"How to make millions with crypto games", "Earn money with blockchain games", "Get paid for gaming": YouTube videos with such titles have been found more often in the past weeks and months. The boom in cryptocurrencies like Bitcoin and Ether has now also reached the gaming industry.
The developers sense great potential, the players hope for big money and the critics are already warning of a big bubble. One thing is certain: crypto and blockchain games are on the rise - and they are already dividing the industry.
In many traditional video games, especially online games such as Fortnite or League of Legends, players can buy various objects, so-called items or assets, or are given them as gifts during the game. These are mostly cosmetic items such as avatars or new virtual clothes and equipment for the game characters, with which you can optically stand out from other players, but which do not otherwise bring any advantage. Some of these objects can be resold for a few cents or euros, as in Counter-Strike or Dota 2 , but usually they have little value outside of the game.
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It looks different in cryptogames. The assets there often have special properties that make them stronger or weaker - and thus more or less valuable. And these games use blockchain technology to publicly document all objects and their owners and at the same time enable them to sell them. It is not just the properties but also the rarity that determine the value of an asset: Depending on the game, several hundred, sometimes even tens of thousands of euros are currently due for individual items. Everyone therefore wants to earn items that are as rare as possible so that they can then be sold at a profit. Some games even reward players with cryptocurrency if they just log in regularly and complete daily missions.
As a result, a new term is making the rounds, namely play to earn: play to make money. That sounds tempting - but is it really that simple?
Blockchain games and the hope of passive income
For Mirco Recksiek, it's no surprise that cryptogames are hot now, even though these types of games have been around for a number of years. Recksiek previously advised companies on the subject of blockchain and now operates the website and the YouTube channel of the same name Bitcoin2Go with a small team. For the expert, the upswing is primarily related to two things: with Facebook, because its vision of a metaverse is closely linked to video game worlds and the technology industry is currently particularly interested in how these worlds can be marketed.
And with so-called NFTs, short for non-fungible tokens. The proof of ownership for these unique, digital objectsnot only shook up the art scene this year. "NFTs came up with the idea that the assets you get in games really belong to you and can therefore be sold again," says Recksiek.
One of the most famous blockchain games with more than two million active players is currently the Axie Infinity from Vietnam. The players can buy and breed virtual creatures based on Pokemon the Axies, and have them compete against other players. Each Axie has special properties, its own genes and is stored as an NFT on the blockchain. Whoever wins duels against other players and their Axies receives a small sum of the underlying crypto currency Small Love Potions (SLP). In addition, new Axies can be bred, which, if they have good genes, can be sold for a lot of money. The most expensive Axie was worth the equivalent of more than $ 800,000 at the time of sale.
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Meanwhile, there are numerous reports according to which full-time, especially in Southeast Asia, such as in the Philippines, people Axie Infinity play. Hoping to earn more money with it than with their previous jobs. In fact, the game can be worthwhile for some players, as a recent study by the Naavik consultancy found out. However, the average daily payouts have fallen below the minimum wage in the Philippines since August, it said. This suggests that it is not that easy to earn big money, at least not in the long run and certainly not for all gamblers.
"In addition, with many crypto games you first have to invest, and sometimes quite a bit," says Mirco Recksiek. This is also the case with Axie Infinity: To get started you need three Axies, which you have to purchase in advance. For three reasonably competitive creatures you currently have to pay up to 1,000 euros. Because many players cannot afford that, there is the possibility of borrowing Axies from other players in the form of a "scholarship".
Part of the income that these Axies then generate is distributed to the actual owner. "It's a wild business model," says Recksiek, "but also smart: Because basically anyone can play with such guild systems. And once you are successful, you can basically let your assets work for you." Passive income is a term that comes up again and again in this context and attracts many players.
Even in the successful digital soccer card collecting game Sorare , you first have to buy yourself a reasonably good soccer team. The performance of the footballers - and thus their ticket value - is reevaluated after each game day based on their actual performance on the pitch. If your team does well, you will be rewarded with new cards that you can then sell again. The rarer the card and the better the player, the more it is worth. There are dozens of tutorials and experience reports on the Internet and on YouTube that explain how you can supposedly get rich with digital trading cards - and which mistakes you should avoid as a beginner.
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Sometimes the videos on blockchain games seem like presentations by investment advisors and hobby investors who prefer to scroll through Excel spreadsheets instead of picking up the gamepad. Investments and income should be offset against each other, always taking into account the transfer fees that are due for every transaction on a blockchain. With some games, the income must first be exchanged for more common crypto currencies in order to be able to pay them out at all. And the fluctuations in the exchange rate of cryptocurrencies should also be kept in mind, as well as the income tax that may be incurred on income from NFTs . That doesn't really sound like a relaxing evening on the couch.
The developers of games like Axie Infinity finance themselves either by earning a percentage of each resale, or by regularly bringing new, limited and therefore coveted objects onto the market. It's a business model that is primarily based on growth. Only when new players keep joining will the demand for assets like the Axies remain high. Critics call these types of games so as snowball system e and warn of a bubble that could burst quickly if the player numbers have reached a plateau.
Blockchain Games: Bubble or Innovation?
"The great focus on profit and income is definitely still a negative point at the moment," says Recksiek, who himself is active in games like Sorare . He personally only plays games that are fun for him in terms of the game principle. "We are still in the discovery phase when it comes to cryptogames. There is currently a gold rush atmosphere, which is characterized by extreme overpricing of assets." Recksiek suspects that the majority of the blockchain games, which are currently released almost every week, will also disappear again. What remained are those providers who also offer an interesting gaming experience over the long term.
According to the expert, however, innovations are emerging in the current phase that help both with the acceptance of blockchain and crypto currencies and that could have a lasting impact on the gaming industry. Just as the free-to-play model , which was also heavily criticized at first, was established around ten years ago, in which games are offered free of charge but are financed through in-game purchases, games based on NFTs and blockchains could also become a new business model establish. Especially when one day the assets can be used across different games and game worlds, as the metaverse provides. Recksiek believes that the digital property market would become much more important in this case.
Not everyone is that optimistic. Max Nichols, designer at the US game studio Bungie, recently explained on Twitter why NFTs in video games are problematic, apart from the high energy consumption of many blockchains. There is already the opportunity to sell exclusive items from games, including via the Steam Marketplace. The idea that certain objects have a special value and unique owner does not depend on blockchain technology, but can be solved with ordinary databases. And last but not least, in his opinion, it is a play-to-earn-Business model always has a negative impact on game design. In this case, you have to create an extrinsic reward in addition to the intrinsic fun of playing, which in turn is detrimental to the fun of the game. To put it bluntly: As soon as it comes to the money, the fun stops.
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Within the games industry, people are also still unsure what to think of the influences of the crypto scene. On the one hand, the investors bring a lot of capital with them. For Sorare now advertise football stars like Antoine Griezmann and founded in 2019 French start-up comes after the latest round of financing on an assessment of 4.3 billion US dollars. Sky Mavis, the studio behind Axie Infinity, moves in similar spheres . With such sums of money it is understandable that many studios are at least keeping the option open to develop blockchain games soon. The legendary game designer Peter Molyneux has just announced with his game Legacy To want to create the "world's first blockchain business simulation".
On the other hand, observers warn of artificially fueled hype and dodgy actors, most recently in the case of an alleged crypto game for the hit series Squid Game , in which the operators use the money collected from the players to set themselves apart. The US company Valve, which operates the world's largest gaming platform Steam, introduced a new guideline just a few weeks ago , which in principle prohibits "applications based on blockchain technology that issue cryptocurrencies or NFTs or enable them to be exchanged". The competition from Ubisoft seems to be more open; Under the name Quartz , the studio is now introducing NFTs into the shooter Ghost Recon Breakpointone. And Epic Games is not completely averse to cryptogames - as long as they are in line with financial supervision and have a clear age limit and transparent terms of use, wrote CEO Tim Sweeney in mid-October.
"A certain regulation is certainly missing," says Mirco Recksiek from Bitcoin2Go, "but politics, especially in this country, is known to lag behind both crypto and video game developments." It is true that the industry can regulate itself to a certain extent and rely on the individual responsibility of those involved. But especially with aspects such as gambling addiction, which could possibly be exacerbated by cryptogames, education and preventive measures are required.
The expert is certain of one thing: crypto and blockchain games will no longer disappear. The gaming scene is too important to increase the acceptance of crypto currencies. NFTs are too attractive to regulate possessions in an upcoming metaverse. And in the best case scenario, next-generation cryptogames are no longer primarily about making money. But, in a very classic way, about having fun in the game.
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