Halo, Grand Theft Auto, Pokemon GO, a few of the litany of major game developers that are attempting to build on the frenzy that is GameFi—or Game financialization. Which in essence is just as the word suggests, the ability for a game or player in a game to monetize their gaming.
This notion would have been seen as impossible just a few years ago, but thanks to a leading group of developers from China, GameFi is now a real possibility for anyone with a penchant for games to earn a living.
The dawning of GameFi occurred on an international stage back in 2019 at the Wuzhen World Blockchain Conference, when MixMarvel founders proclaimed to the world that blockchain technology would change gaming forever. Then soon after the inception of Ethereum and its blockchain, CryptoKitties was born. It was during this period, that the world would first come to know of NFTs or non-fungible tokens and their ability to monetize the gaming industry in a way that had not been seen before.
Unlike former attempts to monetize digital assets, CryptoKitties brought together blockchain technology and gaming assets in such a way that digital ownership would no longer be tied to a single game. Instead, gamers could now swap their gaming assets for real fiat money on decentralized exchanges.
And this is how gaming changed forever.
How Exactly Does GameFi Work?
At its core, GameFi is the ability for someone to earn money from playing a game that rewards its users with tokens, coins, NFTs, or all three. But what makes one gaming project more likely to gift you a token rather than a coin or an NFT? And what is the real difference between a token, a coin, and an NFT? The difference lies in how these three individual software tools are utilized.
Vikram Subburaj, Co-Founder and CEO of Giottus Cryptocurrency Exchange, said that for an investor, both crypto coins and tokens behave the same way. “They represent a utility whose growth and adoption will drive the price of the coin or token in future.”
The great majority of GameFi will offer some sort of “play-to-earn” scheme where a player is able to earn native tokens or coins by simply playing the game. Axie Infinity is a great example of an Ethereum based game that allows users to not only enjoy free gameplay but earn the game’s native AXS token.
This token or reward for playing is earned by the following:
- Winning against opponents and other game players in tournaments
- Creating your own virtual plot of land and tending to it
- Trading with other users on the Axie Infinity Marketplace
- Creating new Axies and breeding them
Owning Assets in GameFi
Digital ownership is at the core of GameFi and many of blockchain technologies’ most essential features. Bitcoin introduced digital scarcity to the world and then NFTs were able to build upon this initial technology. With NFTs playing a significant role in how we think of ownership, this led to an evolution of gaming.
Where now, these NFTs or non-fungible tokens can generate real income for players in GameFi. In CryptoKitties, utilizing NFT technology, players can breed their digital creatures to create new NFTs. With these newly born NFTs, they can then exchange them for stablecoin on a decentralized exchange or continue to hold on to these digital assets until the time comes for them to be sold or traded.
This is revolutionary not because of the digital ownership (games have had digital assets and items for quite some time) but because these digital assets can make a real-world difference in our day-to-day lives. In fact, a large majority of the highest-paid NFTs on the marketplace right now have come from little-known artists or individuals who are new to the technology scene.
The sale and auctioning of these digital assets have changed lives and are continuing to do so in a positive way. You can open any NFT news site to watch ordinary human beings transformed by the sale of their creative works.
Once believed to be the career of a starving worker, the NFT and GameFi world are instilling wealth into a population that had very little hope of ever achieving the success that their parents had when they were young.
And so it is in this spirit of entrepreneurism, that I leave you my dear reader with a bit of hope for what is to come for the gaming industry. As CryptoKitties and CryptoPunks take over, rest well knowing that your support is encouraging the next wave of artists and visionaries who will change the face of gaming and digital ownership forever.