What could be better than making money doing what you love? For example, playing video games. A new direction in blockchain technology – GameFi, will make this dream come true. Participants of the Binance Blockchain Week 2022 in Dubai discussed how the world came to this direction and what tasks are to be solved in this area to popularise it.
GameFi consists of two words: game and finance. The essential idea is that users can make a profit by gaining experience within a certain game. It became possible since the game concept includes the use of blockchain technologies and cryptocurrencies.
All game components like characters, artefacts, weapons and armour are created in the form of NFTs. They become digital assets that can be bought and sold in the game itself and beyond. Cryptocurrency used for payments within the project is determined by its creators. Players can then sell the resulting digital assets for cryptocurrencies or fiat money. At the same time, the income of players can range from $20 to $2000 per month. It depends on the game`s popularity which increases the price of internal game assets.
The most successful GameFi model was presented in the Axie Infinity game, in which transactions in the blockchain amounted to $564M in January 2022. Entering the game players should pay about $700 to buy the main characters in the game who will make money for players in the future. Gamers and their characters participate in battles and complete the quests to gain more tokens. They can also breed their little monsters to have a bigger income. This simple scheme became extremely popular attracting millions of people across the world.
GameFi gained momentum in 2021 when more and more companies began to integrate DeFi and NFTs into their projects. Maurizio Barbieri, Chief Commercial Officer of Liberty Guild Games, described GameFi development and its popularity in the following way: “In fact, this is already a new type of business. The GameFi sector has been growing really fast in recent months. More and more companies are focusing on their communities and trying to attract their attention. For example, if you earn tokens in a game that is growing in popularity, these tokens can grow in price, and you can get rich simply by playing your favourite game at home”. He did not mention community by accident, because the value of the game currency and the earnings of players directly depend on it.
This raises the question of how to explain to people that this is a very real opportunity to earn money and not another scam scheme. Athena Yu, Deputy Head of NFT at Binance, talked about how to solve this problem: “I think it’s important to give people a clear understanding of why NFTs are important to them, what benefits they get from having it. People have fears that their data will be stolen and they will lose assets. Therefore, industry leaders should provide this security”. Audience mood is vital for many projects, especially when it comes to new technologies. Companies working in the field of GameFi should strive for maximum transparency of their strategies, as well as enlighten their users about how their project works.
Chase Guo, Co-Founder of ChapterX, highlighted another angle of this problem: “For many people, it is not clear how game mechanics work. They don’t understand how to exchange fiat money for cryptocurrency and why they should buy tokens. We are faced with the problem that people are not ready to switch to cryptocurrency en masse now, it is terra incognita for them. The situation becomes even more complicated when we start talking about blockchain games and the fact that you can earn money there. Misunderstanding is always a cause for fear”. Thus, it is worth mentioning that one of the priorities in GameFi now is working with the audience, increasing trust, and creating cohesive communities that would be ambassadors of this sphere.
Summing up, we can say that the sector faces several fundamental issues, having solved which we will be able to fully understand and immerse ourselves in the fascinating world of gaming finance. Now it is important not only to talk about the novelty and hype of it but also that this field will be able to improve the entertainment industry in the future. So far, we focus only on the entertainment part, which causes distrust in GameFi. The majority of the Binance Blockchain Week`s participants came to this conclusion, emphasising that industry representatives should demonstrate their willingness to solve technical issues and strengthen the security of their projects. Are they ready for this? We’ll see it soon.