NFTs are coming for your video games. Players, get ready

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It has all the hallmarks of a Pokemon game. You collect cartoonish creatures and use them to battle against other players. Some are rarer than others, inspiring envy in fellow trainers. But this game doesn’t run on a Nintendo console. It’s built on a blockchain. 

In Axie Infinity, players put their team of Axies against an opposing player’s team. Each Axie is represented by lines of code in a game and doubles as an NFT, a nonfungible token that represent ownership. Winning battles and going on adventures earns the player cryptocurrency called smooth love potion, or SLP, which can be sold for actual, real-world dollars. Players with two Axies can use SLP to breed more, which can then be sold to new players.

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We’re not talking about pennies here: One 22-year-old was reportedly able to buy two houses with his winnings. 

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Online games like Axie Infinity are a far cry from the AAA titles released by big game studios, but the integration of NFTs and cryptocurrencies into gaming isn’t just an indie trend. Established players in the industry like Square Enix and Sega have said they’re interested in using NFTs in upcoming titles, and Ubisoft has already integrated them into one of its key games, Ghost Recon Breakpoint. 

Blockchain technology is no longer vaporware drifting on the horizon of the video game industry. It’s here. Are blockchain-integrated games like Axie Infinity the dawn of a new gaming era, or a blip in the market that will vanish as quickly as it began? The question is as contentious as cryptocurrency itself.

Playing to earn vs. playing for fun

A novel method of determining ownership of digital property using blockchain technology, NFTs entered the cultural mainstream in 2021. As cryptocurrencies like bitcoin and ether skyrocketed to all-time highs, newly minted crypto millionaires began speculating on NFT digital art. People pay eye-popping prices to own digital pictures — think $250,000 for a colorful ape avatar — and the NFT speculation market is now at a fever pitch, with celebrities like Snoop Dogg and Ellen DeGeneres putting their names behind NFT collections.  

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Critics dismiss NFTs as an energy-intensive fad that will soon go the way of Beanie Babies, while proponents argue they’re the beginning of a cultural shift that will upend digital ownership. Whether you find NFTs compelling or absurd, or simply don’t get it at all, the video game industry is increasingly embracing them — and cryptocurrencies — as the next big thing.

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The question gaming companies are trying to work out is how to best use the tech. First there’s a soft integration, where players can own digital goods, like costumes or weapons, as NFTs instead of leasing them from merchants like Epic Games, as is currently the case. Then there’s the play-to-earn, or P2E, model, where blockchain assets that have value outside of the game, such as cryptocurrencies, are earned via gameplay.

Axie Infinity exemplifies the P2E trend, along with games like Guild of Guardians and Galaxy Fight Club. Though not all players are able to buy houses with their winnings, many report earning thousands of dollars per month. And the game’s 1 million-plus daily players have led to nearly $29 million per week in revenue for Sky Mavis, the company that owns and runs Axie Infinity. 

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Players have found different ways to earn a living off the game. Some farm SLP tokens, breed Axies and sell them to players. With the game’s patronage system, some experienced players lend out their Axies to new players and take a cut of the profits, kind of like a taxi company lending cars to drivers. Virtual land in the game can also also be sold for thousands, or even millions of dollars’ worth of cryptocurrency. 

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Yet the sustainability of the economic systems games like Axie Infinity create is up for debate. If new players stop joining there will be no one to sell Axies to, and SLP tokens will become worthless. Plus, it appears that new players have a much harder time making cash than those who joined early. To play the game you’ll need to buy a team of three Axies, which would currently cost around $150. If Axie Infinity stops making players money, critics say there’s little reason to play.

“It’s better to have a normal amount of players that you can reasonably keep interested and engaged in the game,” said Andrius Miron, who runs Gamestarter, a blockchain-based crowdfunding platform for indie games. “This is the part where I’m not super excited about Axie Infinity, because I believe their game is mostly focused on the money-making machine aspect rather than gameplay itself.”

Source:

https://www.cnet.com/features/nfts-are-coming-for-your-video-games-players-get-ready/

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