What is crypto gaming?
In just a few years, cryptocurrency and blockchain have grown in popularity. The newest addition is crypto gaming. With the so-called "play-to-earn" approach, it is possible to make a living from playing. It is already being done in the Philippines with the game Axie Infinity. In this article, you will get an introduction to what crypto gaming is, how it works and how you can make money playing.
So, why crypto-gaming?
To understand crypto gaming, you need knowledge of blockchain technology. A blockchain is a decentralized and distributed digital "accounting book" that makes it possible to register, track and make visible all digital transactions. A blockchain stores data in blocks that are linked to each other using cryptography (SNL, 2021).
The use of blockchain technology is particularly suitable in situations where trust is low. The decentralization gives gamers a security and freedom that traditional game platforms can look forward to. Blockchain games make it difficult to cheat or deceive others. The blockchain verifies ownership, history and progression of the player.
Crypto gaming can be divided into two categories. Blockchain technology as a base for the entire game or just for the game's trading platform and economy. The game's trading platform developed on blockchain allows users to buy and sell ownership stakes between each other and across games, verified via the chain. With the entire game developed on the blockchain, every transaction and integration in the game is stored and verified as new blocks in the blockchain.
Decentralized ownership
Traditionally, gaming has had centralized ownership where the game developers run away with all the profits. In order to make purchases in the game, you must transfer Norwegian kroner (fiat) in exchange for the game's own currency. The game's currency has no value beyond that game and that generation.
For example, the soccer game FIFA. With good skills in the game and understanding of the market, it is possible to earn large amounts in the Ultimate game mode, where you manage your own football team. The year after, there will be a new version of the game based on last year's season. Your progression is lost, but so is the money you've earned. The game developer, on the other hand, is left with annual recurring profits.
Crypto gaming is changing that. The currency you earn is decentralized and shared across game generations. With conversion, the currency can also be used across different types of games. The leaders today are Ether (ETH), the cryptocurrency of Ethereum.
The money, which is directly or indirectly Ether, can also be used to make in-game purchases. For example, a new skin or a better weapon. The product you buy can be stored as Non-fungible tokens (NFTs), which represent a unique asset on the blockchain. The product will be unique to you and your ownership will be verified via the chain. You can later exchange or sell the asset. NFTs are not unique to gaming, but gaming is a concrete example of application.
Play-to-earn
Games created on the blockchain with active use of NFTs provide unique opportunities. Axie Infinity is an example. The game is developed by Sky Mavis, of which Norwegian Aleksander Larsen is a co-founder. In the game, you breed, fight and trade characters called Axies. Each Axie is an NFT. With progression in the game, tokens are also earned. Tokens can later be exchanged for Ether and then Norwegian kroner.
Axie Infinity issues two different tokens, Axie Infinity Shards (AXS) and Smooth Love Potion (SLP). SLP is the game's internal reward for progression. Typically, SLP is earned through matches with other players. AXS is the governance token that gives ownership of Axie Infinity as a DAO (decentralized autonomous organization) and allows the owner to vote on proposals for the protocol's future. Decentralized ownership gives both game developers and players equal incentive.
With unemployment during the pandemic, new digital income opportunities have received increased attention. Axie Infinity in particular has become popular and several gamers earn three to four hundred dollars in the first few weeks of the game. It exceeds the salary level of several jobs in countries like the Philippines and here Axie Infinity has become the full-time job of young gamers.
Increased popularity also creates increased values. On the eve of 2021, Axie Infinity reached two million daily active users. In step with its popularity, the value of Axie NFTs has risen rapidly. To be able to play, a team of three Axies is needed. This has led to separate teams offering scholarships to new players without financial capacity.
Conclution
Decentralized ownership gives gamers a financial incentive to spend time and money on games built on blockchain. Both through in-game rewards for progression and harvesting new NFTs with associated value increase. Dedicated governance tokens provide ownership of the game which further increases the incentive. Krypto gaming facilitates equal incentives for both game developers and players. Given the equal quality of the game, it will always be in gamers' interest to choose a game based on blockchain over a traditional game. It will set the standard and stake out the future for gaming.
Written by: Ole Henrik Sæve
Ole Henrik works as a content producer at Markedspartner and studies economics at the Norwegian School of Economics. He is a co-owner of the investment company Springboard Martech and chairman of several companies. In the past, Ole Henrik has written a book, led a podcast and was a responsible columnist in Avisa Hordaland.