Cryptocurrency and eSports have forged a strong relationship that benefits both parties. Cryptocurrency enjoys exposure to a large tech crowd, while eSports teams and players can enjoy fast payments on blockchain, tokenized assets, and sponsorship deals from some of the biggest names in the industry.
Many eSports players are also enjoying some additional benefits of crypto, such as offering fan tokens to raise capital or accepting part of their salary in token and cryptocurrency finances.
Cryptocurrency Popularity
The cryptocurrency market has enjoyed another good year. Ether and Bitcoin ETFs have launched, bringing in institutional investment, and the whole industry was spotlighted during the recent US election. New coins launch regularly, and with new crypto to invest in every month, potential investors and cryptocurrency users have an increasing range of choices.
According to cryptocurrency author Viraj, new coins have the potential to take off. As the market has matured, more utility coins are launching with their own purposes and uses, including those that benefit eSports teams and players.
Faster Payments
One of the key benefits of crypto is that it offers cross-border payments that are completed in a fraction of the time of traditional payments. No matter how far away the recipient is, a payment can reach them within seconds of it being sent.
For eSports players, this not only includes any participation fees from their teams, but also includes prize money and other bonuses paid by tournaments, sponsors, and
Reduced Fees
As well as being quicker, cryptocurrency transactions also cost less. The actual fee does depend on which crypto is used, as well as factors like network traffic, but even large transactions attract low fees.
Strictly speaking, there are networks like Nano that are completely feeless. It is possible to send and receive payments without paying anything for the transaction. Even using the most expensive networks that can guarantee faster transmission of payments, though, fees are only a few dollars even to send a payment of thousands of dollars.
This can be considerably lower than the feed associated with traditional payment methods, especially considering eSports teams, their players, and competition organizers likely all reside in different countries. Cross-border payments generally cost more when using fiat currencies, but not when using cryptocurrencies.
Transparent Economy
eSports teams receive payment from competition organizers. In some cases, individual players receive payments from the same sources. And, in a lot of instances, competition prize money is ultimately determined by the number of entrants and potentially even the number of spectators.
Using a traditional payment model, the players and teams are reliant on organizers to be open, up-front, and honest about entry numbers and other factors. Using cryptocurrency, everything is recorded on the blockchain and can be visible to participants.
This transparency means competition entrants know how much prize money there is and they can verify that prizes and other payments have been made as agreed. It brings trust to competitions and offers transparency to multi-million dollar events.
Tokenized Economy
As well as prize money, there are other ways eSports competitors can raise money. Fan tokens have become a popular addition to the whole industry. Competitors partner with blockchain networks or dApp developers to create their own crypto tokens. These tokens are sold to fans and the competitor receives capital.
The tokens can be used for governance, enabling buyers to vote on certain choices, too, which makes the relationship mutually beneficial. Often, the competitor will retain some of the tokens as part of the tokenomics, and if they perform well and their token naturally increases in value, this also means an increase in their assets.
Additional Earning Opportunities
The eSports crowd is a natural fit for cryptocurrency companies. They typically enjoy and are comfortable using the latest technology, and have fewer hang-ups around using digital currencies like Bitcoin. As such, cryptocurrency companies compete with software and hardware manufacturers to sponsor some of the biggest events.
The likes of crypto.com and Coinbase have proven especially active in sports sponsorships, and it is highly likely that, as eSports continues to gain viewers, we will see more sponsorship deals in this sector, too.
Team Sponsorship Deals
Teams and players also often sign sponsorship deals, and this is another area where crypto is making its mark. Bitstamp signed a $5 million deal with Guild Esports in 2022, while OG Esports signed with Wintermute this year. These multi-million dollar deals are seeing a huge influx of money into the eSports domain.
Smart Contracts
Blockchain uses smart contracts to automate payments. Contracts and records are immutable, which means players are virtually guaranteed agreed payments.
Some smart contract networks offer upgradeable contracts but even these generally require agreement from both sides of the contract, which gives players and teams added protection and assurance that they will get paid.
Monetization
Cryptocurrency and other companies are finding increasingly different ways to incorporate blockchain and crypto into gaming. As well as games like Axie Infinity, which is a dedicated crypto game made by a crypto gaming company, mainstream gaming giant Ubisoft launched what is likely to be the first mainstream crypto game this year.
Champions Tactics: Grimoria Chronicles saw a quiet launch, but it is likely a sign of things to come. The title uses in-game NFTs. Although it can be played using free NFTs, some of these cost as much as $64,000. In future games, it will be possible to create or develop NFTs that carry this kind of value. And because they can be sold on the open market, competitors will be able to monetize their gaming through the sale of these assets.
Conclusion
Cryptocurrency’s use is on the rise in a lot of industries, including eSports. It has especially helped revolutionize the way players and teams get paid thanks to its faster and cheaper transactions, transparent records, and a wider range of payment and earning opportunities for everybody in the industry. With the rise in popularity of both markets, the relationship between the two is only likely to strengthen in the coming years, too.