Lesson 9: NFT Gamification, playing by crypto rules

Blockchain technology after NFTs (non-fungible tokens) has reached the world of video games. Players can deal in virtual currencies and with equipment represented by unique tokens; extracting real value from their gameplay. Such is the gamification of NFTs; such is the GameFi market.

We are at the beginning of the 21st century. The video game World of Warcraft (WoW) popularized the existing, but (at the time) still minority trend of selling gear through the online store. Players could log onto the game and purchase virtual items or virtual resource packages using fiat money: euros for swords, cards or costumes, among others. These items could also be sold to other players. A new market emerged, albeit a rather unstable and inflationary one.

A decade later, with the rise of cryptocurrencies and the tokenization of assets (this time virtual ones), the market gained traction as GameFi, a system of games that offer players financial incentives. An initially free item could be trained by grinding (gaining experience) and then exchanged for equivalent tokens or fiat money. Example: a user buys a shield, trains with it, ramps up its value and then sells it. 

GameFi is not intended to make players rich, but to reward those who are more able or who devote more time to the game (especially if they help to popularize it, such as YouTubers or eSporters) with rewards that can be exchanged for money. It is the Play-to-Earn (PTE) model.

This model also makes it possible to receive game tokens that can then be sold in crypto markets, in exchange for improving gameplay, testing, giving feedback for improvement, selling data during the game, and in other ways. For example, a player may be paid a certain amount of tokens for seeing ads.

In freemium games, where playing is free but limited and can be upgraded for a fee, the credits or tokens acquired can be exchanged for items, loot boxes or boosts. However, it is still more common to buy game tokens using fiat money in a mechanism reminiscent of the first arcade games called Pay to Win (PtW).

Within GameFi it is also possible to transfer part of the task of game creation to the community (for example: Create2Earn and Playmining). Here, content creators can design new gear or storylines for a game, and sell them to the community or official developers in exchange for tokens, so they contribute to the game and earn money in return. First virtual payment in the form of cryptocurrencies, then payable in fiat money.