What could be better than making money doing what you love? For example, playing video games? A new direction in blockchain technology — GameFi — will make this dream come true. Participants of the Binance Blockchain Week 2022 in Dubai discussed how the GameFi industry came to be and what is necessary to popularise it.
What Is GameFi and How Does It Work?
GameFi consists of two words: game and finance. The core idea is that users can make a profit by gaining experience within a certain game. How? By incorporating the use of blockchain and cryptocurrencies into the game concept itself.
All game components (characters, artefacts, weapons, armour, etc.) are created in the form of NFTs. They become digital assets and can be bought and sold both in the game itself and beyond. Which cryptocurrency gets used for payments is determined by the game’s creators.
Players can sell those NFTs for crypto or fiat money, with monthly income ranging anywhere from $20 to $2000. It all depends on the game’s popularity, which increases the price of internal game assets.
Axie Infinity and the Play-to-Earn Model
The most successful GameFi model presented so far has been Axie Infinity. In January 2022, blockchain transactions related to this game amounted to $564M.
Upon entering the game, players pay about $700 to buy the main characters, who will make money for them in the future. Gamers and their characters participate in battles and complete quests to gain more in-game assets and NFTs. They can also breed their own little monsters for a higher income. This simple scheme became extremely popular, attracting millions of people across the world.
GameFi gained momentum in 2021 when more and more companies began to integrate DeFi and NFTs into their projects.
Maurizio Barbieri, CCO of Liberty Guild Games, described GameFi development and its popularity in the following way: “In fact, this is already a new type of business. The GameFi sector has been growing really fast in recent months. More and more companies are focusing on their communities and trying to attract their attention. If you earn tokens in a game that’s growing in popularity, these tokens can grow in price, and you can get rich simply by playing your favourite game at home.”
He did not mention the community by accident. The value of game currency and the player earnings directly depend on it.
GameFi Adoption Barriers
This raises the question of how to explain to people that this is a very real opportunity to earn money and not another scam scheme.
Athena Yu, Deputy Head of NFT at Binance, talked about how to solve this problem: “I think it’s important to give people a clear understanding of why NFTs are important to them, and what benefits can be gained from having them. People have fears that their data will be stolen and they will lose assets. Therefore, industry leaders should provide this security.”
Audience mood is vital for many projects, especially when it comes to new technologies. Companies working in the field of GameFi should strive for maximum transparency of their strategies, as well as enlighten their users about how their projects work.
Chase Guo, Co-Founder of ChapterX, highlighted another angle of this problem: “For many people, it is not clear how game mechanics work. They don’t understand how to exchange fiat money for cryptocurrency and why they should buy tokens. We are faced with the problem that people are not ready to switch to cryptocurrency en masse now; it is terra incognita for them. The situation becomes even more complicated when we start talking about blockchain games and the fact that you can earn money there. Misunderstanding is always a cause for fear”.
As such, one of the priorities in GameFi now is working with the audience, increasing trust, and creating cohesive communities that can act as ambassadors for this field.
Conclusion
Summing up, we can say that this sector faces several fundamental issues. Solving them will allow more people to fully understand and immerse themselves in the fascinating world of gaming finance.
Now it is important not only to talk about the novelty and hype of it, but also that GameFi will be able to improve the entertainment industry in the future. So far, most of the focus has only been on the entertainment part, which causes distrust.
This is the conclusion that the majority of the Binance Blockchain Week’s participants came to. They emphasised that GameFi representatives should demonstrate their willingness to solve technical issues and strengthen the security of their projects.
Are they ready for this? Soon, we will see.
