Play-to-earn: Is professional online crypto gaming worth it?

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  Quantumrun Foresight
• November 11, 2022

The gaming industry has evolved from its humble beginnings as a niche form of entertainment into a multibillion-dollar industry. Play-to-earn games are video games that harness cryptocurrency to reward players. And with the rise of play-to-earn games, people can make money by playing their favorite games. While this unique gaming innovation offers some benefits, it also comes with its share of risks.

Play-to-earn context

According to the World Economic Forum, almost 3 billion people globally play video games, leading to opportunities within the sector for game developers and players. The best of these gamers are treated as athletes: they work for pay as team members, earn prize money at championships, and have lucrative sponsorship deals. Others utilize live streams of themselves to make money by playing games on viewership platforms like Twitch or YouTube Gaming. As of 2022, the video game industry is worth $336 billion USD, thanks to software, hardware, and intellectual property sales. According to BITKRAFT Ventures, gaming has become the largest media category globally, surpassing linear TV, on-demand entertainment, film, and music. 

Blockchain technology and NFTs are the foundation for earning real money in play-to-earn games. In virtual environments like the metaverse (blockchain digital communities), NFTs can take many forms: characters, items, land, decorative personalization options such as digital clothing, and more. People may trade the game’s most valuable goods for real money after collecting enough “treasures.” The genuinely imaginative aspects of the play-to-earn model are its decentralized security and independence. Instead of relying on publishers’ or other third parties’ permissions or regulations, gamers may freely sell game assets from play-to-earn games on marketplaces inside and outside the game.

Disruptive impact

One of the advantages of play-to-earn games is that players can use their gaming skills and knowledge to earn a living. This possibility can be beneficial for gamers who are not interested in traditional jobs or struggling to find work. In emerging economies like the Philippines and Venezuela, play-to-earn gaming became very popular during the COVID-19 pandemic, where many lost their jobs or businesses.

However, there is a dark side to the play-to-earn industry. An example is the Axie Infinity fiasco, which led to debt and mental health issues among its players. Axie Infinity is a crypto-based game similar to Pokémon, where cartoon monsters (Axies) battle against each other to earn coins. In addition, players can sell their Axie or breed more valuable monsters and make in-game money called Smooth Love Potion (SLP), which may be exchanged for various cryptocurrencies. The game was massively successful in the Philippines, which comprised about 40 percent of the player base. However, by 2022, the crypto market value bottomed out, making the coins earned in the game worthless. In addition, the game’s payment gateway was hacked, stealing over $600 million USD, two-thirds of which were from the players themselves.

Implications of play-to-earn

Wider implications of play-to-earn may include: 

• Some governments enacting laws to protect and reduce debt-inducing games.
• Increased pressure for play-to-earn platforms to be regulated or restricted to prevent young people from becoming addicted to them.
• More investors and blockchain companies investing in the development of crypto-based games.
• The metaverse increasingly promoting play-to-earn gaming as a primary “job” to lure potential users.
• Increased payment gateway platforms to cater to the expanding play-to-earn market, including open banking application programming interfaces.
• Cybercriminals actively hacking play-to-earn businesses to steal funds. 
• More investors funding teams of players from developing countries to engage in play-to-earn schemes. This trend may lead to increased debt and game addiction among players.

Questions to comment on

• If you participate in play-to-earn platforms, what is your experience so far?
• How else can players’ funds be protected on these platforms?