Why Gamification Needs a Blockchain and Vice Versa

April 13, 2020

Gamification is the act of integrating game mechanics into a non-game experience. It was a hot topic a few years ago, and although the hype train has slowed down somewhat, companies are still gamifying their products and services to increase user engagement. After all, the more engaged your users are with your product or service, the more likely they'll keep on using it. Gamification motivates your users to act and stay engaged.

In this article, I'll explain both why gamification works and where it’s still lacking. In the second part of this article, I'll explain why gamification needs a blockchain, but also why the blockchain needs gamification (not the same thing).

Airlines Love Gamified Services

The first companies to successfully experiment with gamification were the airlines. Flying is inherently valuable, because it gets you from one distant place to another faster than any other means of transport. But before the rise of budget airlines, it didn’t matter much which specific airline you chose. Many airlines offered a similar flight experience for a similar price. 

Airlines mostly differentiated themselves through their respective brands. You flew with a particular airline because you liked its values, its aesthetic, or its messaging. That’s still the case today, but airlines have now incorporated gamification techniques to make themselves stickier with their customers.

I'm talking about loyalty schemes and airline rewards. Suddenly, users could earn points for the miles they flew, and use those points to get upgrades to business class, perfume discounts in the airport shops, or even access to an exclusive area of the airport.

Someone walking in front of a "first checked bag" ad from Delta
Loyalty schemes have been a huge success for airlines

It doesn't cost an airline all that much to come up with a loyalty scheme. Perhaps a website, printing off the loyalty cards, and arranging everything internally so employees understand the new mechanics and can integrate it into their workflow. Peanuts when compared to the cost of an actual plane and jet fuel. 

Across the board, these gamified loyalty schemes have been a huge success for airlines. The frequent flyer program of American Airlines alone brought in $1.15 billion in marketing revenue in the first half of 2018. Analysts suspect that loyalty schemes constitute a major part of airline profits these days.

Because gamification worked like a charm for airlines, companies across all industries are now integrating gamification techniques into their products and services. Which B2C company doesn't have points, levels, missions, badges, leaderboards, unlocks, event feeds, notifications, quizzes, visual progress, etc... incorporated in their offering?

The Dopamine Rush of Social Media

Social media is another industry that has come to rely on gamification. Pretty much every social media platform is designed for maximum engagement, which means that social media companies have integrated many of the most effective gamification techniques.

The result is that we’re now glued to Facebook, Instagram, Twitter. The dopamine rush of these gamified mechanics integrated into social media platforms haven’t just made us engaged, they’ve made us addicted. Luckily, people are increasingly realizing the destructive potential of social media, with many now trying to quit or at least curb their usage. Suffice to say it’s a sign of how effective gamification can be.

A list of articles on how and why to quit social media
No shortage of articles showing the (destructive) power of gamification

Another Angle to Gamification

But points, notifications, and leaderboards aren’t the only way you can use gamification to have people engage with something. Sometimes, you don’t just need gaming techniques. You need an actual game. One of the most successful examples of this is America’s Army (AA).

AA is a game developed by the United States Army, where you play as an American soldier fighting terrorists. It has a comprehensive training module and its multiplayer mode is played by millions of gamers every day (including yours truly, back in the 2000s). Not only is AA an excellent game to play, but it also introduced its players to a life in the US Army. 

Virtual soldiers standing in a circle before a parachute drop
A virtual briefing before my first digital parachute jump ever

The game was incredibly detailed and educational, but also a lot of fun. It yielded huge benefits for the US Army. In fact, the army considers it to be their most effective recruitment method. Recruiting soldiers through a video game, who would’ve thought?

What’s Wrong with Gamification?

While airlines, social media companies, and the US Army have been successful in gamifying their products and services, they are far outnumbered by examples where gamification didn't work. Gamification in itself isn’t enough to get people engaged. I really don’t care about my Starbucks points, for example. Nor do I care about my TripAdvisor badges. Or that I’m nearly level five as a Google Maps guide. 

My Google Maps Local Guide profile where I'm almost level 5
Almost level 5, but what does that even mean?

And that’s because either the rewards are hardly worth the effort or because the badges and points don’t have any inherent value. What am I going to do now when I'm a level 5 Google Maps guide? How is that useful to me? If a company cannot provide an immediate answer to that question, it’s a sign they’ve only done half of the work. It’s not valuable enough and people won’t be interested. That’s where blockchain technology can provide a solution.

Using the Blockchain to Gamify

While the goal of each online community differs, they all use gamification for the same purpose: to increase engagement, and to recognize and reward members who act a certain way. However,  the value of the rewards that users receive is tied to a specific community. You can’t do anything with your Starbucks points in a Dunkin’ Donuts. Your British Airways points are useless if you fly with Lufthansa. There’s a cap to the value that loyalty rewards have, because they’re restricted to a particular community.

Blockchain can remove that value cap. Instead of points, users can be rewarded blockchain tokens. Firstly, these tokens have monetary value and can be exchanged for other cryptocurrencies or for fiat money. That’s an immediate benefit over the current way of working, where your points hardly ever get you hard cash.

Secondly, this type of blockchain tokens needn't be coupled to the particular community where you got them from. The rewards you get in one place can be used in another place. This significantly increases the value of the rewards, and customers will flock to where they can get their points easiest. This, in turn, will lead to more competition between companies using that blockchain and more competitive rewards. All of this is good for the user.

Of course, this will require some serious rethinking of the current ways that companies gamify their offering. Simply implementing a gamified blockchain mechanism is only doing half of the work. You’ll need to know which other companies will be on the same blockchain and you’ll need to understand how users could use the tokens you give them. It will be an exercise of balance and you’ll have to carefully consider the number of tokens you give out versus the rewards you offer. 

But, if implemented correctly, using the blockchain to gamify your offering can provide your users with more value than any gamified offering today. 

Gamifying the Blockchain

Gamification can use blockchain, but blockchain can use gamification too. Here's how.

Blockchain is important technology that can shake up our society and make it better in several ways. It moves power away from intermediaries to a community, improves privacy, gives people control over their identity, and so on... But these benefits alone aren’t enough to make it mainstream. Most people go about their lives today as they did yesterday, relatively happy in their routine and at best vaguely interested in major ideological changes. This isn’t a critique; it’s human nature.

A game would greatly help with introducing blockchain technology to a larger audience. That game needs to be easy to install, easy to understand, and a lot of fun to play. Similar to what America’s Army did for the US Army. Something that gently introduces people to what blockchain technology means.

The closest any DApp (decentralized application; or a game that runs on the blockchain) has come to that lofty goal was CryptoKitties. But even then, at the game's peak in December 2017, there were only a few thousand monthly active users. To bring blockchain to the masses, we need a DApp that has hundreds of thousands of users (if not millions). This is how blockchain can use gamification techniques, to make it more appealing to a bigger audience and to keep them engaged.

A few different CryptoKitties
CryptoKitties is easy to start, easy to understand, and fun to play.

In Conclusion

Gamification and blockchain technology walk hand in hand. A great game can introduce blockchain to the masses and blockchain technology can help improve the gamified offerings that companies offer today. It can tie rewards to real monetary value and it allows users to transfer rewards between communities. And that’s just the start of it. Both blockchain technology and gamification are trends that will only become more inevitable as they mature and become integrated into our daily lives.