The blockchain gaming industry in New Zealand is experiencing significant growth and has the potential for further expansion. As of 2023, the country ranked 24th out of 26 countries for cryptocurrency adoption, signaling significant room for growth in the crypto-gaming sector. Experts, however, predict the global value of the blockchain gaming market to increase at a CAGR rate of 70%, potentially making it the biggest sector in the New Zealand gaming industry within the next few years.
The use of blockchain technology in gaming offers several benefits, such as allowing players in NZ to buy and transfer in-game assets between multiple games on different platforms with proof of ownership. Blockchain technology is also changing how Kiwis wager at online casinos. Online casino sites that use blockchain and accept cryptocurrencies are popular because they pay fast. According to Techopedia’s Victor Arum, fast payout casinos now offer instant deposits and withdrawals and have various payment methods like Bitcoin and crypto wallet options like Neteller available for citizens. This highlights the blockchain gaming sector’s ongoing expansion, favorable regulatory landscape, and interest in cryptocurrencies.
Increased Adoption and Interest
New Zealand has seen a massive increase in interest and adoption of cryptocurrencies and blockchain technology in recent years. According to a recent study, nearly half of New Zealanders are interested in cryptocurrency as a wealth-building tool, compared to a traditional asset like real estate, The number of citizens who own cryptocurrency has grown from 6% to 14% from 2019 to 2023, is approximately 700,000 Kiwis.
New Zealand is making progress in embracing blockchain technology and cryptocurrencies like Bitcoin, however, there is still room for growth and development in the sector. The country’s government, through the Ministry of Commerce and Consumer Affairs, has proposed new measures to embrace crypto innovations to promote growth in the industry. This includes creating educational materials, considering appropriate policies to manage crypto-related assets, and classifying crypto assets used for investments as a new category of “financial advice product.” Additionally, the government has suggested expanding the skills shortages list to include individuals with expertise in blockchain technology and cryptocurrencies.
The Growth of the Blockchain Gaming Sector
New Zealand’s younger demographic is playing a key role in driving the growth of blockchain gaming, despite lower levels of awareness and use of blockchain technology compared to other countries. Several factors are driving this growth, including:
Increased Investments and Funding
There is a growing interest and investment in blockchain gaming, with major players like Mythical Games and Dapper Labs entering the market. Additionally, the government allocated funding of $40 million per annum to implement a rebate program for the game development industry, supporting the ongoing growth of game development in Aotearoa New Zealand.
Play-to-earn Models
The play-to-earn model (P2E) has transformed the gaming industry by providing Kiwis the opportunity to earn real-world value through gameplay. This means that players can earn cryptocurrencies, such as a blockchain game’s native token simply by playing and participating in various in-game activities like completing quests. These native tokens can be exchanged for fiat currencies like the New Zealand dollar or used to purchase in-game assets.
Kiwis can also own and trade their in-game assets, which are NFts on the blockchain. This ownership allows players to sell, trade, or buy NFT assets. Popular blockchain games like Splinterlands, Axie Infinity, and The Sandbox have seen significant growth in the country
Desire for Transparency and Security
Blockchain technology offers increased security and transparency in transactions, making it an appealing option for the iGaming industry. Although the country’s iGaming industry is relatively small, it has been growing driven by the increased adoption of blockchain technology and cryptocurrencies by offshore online casinos.
Cryptocurrencies are built on blockchain technology, which provides a high level of security and transparency. This helps blockchain gaming and gambling platforms secure and protect player findings and reduce the risk of fraud, hacks, or chargebacks.
Player Ownership of Assets
The rise of NFTs provides players with verifiable ownership of their in-game assets, ensuring that they have exclusive rights to their in-game assets. This ownership is recorded on the blockchain, making it immutable and transparent. NFTs can also be used across different gaming and gambling platforms, allowing players to carry their assets with them and use them in various gaming environments. This interoperability adds to the value and utility of in-game assets. The combination of using P2E models and NFT integration has made blockchain gaming more appealing to Kiwis, also attracting a broader audience to blockchain gaming.
Cryptocurrency Integration
The ability to earn and trade cryptocurrencies like Bitcoin, Litecoin, and Ethereum within blockchain games creates new revenue streams for both gaming developers and Kiwi players. This driver taps into a growing market interest in cryptocurrencies and blockchain gaming.
Cryptocurrencies offer a faster, more secure, and low-cost method of transferring value within the game. This reduced friction in transactions is a key reason why online casinos and blockchain gaming platforms are increasingly adopting cryptocurrencies. This creates a more efficient in-game economy, which benefits both the players and the blockchain gaming and gambling platforms
Regulatory Environment
New Zealand’s Financial Markets Authority (FMA) regulates cryptocurrencies, blockchain gaming, and other crypto-related activities. The government’s approach to blockchain gaming and related technologies is still in its early stages, with regulations covering uses classified as financial services and products. While the New Zealand government is open to blockchain technology and cryptocurrencies, its regulations regarding services using cryptocurrencies are unclear.
Under the Gambling Act 2003, domestic online casinos are not allowed to operate at all, but offshore online casinos can legally accept cryptocurrencies as a payment method for New Zealanders. However, there are no specific regulations for blockchain-based video games that use cryptocurrencies in the country. The FMA’s regulations on crypto exchanges, crypto wallets, and taxation will most likely apply to blockchain gaming.
The government has not taken a restrictive approach to regulating blockchain and crypto-assets. Instead, it has “retrofitted” existing regulatory protocols to apply to market participants using blockchain and crypto-assets, adopting a wait-and-see approach. So far, the government is supportive of blockchain technology and its potential applications but is proceeding with caution to ensure a balanced regulatory environment as the sector grows.
Challenges and Limitations
New Zealand has the potential to position itself as a leader in the responsible and innovative uses of blockchain technology, however, the country’s approach is still evolving, resulting in limitations and challenges.
Lower Levels of Awareness and Use
Blockchain technology is being mainly used by entrepreneurs and early adopter businesses in the technology and creative sectors. There is, however, a lower level of awareness, use, and capability in the broader business community, universities, and in government itself. New Zealand’s population is relatively small, which affects the rate of adoption. Smaller markets do tend to take longer to embrace “disruptive” technologies like blockchain, however, the blockchain gaming sector seems to be picking up.
Regulatory Uncertainty
The country’s regulations mostly cover uses classified as financial services or products and virtual assets like cryptocurrencies for taxation. No laws and regulations exist for blockchain gaming just yet. However, New Zealand is taking steps to understand and regulate blockchain technology, and there are calls for a more proactive approach that encourages development and innovation with consumer protection. While regulators worldwide recognize the benefits of blockchain technologies, New Zealand’s response remains a work in progress.
Potential Conflicts with Existing Laws
The immutability of blockchain technology means that once transactions and data are recorded on the blockchain, they cannot be changed, deleted, or reversed. This conflicts with New Zealand’s right to correction or right to be forgotten under the country’s Privacy Act. This presents a challenge for individuals who are involved with decentralized autonomous organizations (DOAs). Since blockchain networks can be decentralized and distributed across multiple jurisdictions, they can complicate compliance with the laws regulating international data transfers under the Privacy Act.
Skills Gap and Lack of Expertise
The ability of businesses in New Zealand to use and incorporate blockchain technology is rather limited and the skills are in short supply. This limits New Zealand’s ability to provide financial and legal guidance to businesses, which means that businesses and Kiwis are relatively slow to adopt and use advanced technologies like the blockchain.
However, the rise in crypto casinos and growing interest in blockchain gaming contradicts the government’s slow approach to adopting and regulating cryptocurrencies and blockchain technology. This discrepancy could be attributed to the gaming industry’s focus on innovation and the ability to offer unique experiences to attract gamers and retain players. The lack of regulations may have created an environment more conducive to the development of blockchain gaming platforms. However, the slow adoption still posed challenges to the long-term growth and sustainability of blockchain gaming.
