in order to approve or decline them for fraud – and help cut refund expenses, as well as, more generally, help restore the industry’s reputation.
But there is another solution.
Blockchain technology, which is undeniably helping revolutionize industry after industry, could always work its magic in the gaming sector.
Let’s take a look at how that could pan out. Ultimately, when you forget the buzzwords and the hype, blockchain is simply 100% secure and immutable data, with a registry of who owns that data at any point in time, and the ability to have a clear overview of said data within a public and decentralized setting.
So, we can ask ourselves: where do we need an overview of immutable data that is 100% secure, and documentable so? Gaming lends itself extremely well to this question.
A blockchain with a unique ID at the protocol level, like Concordium, can ensure compliance with responsible gaming policies, making the sector safer and more enjoyable for all. This is exactly what we designed Concordium for, as we believe in the importance of balancing privacy and accountability like never before.
In the case of age controls, for example, it could easily prevent underaged players from accessing games they should not be able to. It could also assist in monitoring criminal activity, personal information protection, and an overall upgrade of the entire verification process both in terms of cost, time, and compliance.
A blockchain with an ID framework can manage identity checks quickly, automatically, and at no extra cost. Say goodbye to human teams spending hours and hours manually reviewing each transaction – blockchain can automate that, too. And of course, a decentralized network is hard for hackers to disturb or even access, since each node maintains information on distributed databases and since POW algorithms keep the networks highly secure.
By harnessing the power of blockchain technology, we could protect gaming from its own dark side. We could restore its reputation, cut fraudsters off at the source, and benefit players both from a financial standpoint and a mental health one, as scamming can be extremely tough on its victims and send them into periods of depression and heightened anxiety.
It might take a moment, as any Web 3.0 transition should, and it wouldn’t be easy on the scammers who have been relying on these schemes for over forty years ––but it’s easy to see why it would be worth it.
About the Author: Lars Seier Christensen is a Danish businessman, entrepreneur, and investor, born in Copenhagen in 1963. He has lived in St Gallen Canton in Switzerland since 2010. Mr. Christensen has five daughters with his wife, Yvonne.