Have you heard the phrase GameFi? Any idea what it is? Does ‘earn while you play’ mean anything to you?
Let me explain.
P2E
GameFi is a fast-growing new genre of gaming. Crypto games, often referred to as play-2-earn (P2E) games, let you earn crypto while playing on your device, from phone to laptop.
Not only can you earn while you play. Thanks to blockchain technology, you also verifiably own the individual assets that you acquire in-game in the form of NFTs (Non-Fungible Tokens).
In-game currency is not a new concept. Some date back to 2003, with the likes of Disney’s ToonTown Online, and 2004’s hit game World Of Warcraft (WOW). Gold was the currency used in WOW, which amassed a fanbase of 10 million players at its peak. Gold was used for almost everything in the game, including buying items, purchasing food, and customising your character.
At the time, this was revolutionary and paved the way for many games.
GameFi Begins
In many ways, these games were a starting point for digital assets in gaming.
Counter Strike: Global Offensive, released in 2012, adopted this model and indirectly created a whole ecosystem from in-game weapon ‘skins’. Skins could be unlocked in the form of ‘loot cases’, which, to open, needed a key you bought with fiat currency.
Because skins cost real money and had a rarity system, dozens of second-hand marketplaces soon popped up. Buying and selling these items created multiple revenue streams not only for those trading, but also for site owners. This saw a further merging of physical and digital asset values.
Love Potion
In 2018, Vietnamese company Sky Mavis released the hit game ‘Axie Infinity’. It saw gamers collecting, battling, breeding, and trading their ‘Axies’ (Axolotl characters) to earn the in-game currency, Smooth Love Potion.
Smooth Love Potion can be traded on Uniswap for Ethereum.
The game’s popularity grew in 2020 as Covid spread the globe. The pandemic led to many losing work and seeking alternative forms of income.
A June 2021 report by CNBC highlighted the growing number of Philippine-based players using Axie Infinity as their primary source of income. They were playing the game so much that the Philippine Department of Finance declared that revenue from the game was taxable.
Age of GameFi
Fast forward to 2022, and most games use microtransactions and in-game purchases. Forza, Minecraft, Call of Duty, and many more, make millions off these mechanics. This strongly indicates that the younger generations feel more comfortable with digital purchases, and they will become the norm.
Welcome to the age of GameFi.
Most P2E games now are point and click games that lean more towards earning than playing. For gamers, this leaves a lot to be desired, and, with the crypto market blossoming, the creation of more immersive and fundamentally fun-to-play games is inevitable.
