What is crypto gaming and how can you make money with it?

Crypto gaming is not a clearly defined term
Gamers can generate income through cryptocurrencies or NFTs
Also opportunities for investors

According to a study by DappRadar and the Blockchain Game Alliance, blockchain gaming has seen growth of 2,000 percent in 2021. But blockchain gaming – like crypto gaming – is not a clearly defined term, as it encompasses numerous crypto activities that take place in the gaming sector.

Earn cryptocurrencies through gaming

One of the ways to tie both worlds together is by being able to earn cryptocurrencies by playing video games. So-called Play 2 Earn games have been making it possible for gamers to earn money with their virtual successes for some time now. In the rarest of cases, however, gamers are paid in cryptocurrencies – at least not without first making a corresponding investment in digital tokens themselves.

One of the most famous games in this segment is Axie Infinity. The game has a similar gaming concept to Pokmon & Co. By acquiring virtual creatures, so-called Axies, which can be raised and bred, gamers can acquire, raise and breed virtual creatures (Axies) and use them in battles against other players. You can then earn money by selling rare Axies, for example.

Since the number of mating possibilities per Axie is limited and additional in-game items are required for breeding, the income of an Axie Infinity player also depends on luck and additional personal investments. There is also the principle of supply and demand. How many other players are willing to put on the table for a virtual creature depends on various factors that cannot be reliably priced in. The price fluctuations of the in-game currencies AXS and SLP also make it difficult for players to reliably generate income. In principle, however, the system works: If you sell a rare Axie for more money than you have invested yourself, you can exchange the proceeds for other cryptocurrencies or Fiat money and thus generate income.

Make money with gaming NFTs

Non-fungible tokens, NFTs, have also recently found their way into the gaming industry. NFTs ensure owners ownership of specific virtual items by serving as certificates of authenticity and non-interchangeability of the item. This opens up extensive opportunities in the gaming segment, which many game developers and publishers are already actively exploiting.

Gamers who have special items in the game receive proof of ownership on the blockchain and can collect, exchange or resell the item in this way. This concept is already being used in games that have reached out to the Metaverse, with well-known pioneers including Decentraland and Sandbox, and Axie Infinity also belongs in this category. In this video game, players can purchase virtual properties and design them virtually according to their wishes. In addition, some avatars can be equipped with special items. Here, too, the initial investment of equity is necessary, because the NFTs usually have to buy players before they can be resold.

Large game developers such as Electronic Arts (EA) and Ubisoft have also announced that they want to develop NFT games. At the end of 2021, EA boss Andrew Wilson even said that NFTs were “an important part of our future”. However, game developers also benefit financially from the introduction of NFTs, as a certain percentage of all sales should flow into their pockets. Gamers, who are considered a generous target group anyway, would not only benefit from the possibility of trading the items they have acquired, but could also benefit from the concept through the fact that the design of the ingame environment, the avatar, etc. could be unique Gaming NFTs to be persuaded.

Criticism of NFTs does not wear off

But by no means all experts and representatives of the gaming community rate the latest developments in the gaming sector positively. Concerns about the environmental aspect are raised again and again. Since NFTs are based on cryptocurrencies, the question of the high power consumption associated with such projects is particularly relevant. Crypto transactions leave a clear carbon footprint, and the additional energy consumption runs counter to the desire for climate neutrality.

Another point of criticism is the evaluation of NFTs. Since these fluctuate greatly depending on supply and demand, but have no intrinsic value themselves, unlike gold, for example, their value is often based on subjective assessment and hype built on a narrative basis. A sharp drop in price could result in disproportionate losses for the NFT owner.

In the video game segment in particular, criticism also comes from within the company: Many gamers accuse game developers and publishers of letting the creative aspect of the development of a video game take a back seat, while putting monetary aspects in the foreground. In particular, if gamers gain in-game advantages through NFTs or if the concept takes on a casino-like structure, the implementation of NFTs in video games could also deter numerous gamers.

Investor options

Nonetheless, observers are undisputed that crypto, NFTs and the blockchain will have an impact on the video games market. The entry of crypto into the gaming market has potential and generates new sources of income for game developers and gamers. But even those who do not gamble themselves can benefit from the developments that are driving the gaming industry towards a decentralized future.

Numerous metaverse currencies can also be traded on crypto exchanges apart from the associated video games. In addition, investors can also buy shares of publicly traded video game manufacturers to participate in the crypto gaming trend. In addition to Ubisoft and Take-Two Interactive, Electronic Arts and Activision Blizzard in particular are worth a look here, even if not all gaming groups have yet announced extensive initiatives in the crypto area. Activision was recently acquired by tech giant Microsoft, underscoring the US company’s ambitions in this space and also drawing investors’ attention to shares in the Windows maker.

The Facebook parent company, recently renamed Meta, also has plans in the crypto sector and is planning an extensive virtual reality world. With Facebook, WhatsApp and Instagram, where the test of NFTs was announced, the company has strong sales channels and a large potential customer group at the start.

Gaming ETFs are ideal for those who don’t want to take the risk of making a single investment or buying a Metaverse currency. The investment can be spread here, which minimizes the risk. In addition, participation in the gaming market is also possible here with little money.

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