Is playing cryptocurrencies worth your time and money
The lockdowns during Covid, when we spent a lot of time indoors, seems to have accelerated the game industry’s current rapid expansion.
Compared to 2019, £1.6 billion ($2.1 billion) more was spent on video games in the UK in 2020. People used video games as a form of indoor amusement during lockdowns, playing everything from Animal Crossing to Call of Duty.
It also wasn’t a passing trend. According to InvestGame research, the worldwide video game market expanded in 2021 as well. Private investments increased by more than three times in the first half 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 in its research is the development of blockchain-based gaming.
Through the use of a non-fungible token (NFT) market or by allowing players to earn cryptocurrency incentives through gameplay, crypto games integrate the two technologies.
The use of cryptocurrency in the gaming sector is showing signs of success.
One of the most well-known cryptogames, Axie Infinity, has generated an astounding $1.2 billion in income.
128 blockchain gaming startups will get investments in the first quarter 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 often.
Therefore, it’s becoming more crucial for gaming investors to comprehend the specifics of this industry.
But how do cryptogames operate?
Is playing cryptocurrencies worth your time and money
What is crypto gaming?
The centralization of traditional games prevents all things and experience (XP) earned from playing from being utilized in other games. Blockchain technology, which is used in cryptocurrency gambling, alters this. The usage of awards and products by players across various cryptocurrency gaming projects is now possible.
Players may also make money through cryptocurrency gambling. Players can engage in what is known as a “play-to-earn paradigm” 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 may engage in combat with their Axies to gain SLP and AXS, two cryptocurrency game tokens based on Ethereum.
This offers a completely new component to the market: the notion that gamers may 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 just players playing?
Is playing cryptocurrencies worth your time and money
Who is playing?
The number of NFT game users during the previous 30 days is tracked by Statista. The top three NFT games are Alien Worlds, Axie Infinity, and Splinterlands, with a combined monthly user base of over two million.
Despite a dearth of study 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 players are between the ages of 21 and 38, making millennials the biggest age group. 55% of millennial bitcoin owners were gamers prior to doing so.
22.6 million gamers in Asia-Pacific, a key region in this market, are cryptocurrency owners. 5.9 million gamers in Europe and 5.8 million in the Middle East and Africa came after this. Unexpectedly, North America has the fewest cryptocurrency players, with only just 3.3 million.
This information closely resembles the larger gaming market. According to Statista, Asia-Pacific nations lead the top five gaming markets in terms of revenue.
The CEO and creator of the blockchain game production studio 0xGames, which has produced a number of games, is Sergey Kopov. He thinks that the 3.24 billion gamers globally would show more interest in crypto gaming.
“Crypto games mostly attract not gamers, but individuals who want to earn money on this new buzz,” said Kopov to Currency.com. But this is only a passing phase. Crypto games will soon be engaging enough to compete with traditional games on the gaming field, allowing them to draw players in.
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 money to be gained by investing time in these sites.
The documentary also questioned the notion of cryptocurrency gamers. It included an older married couple, a mother, a fresh college graduate, a cab driver, and several other crypto players.
Is playing cryptocurrencies worth your time and money
Successful 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 established the video game startup Sky Mavis, which unveiled the Ethereum-based game. Given that the firm had just just secured $152 million in venture investment from cryptocurrency investors in October 2021, Sky Mavis’ valuation as of December 2021 was a stunning 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 gaming cryptocurrencies by market capitalization, below Decentraland and The Sandbox. Alien Worlds (TLM), at a price 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 may buy, trade, and level up cards in the game. Since he was ten years old, Matthew Rosen, the publisher’s creator and chief technology 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 capitalization is lower, and as a result, CoinMarketCap now puts it at position 408, whereas TLM is at position 291 in the ranking.
Is playing cryptocurrencies worth your time and money
How does crypto gaming work?
Many of the components seen in crypto alternatives are already present in traditional games. In-game money may be purchased using fiat cash, and players can also level up their characters 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 is a Splinterlands creature card or a purple Axie with green thorns.
Players are drawn to gaming because it may be profitable. Pay-to-play models, where players must spend money to get the most out 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 accomplishes the exact opposite, allowing users to benefit 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.
What are the 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 must spend at least $300 before you can begin earning. The ordinary player may be turned off by this high level of investment as the majority of conventional games do not cost more than $100.
You run the risk of losing your NFTs and tokens. This may occur if you attempt to transmit them 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 breach that resulted in the loss of more than $600 million from its holdings.
Compared to cryptocurrencies, there is an even greater danger 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 assaults due to volatility. Like non-gaming cryptocurrencies, crypto game tokens are subject to market fluctuations, although certain games include withdrawal restrictions. This implies that gamers might not have time to cut their losses if a cryptocurrency gaming coin, like AXS, drops in value (it is presently 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 players may pay 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 a research. Loot boxes have been adopted by cryptogames 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.
The future of crypto 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 in: Framework Ventures recently unveiled a $400 million fund for Web 3.0 games, while Andreessen Horowitz just announced a new $600 million fund.
Both Solana and Polygon have started investing 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 investors exert pressure on them.
According to 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 only the first three months of 2022.
The blockchain gaming sector, however, suffered a severe setback in October 2021 when Steam, the largest PC game distributor in the world, stated it would not host blockchain-based games because it does not let products with real-world value on its platform. Cryptographic games may suffer greatly if Steam stops supporting them since they would lose access to a market that is the leader in its field and draws 62.6 million daily users.
Epic Games, the distributor, is employing a different strategy. Tim Sweeney, the CEO of Epic, stated that the company is glad to collaborate with early creators on their blockchain-based games even if it won’t 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 users access to the market.
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