What is play-to-earn?
A play-to-earn, or P2E, game is one in which players earn virtual assets that have cash value through gameplay. These assets can be a game's cryptocurrency, or a variety of individual cards, land, pets, characters, or items. P2E games are built (via blockchain technology) to enable players to sell assets they have purchased or earned in-game to other players for cryptocurrency. Crypto can be cashed out as dollars. Some games also support renting assets, enabling players or investors to earn passive income.
How do these games work?
Blockchain technology in the background of play-to-earn games seamlessly tracks ownership of assets. One type of asset is cryptocurrency, where one coin is the same as any other coin (they're fungible!). But blockchains can also be used to support non-fungible tokens (NFTs). Each virtual NFT item, land, etc. has a unique identifier and history - just like each item or piece of land in the real world.
Why use blockchains for gaming?
For both cryptocurrency and NFTs, blockchains verify that an asset is genuine and who owns it. This prevents the creation of counterfeit items and keeps values high. The reason that virtual level 100 Pokémon cost pennies, despite the hours of work required to level one in-game, is that hackers can create as many as they'd like. This unlimited supply makes even a shiny virtual Pokémon worth almost nothing. If Pokémon used an NFT system to verify ownership like Axie Infinity, users might be able to sell their Pokémon for thousands of dollars.
Blockchains also secure transactions. This includes buying, selling, renting, and trading. Users don't need to know or trust each other to avoid a scam. It's impossible for either side to take the money and run. For a more detailed explanation, check out the first 10 minutes of this video. But you don't need to understand the technical details to get started playing P2E games - the most popular ones are quite user-friendly.
Why would someone pay me to play their game?
Because you add value to their game by playing it, in three major ways:
- Investing money in the game yourself. A few play-to-earn games like Axie require upfront investment. Many others don’t. But some fraction of players who start off as free-to-play will end up investing money into the game after spending more time in it. Even if they are buying from other players instead of the developers, developers typically take a small percentage off the top from sales made from in-game shops. So if players buy in, play the game while their assets triple in value, and then sell everything, the developer still makes money.
- Improving the game experience for other players. More players enables faster and more even matchmaking. More players enables more liquid buying/selling/renting markets. More players leads to more player-generated content, both in-game and in forums/discords, that keeps players around.
- Referring other players. People who enjoy a game tell their friends and attract more players to the game. Some of those new players may invest money in the game.
Players are definitely worth something to the game’s developers, even if they don't put in any money themselves.
Why don't traditional games pay me?
The idea of paying players in real-world currency hasn’t caught on - likely because even pennies per person per day would be a huge drain to the developers while being meaningless to individual players. However, blockchain technology enables paying players with assets that initially cost the developers nothing. Those assets will still be worth nothing if the game fails. But if the game is a smash hit, they could be worth thousands of dollars.
This is much more exciting for players, who stand to profit tremendously if they pick the right P2E game to invest in. And in the meantime, they can have a lot more fun playing with their assets than GME shareholders.
Should I start playing-to-earn?
Free-to-play (F2P) games were a natural evolution from premium, pay-up-front games. Plenty of premium games are still released, but popular titles like League of Legends, Fortnite, and Hearthstone have demonstrated the ability of F2P games to dominate in many genres.
Play-to-earn games are the natural evolution from free-to-play. Why play one game for free when another will pay you? Why spend money on a game that you will never get back, when you could invest money in a game and cash out with a profit if you decide you want to move on (or want to buy a yacht)? P2E will revolutionize the gaming industry.
Getting into the right games now has a similar potential for gains as getting into cryptocurrency a decade ago. The biggest difference is that "mining" is a lot more fun!
I originally published this post on my blog, playing2earn.com.
