The global video game market reached INR 15 trillion in 2021. As more players around the world become fully immersed in online gaming worlds, it makes sense that cryptocurrency will play a bigger role.
A handful of games are already integrating crypto directly into their gaming economies.
“Play to Earn”, or P2E, games reward players by paying them in cryptocurrency or digital tokens based on how much they achieve or play the games.
Earning cryptocurrencies allows gamers to capitalize on their skills or enthusiasm for gaming. But before players take the plunge, it’s good to understand the pros and cons of cryptogaming.
What is crypto gaming?
While money for virtual video games is not a new concept, the advent of blockchain technology has created opportunities for crypto game developers to add an element of real economy to their games.
Crypto gamers can earn non-fungible tokens (NFTs) or cryptocurrency by playing and winning a game, and those digital assets then become the property of the gamer.
In many cases, in-game digital tokens can be exchanged for stablecoins on centralized or decentralized cryptocurrency exchanges. These digital assets can be sold or traded on online marketplaces or converted directly into fiat currency.
How does crypto gaming work?
There are different business models in crypto gaming.
P2E games offer users a variety of ways to earn or buy game tokens, said Adrian Krion, founder and CEO of blockchain-based gaming platform Spielworks.
“People can monetize these tokens by buying them early and [hoping] for many players to get into the game after buying the tokens,” Krion says.
Some crypto games make money through advertisements or sales of in-game items, such as certain weapons, skins, or even virtual countries.
The developers then incentivize players to spend more hours on the game by paying them in crypto or NFTs for completing quests. These quests are usually simple tasks that require some interaction with the game, such as killing a certain number of enemies or collecting a certain amount of resources.
Other crypto gaming platforms offer crypto investors ways to gamble their currency on casino games and other games of chance.
BitStarz, 7bitcasino and mBitcasino are among the three most popular crypto gambling platforms.
Best Gaming Tokens
The global gaming token market is worth more than INR 1 trillion, according to data collected by CoinMarketCap.
These tokens may only have utility within a particular game or gaming ecosystem, but the top tokens also have significant real value. Here are the top three by market capitalization:
ApeCoin (APE)
ApeCoin (APE) is the most valuable gaming token, with a market cap of INR 177 billion.
ApeCoin is the original coin of the Bored Ape Yacht Club, a collection of non-replaceable tokens built on the Ethereum (ETH) blockchain. Third party developers have included ApeCoin in their games. For example, players of the P2E mobile game Benji Bananas earn special tokens that they can easily exchange for ApeCoin.
Decentralized Country (MANA)
Decentraland (MANA) is the native token for Decentraland, a virtual world built on the Ethereum (ETH) blockchain. Users can buy and sell digital real estate, interact with other users and even play games in Decentraland.
Players use MANA to purchase Decentraland NFTs that define virtual land parcels or to exchange them for other in-game goods and services.
MANA’s market cap is over INR 143 billion.
Sandbox (SAND)
The Sandbox is another metaverse, or digital world, running on the Ethereum blockchain. The Sandbox Tokens (SAND) facilitate various gameplay transactions, including purchasing parcels of digital land called LAND.
SAND has a market capitalization of about INR 127 billion.
How To Make Money With Crypto Gaming
Crypto gamers may see in-game rewards as small paychecks they receive for completing quests or other requirements.
Harry Turner, former hedge fund manager and founder of The Sovereign Investor, says in-game items like weapons, armor, skins and other gear can have tremendous real value.
“By completing missions and collecting NFTs, investors can generate profits from selling these items,” Turner says.
DMarket is just one example of an online marketplace for NFTs and other virtual in-game items, many of which sell for millions of dollars.
Zain Jaffer, founder and CEO of Zain Ventures, says that cryptogamers who invest early in a successful game are likely to be the biggest winners, as are investors who buy stocks.
In 2001, RuneScape players received free digital party hats as part of the game’s Christmas promotion. Twenty years later, Jaffer says these party hats are now worth billions of in-game gold. According to Runescape, the most sought-after color of party hats has sold for 57 billion gold pieces (almost INR 5 lakh).
“It won’t be surprising if history repeats itself, and early investors in crypto gaming platforms and currencies will be the ones to reap the new real-world rewards,” says Jaffer.
Crypto Gaming Risks
Unfortunately for crypto gamers, there are numerous risks associated with crypto games and tokens at this stage.
A major risk to crypto gaming tokens is that they are subject to supply and demand dynamics related to the popularity of the game. Once players leave a game, the demand for an in-game currency can dry up completely and make the tokens worthless.
“Because these games are very new and their endurance has not yet been proven, there is no guarantee that their assets will remain valuable for long periods of time,” says Jaffer.
Turner says there are also significant risks associated with holding in-game currency.
“Market volatility can directly affect the value of your in-game assets. For example, if you hold a supply of Aurum (Crypto Raiders’ in-game currency) that you plan to use to buy virtual items, its value can drop dramatically overnight and you’ll have much less purchasing power. than you had before,” Turner says.
Since cryptocurrency is relatively new and not well regulated, criminals always try to take advantage of cryptogamers through hacks and scams. Just because a game’s underlying blockchain is secure doesn’t mean the engine or marketplace is secure. Digital wallets that store crypto gaming tokens can also be hacked or misused.
Earlier this year, hackers stole INR 49 billion in Ethereum and USD Coin (USDC) from users of the crypto game Axie Infinity. Axie Infinity is one of the most popular crypto games, peaking at over 2.7 million monthly players before the hack. In June, Axie Infinity developer Sky Mavis said it would only reimburse about a third of the crypto its users lost in the hack.
Axie Infinity is considered the most popular play-to-earn game.
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