A new game concept called “PTE (Play-to-Earn)“ pays participants in cryptocurrencies. The lockdowns during Covid, when we spent a lot of time indoors, seem to have accelerated the game industry’s current rapid expansion. Compared to 2019, £1.6 billion ($2.1 billion) more was put into video games in the UK only in 2020. People used video games as a source of indoor amusement during lockdowns, playing everything from Call of Duty to Animal Crossing.
It also was not a passing trend. The worldwide video game market expanded in 2021 as well, as per InvestGame. Private investments increased by more than three times in the first six months of the year while public offers increased from $4.9 billion in the first half of 2020 to $17.1 billion in the first half of 2021. Another trend identified by InvestGame is the development of blockchain-based gaming. Through the use of an NFT (non-fungible tokens) market or by allowing players to earn cryptocurrency incentives through gameplay, crypto games blend the two technologies.
The use of cryptocurrency in the gaming sector is showing signs of success. One of the most widely used crypto games, Axie Infinity, has generated an astounding $1.2 billion in income; 128 blockchain gaming startups will get investments in the first trimester of 2022, which is a sign of the growing interest in and media coverage of the cryptocurrency gaming industry. But it seems to be a competitive environment where participants and investors switch projects frequently.
Therefore, it is becoming more crucial for gaming traders to comprehend the specifics of this industry. But how do crypto games operate?
What Exactly Is Crypto Gaming?
The centralization of traditional games prevents all goods and experiences (XP) earned from playing from being used in other games. Blockchain technology, which is used in cryptocurrency gambling, alters this. The use of awards and products by players across various cryptocurrency gaming projects is now possible.
Players can also make money through cryptocurrency gambling at USDT betting sites. Players can engage in what is known as a PTE model, which we mentioned in the prelude, in a number of different ways. Take Axie Infinity as an illustration. Axies are characters that players may purchase, level up, and then sell for more money. Additionally, players can engage in combat with their Axies to gain SLP and AXS, two cryptocurrency gaming tokens based on Ethereum.
This offers a completely new component to the market: the notion that players can earn cryptocurrency while playing games. Three out of four players surveyed by Worldwide Asset Exchange said they hoped they could utilize their cash on different platforms, so this is a positive move. But are only players playing?
Who Are Those That Play?
The number of NFT game users during the previous 30 days is tracked by Statista. The top three NFT games are Alien Worlds, Splinterlands, and Galaxy Blocks, with a combined monthly number of subscribers of over two million. The popularity of Axie Infinity is on the decline.
Despite a dearth of studies on the demographics of cryptocurrency gaming, it is obvious that gamers are the primary target audience. According to crypto payments platform Triple A, 38% of cryptocurrency gamers are between the ages of 21 and 38, making millennials the largest age group; 55% of millennial cryptocurrency owners were gamers prior to doing so.
Exactly 22.6 million gamers in Asia-Pacific, a key region in this market, are cryptocurrency owners; 5.9 million video game players in Europe and 5.8 million in Africa and the Middle East came after this. Surprisingly, with only 3.3 million players, North America has the fewest crypto gamers. This information closely resembles the larger gaming market. According to Statista, Asia-Pacific nations lead the top 5 gaming marketplaces in terms of revenue.
A center for cryptocurrency gambling has arisen in the Philippines. The Covid-19 outbreak severely damaged the nation’s economy, but some citizens discovered a brand-new source of income. A YouTube documentary showed how Filipinos were using Axie Infinity to make money, demonstrating that there is an opportunity to earn money by making an investment in these sites. The documentary also questioned the notion of cryptocurrency gamers. It included an elderly married couple, a mother, a fresh college grad, a cab driver, and several other crypto gamers.
Reputable Crypto Games
Given that the game’s origins are in Asia, it is not surprising that Axie Infinity has gained popularity there. Vietnamese-born Trung Nguyen founded the video game startup Sky Mavis, which unveiled the Ethereum-based game. Given that the company had just recently raised $152 million in venture funding from cryptocurrency investors in October 2021, Sky Mavis’ valuation as of December 2021 was a remarkable slightly under $3 billion.
Despite the pricing, Alien Worlds, which has nearly twice as many monthly players as Axie Infinity and more than 1.16 million, is the most popular cryptocurrency game. The game’s co-founder, Saro McKenna, has a background in corporate finance and has spent ten years working there. McKenna is also an Oxford University MA graduate.
Axie Infinity is more widely played than Alien Worlds, but the in-game money tells a different tale. The Axie Infinity token (AXS) was trading at $16.13 as of June 27, 2022, down 14% over the previous 30-day period. It ranks fifth out of all videogame cryptocurrencies by market capitalization, below Decentraland and The Sandbox. Alien Worlds (TLM), with a cost of just $0.02, is far cheaper than it.
With more than 604,000 monthly players, the blockchain card game Splinterlands is comfortably ranked third on Statista’s list. You can buy, trade, and upgrade cards in the game. Since he was ten years old, Matthew Rosen, the publisher’s creator and chief technical officer (also known as Splinterlands), has been making video games. The card game’s token, called Splintershards (SPS), is now available for about $0.05. Despite having a greater price than TLM, its market valuation is lower, and as a result, CoinMarketCap now ranks it at position 408, whereas TLM is at position 291 in the ranking.
The Way of Work of a Crypto Game?
Many of the components seen in crypto alternatives are already present in traditional games. In-game money can be purchased with fiat currency, and players can also level up their avatars and gather things. What then draws both gamers and investors to cryptocurrency gaming?
Ownership is one of the main drivers of the growth of crypto gaming. In contrast to conventional games, those that use blockchain technology grant players tenure over the items they earn. In-game things can be owned by players, traded, or even sold. The marketplace dynamic has drawn players, whether it be a purple Axie with green thorns or a Splinterlands creature card.
Players are drawn to gaming because it can be profitable. Pay-to-play models, where players must spend money in order to make the most of a game, have drawn criticism in the past for several titles. Prior to cryptocurrency gaming, spending money would just enhance your experience, allowing you to level up more quickly, for example. The play-to-earn approach of cryptocurrency gaming does the exact opposite, allowing users to profit from their initial investment in the form of cryptocurrency game coins. This has even made it possible for certain Filipino gamers to make a living.
Are There Any Risks?
Crypto gaming has disadvantages despite its benefits. Some games are more impacted by access restrictions than others. For instance, in order to play Axie Infinity, a player must have three Axies. Since the cheapest Axies are roughly $100, you need to spend a minimum of $300 for you to begin earning. The average player may be turned off by this significant amount of money as the majority of conventional games do not run more than $100.
You face the threat of losing your NFTs and tokens. This may occur if you attempt to transmit funds to a wallet that is incompatible with the NFT kind or if you become a victim of fraud. This is not unheard of; in July, the creator of the cryptocurrency game Hedgie claimed to have lost more than $1 million in NFTs to fraud. Similar to this, Axie Infinity’s blockchain, Ronin, suffered a hack that resulted in the loss of more than $600 million from its holdings.
Compared to cryptocurrencies, there is an even greater risk for crypto games because operators typically are not required to follow regulations like anti-money laundering, which raises the possibility of fraud. Players may experience financial losses in addition to hostile attacks due to volatility. Like non-gaming cryptocurrencies, crypto game tokens are subject to market fluctuations, but certain games include withdrawal restrictions. This means that gamers might not have time to reduce their losses if a cryptocurrency gaming coin, like AXS, drops in value (it is currently worth around half what it was on April 29, 2022, for example).
Combining two cutting-edge technologies also makes gambling, a serious problem to which both are prone, worse. Loot boxes, where gamers can cash to unlock a virtual box containing random goodies, are a recent addition to video games. Loot boxes are structurally and psychologically similar to gambling, according to certain reports. Loot boxes have been adopted by crypto games as well. For instance, Splinterlands lets you purchase packs of undetermined cards. Health professionals worry that gambling has become a regular part of young people’s lives due to the millennial gaming user demographic and that crypto gaming will only make this situation worse.
Future of Cryptocurrency Games
Investors want in on the booming demand for cryptocurrency games. Sky Mavis received $7.5 million in its initial round of fundraising thanks in part to Mark Cuban’s investment. Additionally, venture capital firms are joining the game: A $400 million investment for Web 3.0 titles and a fresh $600 million venture from Andreessen Horowitz were just unveiled by Framework Ventures.
Both Polygon and Solana have made investments in early-stage blockchain games that include decentralized financing (DeFi) into their platforms, showing that blockchain businesses are also interested in joining the bandwagon. The market for cryptocurrency gaming platforms may expand as more and more shareholders exert pressure on them.
Based on a recent analysis by the investment company Drake Star Partners, this is already apparent. 128 cryptocurrency gaming firms received funding totaling $1.2 billion in just the first three months of 2022. The blockchain gaming sector, however, suffered a severe setback in October 2021 after Steam, the largest PC game distributor in the world, stated it would not serve blockchain-based games because it does not permit products with the actual worth on its platform. Cryptographic games may suffer greatly if Steam stops supporting them since they will lose access to a market that is the leader in its field and draws 62.6 million users each day.
Epic Games, the distributor, is employing a different strategy. Tim Sweeney, the CEO of Epic, stated that the company is happy to collaborate with blockchain-based video games’ early developers even though it will not be producing its own cryptocurrency games. Crypto games, according to the video game distributor, would need to adhere to financial regulations and have the proper age ratings. This might eliminate many of the dangers that crypto games face and provide Epic Games’ 31.3 million daily consumers access to the market.