Introduction
Blockchain gaming has come a long way since the simple non-fungible token (NFT) collectibles like CryptoKitties. Today, players have the opportunity to earn income through cryptocurrency games, even if their wallets do not contain the rarest NFTs.
This concept is particularly appealing because traditional video games rarely allow players to generate real-world profits by selling digital assets. With this new "play-to-earn" model, users can now make money in the crypto space.
What Are "Play-to-Earn" Games?
"Play-to-earn" games allow players to earn ongoing cryptocurrency rewards simply through their gaming activities. While the mechanics of each game may differ, rewards typically come from staking, mining in-game currency, or generating tradable NFT items. In early blockchain games, users primarily relied on random chance to profit. However, "play-to-earn" games create an embedded economic system and business model that enables players to generate income through gameplay.
A well-known example is Axie Infinity on the Ethereum blockchain. This game combines elements of traditional video gaming with blockchain gameplay. For instance, Axie Infinity offers adventure modes, PvP battles, and tournaments, which are common formats in traditional games. The game is supported on Windows, Android, Mac OS, and iOS platforms.
How Do "Play-to-Earn" Games Work?
Categorized as GameFi due to their combination of gaming and finance, "play-to-earn" games offer different economic incentives to attract players and encourage ongoing progress. As mentioned earlier, players typically earn income through two main avenues, which can also present challenges:
Earning in-game cryptocurrency: For example, in Axie Infinity, players can earn Smooth Love Potion (SLP) by completing daily tasks or battling monsters and other players.
Earning or trading in-game NFTs: Each NFT may represent items, characters, or other collectibles within the game. Depending on the game, these items may be purely decorative or have practical uses within gameplay.
Additionally, there is a third way to earn through "play-to-earn" games: staking. Some NFT games allow users to lock NFTs or cryptocurrencies in smart contracts to receive rewards. For instance, staking MBOX tokens can provide users with MOMO NFT blind box rewards, each containing a random NFT of varying rarity that can later be sold on secondary markets. However, substantial initial investment is often required to earn significant staking rewards.
How Does Blockchain Technology Ensure the Security of "Play-to-Earn" Games?
"Play-to-earn" is not a new concept. Many online games, especially massive multiplayer online role-playing games (MMORPGs), have auction houses based on fiat currencies or secondary markets maintained by gold farmers. The key difference for cryptocurrency games is that these currencies and items are stored on the blockchain. Several characteristics of blockchain technology make it extremely easy to prove ownership, legitimacy, and rarity.
You can think of a blockchain network as an immutable database maintained by a distributed network of computers (users), with each user holding a copy of the blockchain data. This makes it nearly impossible for anyone to alter, duplicate, or delete blockchain data.
As a result, the development of blockchain games effectively prevents fraud or corruption, such as item duplication, gold hacks, and other vulnerabilities common in traditional games. One of the critical factors determining the value of in-game items is their rarity. There is no simple copy-and-paste on the blockchain. If an item is unique, it cannot be duplicated, thus establishing a foundation for the true value of in-game assets.
How Much Income Can People Earn from "Play-to-Earn" Games?
Generally speaking, games are not known for rewarding ordinary users with money. It may be hard to imagine that regular players can actually earn income from blockchain games. In fact, many people, particularly in developing countries, rely on cryptocurrency games like Axie Infinity to make a living.
Mining provides a relatively stable source of income, with earnings proportional to the player's skill and time spent playing. This method of mining is particularly popular in the Philippines, where Axie Infinity has become an alternative option for unemployment relief. Depending on market prices and gaming time, players can earn between $200 and $1,000 per month by mining SLP. Although mining earnings are often lower than those from trading NFT creatures and items, the stability of mining income can be more secure for those in need of consistent earnings.
In games like Axie Infinity, players can even use NFTs (Axies) to create new NFTs. However, the value of newly bred Axies can be unpredictable. As of October 2021, the most expensive Axie (Angel) was sold for $131,970 on November 7, 2020, and is currently priced at 3,000 ETH. Despite these enticing figures, the randomness involved makes it difficult to predict the average income for "play-to-earn" game players.
How to Start Experiencing "Play-to-Earn" Games?
Each "play-to-earn" game has different requirements for new players. At a minimum, you will need a cryptocurrency wallet, such as MetaMask or Binance Chain Wallet, to store your cryptocurrency and link it to the game.
You may also need to make an initial investment, such as setting up a team of characters or purchasing in-game items. The digital crypto economy is often not a "free lunch."
For example, in Axie Infinity, you would need about $600 as an initial investment to purchase three Axies. Although it is possible to recoup this cost within a few months of playing, it still creates a barrier to entry.
Another option is to seek what is known as a "scholarship," where you can borrow Axies from other players for free and share your earnings with the player providing the scholarship. In other words, a portion of your income will go to the player who provided the Axies. Once you establish your initial team and complete daily tasks and challenges, you will start earning SLP consistently, which is an ERC-20 token that can be traded on Binance and other crypto trading platforms.
How to Cash Out Earnings from "Play-to-Earn" Games?
In NFT games, we mentioned two main ways to earn: finding NFTs to sell or regularly playing games to generate a steady flow of in-game cryptocurrency.
These activities will yield you NFTs, tokens, or both, which you can sell on secondary markets. Depending on the specific cryptocurrencies and items you possess, you can sell these NFTs and tokens on Binance. You can conveniently add NFTs from Ethereum and Binance Smart Chain (BSC) to the Binance NFT marketplace, but you need to confirm whether Binance supports the NFTs you want to sell in your country or region. Additionally, you will need to complete the KYC process to verify your account.
Cashing Out Cryptocurrency from "Play-to-Earn" Games
To cash out tokens like SLP or SAND, you need a trading platform that handles the cryptocurrencies you earn from "play-to-earn" games through tradable pairs. If you wish to use these earnings in real life, you also need to consider whether the tokens can be exchanged for fiat currency (such as USD or EUR) and withdrawn to your bank account. Another option is to use cryptocurrency cards, such as the Binance Visa card, to spend your cryptocurrencies.
You can also convert your earnings into stablecoins, but converting them into fiat currency often requires additional steps. Storing funds as stablecoins like BUSD is generally more stable compared to volatile tokens like SLP, SAND, or Bitcoin (BTC).
Conclusion
"Play-to-earn" games represent an emerging development in generating income through cryptocurrencies. For most new projects and concepts, it typically requires being on the cutting edge to fully leverage them. However, "play-to-earn" games do offer players the opportunity to earn money. Yet, you should always remain vigilant, as many games may carry high risks and unsustainability due to poor token economics or even fraud.
Risk Warning
While the cryptocurrency market offers significant growth potential and innovation opportunities, it also carries a high level of market risk and price volatility. The value of crypto assets can fluctuate dramatically in a short period, potentially leading to substantial financial losses for investors. Additionally, the cryptocurrency market faces multiple risk factors, including technical risks, legal and regulatory uncertainties, cybersecurity threats, and market manipulation. We strongly advise users to conduct thorough research and due diligence before making any investment decisions and to consult professional financial advisors. All investment decisions are made at the user’s own risk. Thank you for your trust and support of Venkate!
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