A fusion of the words “game” and “finance,” GameFi is the financialization of video gaming on blockchain networks designed to merge the fun of games with the financialization of in-game economies.
All objects in these types of games are expressed as NFTs — digital tokens used to prove ownership of scarce intangible items such as plots of land, avatars, costumes, weapons, and gold bars.
Once players find and accrue these items through gameplay, many have the option to trade these with others in digital marketplaces for different NFTs, or sell them in exchange for cryptocurrency.
Players can increase their earning potential by dedicating time leveling up and improving their characters, depending on which game is played.
This creates monetized structures on their land that other gamers pay to use or by competing against others in tournaments.
To keep track of what every player owns, all NFTs and cryptocurrency transaction data are stored on a public blockchain.
Here are three things you need to know about the financialization of games and crypto.
Crypto games provide players verifiable ownership of virtual products for cryptocurrency which can be traded for money. Players can also trade virtual products for cryptocurrency, which can be traded for real money.
While ordinary games have mainly been about entertainment, crypto games bring entertainment with the added advantage of earning real money while playing. Each time players buy an asset, they indirectly increase the value of the game economy.
Axie Infinity, CropBytes and Gods Unchained are some of the most popular crypto games that allow players to earn money by using virtual products to achieve in-game objectives.
CropBytes has more than 80,000 users and the game gives the users ability to leverage the power of crypto to earn money through playing.
The NFT gaming space offers massive opportunities and major players are taking notice, partnering up with venture capital firms and game developers to explore and come up with ways to make money.
Major gaming companies such as Ubisoft have launched an incubation program for crypto-based games which is responsible for some of the most popular play-to-earn games on the market today, including Axie Infinity, which has more than 1.8 million daily users.
Resources such as a plot of land can be owned by anyone in the blockchain-based games. Every gamer who wins becomes both a participant and an owner.
While game types differ in their description, a recurring objective is the accumulation of resources.
Playing the game well allows one to accumulate in-game assets represented as NFTs. These can be traded on marketplaces for other cryptocurrencies, or fiat money such as U.S. dollars and disposable income.
Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?