Lightning Payments Come to Mobile Games, Fueling Bitcoin Adoption

THNDR CEO Des Dickerson sees gaming as fertile ground for layer 2 payments and a big avenue for bringing new Bitcoiners into the fold. This piece is part of CoinDesk's Payments Week.

Apr 26, 2022 at 7:53 p.m. UTC
Updated Apr 27, 2022 at 3:35 p.m. UTC
Layer 2

George Kaloudis is a research analyst for CoinDesk Research.

When you hear “payments in mobile gaming,” maybe you think about “in-game pay-to-play-better” mechanisms where you can get a more powerful character if you just pony up $4.99.

Or, about how you can only move to a certain part of the map for a small payment of $1.99.

Or about how you can only open a certain door with a certain key, which you could get through a five-hour grind in the druid gardens.

Maybe you think about the $14.99 monthly subscription you’re paying for that chess app because you’re totally going to get good at chess soon.

This piece is part of CoinDesk's Payments Week.

As games opt for more of these small and microtransactions, Bitcoin’s Lightning Network (Lightning) can clearly play a role. Its commerce layer can handle cheap, fast microtransactions as small as a single satoshi (1/100,000,000th of a bitcoin (BTC), ~$0.0004), allowing players to make easy in-game payments.

But that’s boring. And it doesn’t quite fulfill Bitcoin’s potential.

What is less boring is using the Lightning Network to monetize mobile games in the other direction, allowing players to win money for being good at the game.

That in turn can further and encourage bitcoin adoption, Bitcoin gaming entrepreneurs believe. In this way, some believe that mobile games can act as an effective introduction to bitcoin.

That’s the idea behind companies like THNDR, where Des Dickerson is CEO and co-founder. THNDR is building mobile games where you can earn bitcoin paid out over Lightning. Players of these mobile games are eligible for small, bitcoin-denominated rewards daily based on their game performance in the preceding 24 hours.

Basically, players will earn at least some bitcoin they can claim by withdrawing to a Lightning Network-enabled bitcoin wallet (fees are quite cheap on Lightning).

In an interview with CoinDesk during the Bitcoin Miami conference in April, Dickerson said her company’s mission is to use their games as a way to introduce people to bitcoin. She said that “gaming is becoming the next social network, and I believe that mobile gaming is how we can onboard the most people to bitcoin.”

There’s certainly some truth to that because mobile games are just flat out, incredibly popular. Take Mobile Legends: Bang Bang, for example. You probably haven’t heard of it but it has been downloaded over 1 billion times. But you’ve heard of Halo, and that has only sold 81 million copies worldwide.

Part of this is because of accessibility. In economically developing countries where citizens have less disposable income, expensive PC setups or console systems to play games don’t really make sense. Instead, citizens opt into playing video games on their relatively cheap smartphones (yes, $100 smartphones exist).

Looking at Mobile Legends: Most of its player base hails from countries like Malaysia, the Philippines, Indonesia, Thailand, Singapore, Vietnam and Myanmar. (Side note if you’re keeping count: those countries combined have a population of more than 650 million people.)

If we take a closer look at some of these countries, the profile ties in quite nicely into what THNDR and companies like it are trying to achieve. Personal remittances make up a big piece of the total GDP for the Philippines (9.6%), Vietnam (6.3%) and Myanmar (2.8%). Bitcoin as a means to solving for expensive remittances has been talked about for quite some time and was cited as one of the main points for El Salvador making bitcoin legal tender.

CoinDesk - Unknown

Remittances as a percentage of GDP (World Bank)

While THNDR isn’t quite yet ready to tackle monetizing a complex Multiplayer Online Battle Arena game (MOBA) like Mobile Legends, it has taken on the hyper-casual and casual game genre. In the same interview, Dickerson gushed about the company’s newest release called “Satsss – Bitcoin Snake,” an homage to the first mobile game ever.

“If you look at Satsss, our retention is better than other snake games in the App Store and Google Play, so people are playing longer day over day when bitcoin was introduced to the game.”

Retention is an important metric for the business of mobile games and monetizing them with bitcoin, at least on the surface, seems to suggest an overall improvement to the business of the game. But what about the broader mission of bitcoin adoption? How exactly do these games help with that?

The way bitcoin adoption spreads through gaming is getting bitcoin in the hands of people who do not have it yet. Dickerson told us that:

“Gaming is the gateway drug, but what do they do after they get their first bitcoins? After they go and download a wallet, they eventually move on and they start holding their bitcoin in a secure hardware wallet offline … an important step towards more financial self-sovereignty.”

Dickerson is unabashedly proud of this and she fought back tears telling us.

She offered up even more by way of some interesting statistics, including telling us that:

“Women between the ages of 35 and 50 in particular are a huge demographic for mobile gaming, and that’s a demographic that could very much benefit from an introduction to the Bitcoin ecosystem.”

Just as these women could benefit from getting their first bitcoin from a bitcoin-enabled mobile game, so, too, could the mobile gamers from the Philippines we mentioned earlier.

There are a glut of statistics that suggest mobile gaming is big and will continue to get bigger in the future. Given its sheer size, as bitcoin-enabled mobile games continue to penetrate the market it stands a chance in playing an important role in onboarding the next billion bitcoin users.

More from Payments Week:

The Lightning Network, which enables small and instant bitcoin payments, is getting bigger and more useful. Here's a state of play. This piece is part of CoinDesk's Payments Week.

Financial censorship has gone from an abstract idea to a harsh reality for Russians who suddenly found themselves unbanked by the West and their own government.

Down The Silk Road: Where crypto has always been used for payments.

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The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

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George Kaloudis is a research analyst for CoinDesk Research.

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George Kaloudis is a research analyst for CoinDesk Research.

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