The next phase of crypto is Cryptocurrency Gaming. Attract and reward is the evolving crypto business model. Play-to-earn game Axie Infinity (AXS) has clocked a fully diluted market cap of $35+ billion and generated $800 million in revenue in a single month, highlighting the surging popularity of games based on non-fungible tokens (NFTs). Curiosity combined with opportunities is triggering innovators to release best crypto games or cryptocurrency earning games to the marketplace. Let us take deep dive to uncover the next-big crypto opportunity.

Video games have considerably evolved in the past few decades. In fact, the global gaming market, which was valued at USD 173 billion in 2020, is predicted to reach USD 314 billion by 2026, with a CAGR of 9.64% between 2021 and 2026. Some of the biggest video gaming companies include Sony, Tencent, Nintendo, and Microsoft, each having gaming revenue of over 10 billion dollars. Sony tops the list, with a massive revenue of about 25 billion dollars. Electronic Arts (EA Games), Sega Games, Konami Holdings Corporations and Gameloft, are some of the most prominent gaming studios in the world.

Traditional gaming industry is taking a fundamental shift with crypto and blockchain technologies. First we built DeFi. Then we layered on NFTs. And upon those things, we can build crypto-gaming. The evolution of the gaming can be pictured as,

• Gaming 1.0 – Pay to Play (One time purchase)
• Gaming 2.0 – Freemium (Fortnite)
• Gaming 3.0 – Play to Earn

Have you noticed? The shift from attract and extract to attract and reward?

Centralized institutions create lucrative incentives for people to use their products – great UX, sign-up bonuses, better technology. But once our guards are down the profit-seeking cranks up. They create barriers to exit and entrap users in a walled garden. Then they extract maximal value from our coffers. The gaming industry congregated around the same model, which means it’s just another industry that crypto can disrupt.

Crypto doesn’t do well with closed platforms. Composability and permissionless execution are fundamental values that we expect to see from the protocols we use.

In order to retain users, protocols cannot close their borders and force us to play ball. Instead, they must find proactive ways to keep users happy.

Cryptocurrency Gaming: The Next Evolution

Crypto gaming is being referred as GameFi. Crypto games are video games that run on a cryptocurrency network and include a completely or partially distributed ledger architecture, providing players verifiable ownership over the virtual products contained in the games. GameFi is one of the hottest new trends to emerge from the crypto industry, combining decentralized finance (DeFi) and non-fungible tokens (NFTs) with blockchain-based online games.

Play to earn, play and earn, blockchain gaming. The names might change slightly depending on who you talk to, but the integral concept is the same. Gaming’s status quo is shifting, and the incoming paradigm is one that rewards players for spending time engaging with a game and its platform. 

Moreover, the birth of L2 solutions is no longer just hopium for the masses. Yes, it’s provided a scalable way to interact with the Ethereum ecosystem, but more importantly for this particular write-up, it’s empowered play to earn gaming to become a reality.

Take an important pillar of traditional gaming enterprises: microtransactions. Microtransactions on mainnet are a painful experience; a typical $4.99 microtransaction quickly becomes a $34.99 transaction when gas fees are considered.

It simply doesn’t make sense to transact. Traditional gaming models just don’t work in this environment. 

But that’s starting to change. 

Layer 2 Solutions Are Fueling Gaming 3.0

Whether it’s Immutable X, Polygon, Optimism – whatever your flavor – each offers a solution to the exorbitant gas fees that plague Ethereum. Better yet, the implementation of these solutions finally allows for transactions of all value (from little to large) to be possible. Play to earn games can finally thrive. 

But you may ask, what do microtransactions have to do with play to earn games? I’ll get into that, but first, we have to understand how the world of traditional gaming works.

Nuances of Traditional Gaming

Pay to win or freemium. These are both phrases you’ve likely heard if you’ve ever spent time gaming. In 2020, over $54 billion was spent on in-game assets. That’s a lot of money for people to put into cosmetics, accessories, or other assets that the users themselves do not own.

If you read the minuscule print in the massive terms and conditions of any large gaming corporation, you’ll spot lines that explain that the assets are only being licensed to the consumer. The company can take anything you purchased or acquired through play at its whim. 

This is where the combination of crypto and gaming comes in to save the day.

Building on Ethereum gives real ownership to its users. If you purchase an NFT, it is truly yours to do as you please. Non-custodial asset ownership is a mind-blowingly recent concept that’s genuinely making the masses question the hows and whys of the status quo. Play to earn gaming combines the entertainment value of traditional gaming with the ownership and freedom that blockchains unlock. 

When you put these two things together, you have a powerhouse that is primed to introduce the unlimited potential of decentralized applications to the world. 

The Catalysts for Play to Earn

Play to earn gaming is not dissimilar to proof of work. The ‘work’ in this instance comes from engaging with the game and its ecosystems, an action that creates value for both the product and its users. Put simply, do some ‘work’ (engage with the game), and you get rewarded for it. 

Crypto assets are composable, meaning that the value earned as a reward can be kept inside the game’s ecosystem or extracted out of it as well. As an example, you can have a badass Gods Unchained card that wreaks havoc in the meta and brings you all the glory, thereby earning you more rewards, or you can take that card and go sell it on a third-party marketplace for other assets like ETH! 

So, why has play to earn suddenly picked up steam? There are a few compounding factors. First, the increasing mainstream awareness of crypto has meant that more people are willing to dip their toes into the space. We saw this with DeFi summer 2020 and the NFT boom. 

The second, the relentless menace that is COVID. On a not-seen-in-our-lifetime scale, there was a worldwide loss in employment and stability.  People lost their jobs. They were looking for new ways to earn money. The possibility that they could earn money from playing a game was unfathomable, and as the concept began to gain speed, and now we’re seeing more and more adoption in the space. 

The third (as I mentioned above) comes from the constraints of L1 having strangled play to earn gaming for a while now. Only very recently did scalable L2 solutions become provably functional, allowing people to truly experience what it’s like to extract value from a game. (A bit of shameless boasting here: but I’m pretty thrilled that Immutable X was able to lead the charge here, being the first of these to launch secured by Ethereum L1.)

Crypto Gaming Business Model

Blockchain gaming is now a primary force driving cryptocurrency adoption in 2021. Crypto innovators like YGG is at the forefront of this movement, with the YGG DAO laying the foundation for a system that positively impacts the lives of millions of motivated individuals. Crypto gaming business models have the following in common:

• They focus on NFTs.
• Players own their in-game assets and can operate, loan, trade or sell them.
• The games have a strong yield component so players can generate income.
• They have a guild, team, or league component to incentivize group effort.

The prospect of earning yield from playing video games is an alluring idea that has expanded to include more than just the traditional esports industry. Especially in areas of the world that are disadvantaged in terms of access to income-earning opportunities, the play-to-earn movement represents not just a lifeline but a revolutionary new model of employment.

Ways To Earn From Cryptocurrency Gaming

Workers in the Global South are making a living playing the blockchain game Axie Infinity. Part Pokémon Go, part NFT economy, the online game has replaced regular jobs for many players

With all these wheels in motion, crypto gaming is kicking into gear – full steam ahead. But how and where can you play games and earn value? This answer is of course reliant on the particular game in question, but there are some common denominators across the board. 

1. In-game Assets

Traditional games give players the ability to earn or purchase in-game items, but these are almost always trapped in the user’s account. The NFT sector has, in recent times, made its way into the multi-billion dollar gaming industry, leading to the creation of – NFT Games. Some of these games actually reward players with valuable crypto-assets. These games have tokenized in-game assets allowing players to collect them as non-fungible tokens (NFTs). In order to help gamers make money for playing, NFT games allows players to accumulate and trade playable characters, weapons, vehicles and other in-game assets as NFTs. Depending on the rules of each game, the players can either sell their NFTs for profits, or accumulate them until they yield crypto rewards from the game without having to let go of their assets.

The difference with play to earn games is that players can trade, sell, and use these items in a noncustodial way. Let’s say you breed a ridiculously rare Axie, or pull a super-rare Gods Unchained card – a play to earn user has the non-custodial asset ownership which empowers them to say, “Hey, I’m going to sell this on a marketplace and put the earnings into my wallet of choice.” Boom. You just made money from gaming. 

2. Game Tokenization

We’re also seeing a rise in gaming tokens – GODS, AXS, GHST, MANA, ILV, etc. These tokens are all designed to bolster their game’s economy and simultaneously reward their users for their engagement. For the most part, you can earn these tokens in-game.

Then whether it’s an in-game utility that empowers users to create higher-value assets, staking rewards, or external composability, these tokens are yet another way players can extract value from their time spent playing the game. 

Look at the forge in Gods Unchained for example: not only does the GODS token have external composability, but it will also be used in-game, in tandem with the flux currency to fuse non-NFT assets into NFTs. These assets can then be taken to be sold, traded, and bought between users. 

3. Gaming Content & Education

This one is not directly from the game, but it’s an incredibly valuable piece of the gaming economy. People need to understand how to use these games. Whether it’s educating people on how to create wallets, what signing transactions actually means, or figuring out the best way to explain decentralized wallet ownership to people who’ve never dabbled in the space before, there are common obstacles.

For an average gamer with no experience in crypto, the whole thing might come across as downright terrifying. Everyone in the space needs to continue to work to remove these roadblocks to adoption so that everyone can experience the benefits crypto games have to offer. There’s a massive opportunity to help the next wave of users onboard into this emerging economy. Who knows…you could be the next PewDiePie. 

The Tip of the Gaming Iceberg

With all of this excitement above, I do want to touch on one point: I truly believe that we’re only brushing the surface of the potential of play to earn gaming. 

It’s so early in its implementation, and I believe that the success we’re seeing across the industry now is only a tiny slice of what’s to come. I’ll bring up the NFT boom example again: we saw people scoffing at the idea of digital art, music, assets, but just as the laughing began, interest started to skyrocket. 

As people came to understand the inherent worth in NFTs and true asset ownership, there was not only crypto-industry interest, but it broke into the mainstream world. 

The day I saw Beeple NFT news on CNN was the day I knew that the world as we know it is changing and that it’s up only from here. I truly believe that the same thing is relevant with crypto gaming: L2s have just started functioning, so we’re at the beginning of what’s going to be a complete gamechanger to the gaming industry. Like all new technology, there will be initial waves of resistance, but once the mainstream public is aware of the scalable offerings, through news or marketing or just a really fun game, I believe the narrative will change and mass adoption will begin. 

A huge reason I left the traditional gaming industry behind to pursue a career in play to earn gaming was that I truly believe in the importance of bringing the accessible earning potential of crypto to millions, in a familiar, entertaining format. With my gaming industry experience, I genuinely can’t wait to be able to reverse the current status quo and watch gamers have that penny-dropping moment of “I can actually own my assets, I can buy/sell/trade without the overlords of the corporations watching my every move, and I can earn real-world value just by playing a game – something that I was going to be doing anyway?!” 

Seeing that moment of realization in even a small proportion of the population that we have now has hardened my resolve. I want to make sure that this concept goes worldwide. 

The Future of Cryptocurrency Gaming

A key question that arise frequently these days is “What will play to earn gaming look like in the next year”? 

Crypto Gaming “GameFi” has already gained significant traction, with the collective market capitalization of top games breaking $14 billion. But key opinion leaders in the crypto industry believe there’s a lot more ahead for this new sector, increasing cryptocurrency adoption. GameFi is going to be the next big thing that makes the DeFi, NFT and the larger crypto space easy to understand and be involved in.

Crypto startups and gaming companies are already racing to capitalize on this explosive trend, with a long list of new games preparing to launch over the next several months, including:

• Star Atlas
• Ember Sword
• Guild of Guardians
• The Sandbox
• Dr Who: World’s Apart

There are also entire gaming platforms being built, such as MOBOX, which allows people to create their own interoperable games and NFTs. It also integrates DeFi elements like liquidity pools and staking where gamers can generate an income from their assets which can be used to purchase upgrades or generate keys to unlock chests containing new NFTs.

The GameFi universe does not seem to be slowing down any time soon. With new investment and GameFi-specific funds pouring in, the potential of the sector is endless.

Play to earn gaming is here, and it’s here to stay.

Related article: Win With Non Fungible Tokens (NFTs)

Disclaimer: The information provided on this page does not constitute investment advice, financial advice, trading advice, or any other sort of advice and it should not be treated as such. This content is the opinion of a third party and this site does not recommend that any specific cryptocurrency should be bought, sold, or held, or that any crypto investment should be made. The Crypto market is high risk, with high-risk and unproven projects. Readers should do their own research and consult a professional financial advisor before making any investment decisions.

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