How Does Crypto Gaming Work? What Are The Popular Games And Online Risks For Players?

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What are the dangers in crypto gaming?

Crypto gaming is a massive industry and here to stay. However, as cryptocurrency is relatively new and not well-regulated, criminals are always looking to exploit crypto gamers via hacks and scams. Despite the fact that a game’s blockchain is secure, its engine or marketplace may not be. It is also possible to hack or mishandle digital wallets that store cryptocurrency gaming tokens.

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The global video game market topped $195 billion in 2021. As more players worldwide become fully immersed in online gaming worlds, it’s natural that cryptocurrency will play a larger role.

A handful of games already integrate crypto directly into their gaming economies.

“Play to earn,” or P2E, games reward players by paying them in cryptocurrency or digital tokens based on how much they achieve or play the games.

By earning cryptocurrencies, gamers can profit from their skill or enthusiasm for gaming. But players, before taking the plunge, it’s good to understand the pros and cons of crypto gaming.

What Is Crypto Gaming

While virtual video game money is not a new concept, the advent of blockchain technology has created opportunities for crypto gaming developers to add an element of real-world economics to their games.

Crypto gamers can earn non-fungible tokens (NFTs) or cryptocurrency by playing and winning a game, and those digital assets then become the property of the gamer.

In many cases, in-game digital tokens can be exchanged for stablecoins on either centralized or decentralized cryptocurrency exchanges. These digital assets can be sold or traded on online marketplaces or directly converted to fiat currency.

How Does Crypto Gaming Work

There are a variety of different business models in crypto gaming.

P2E games offer users different means of earning or buying gaming tokens, says Adrian Krion, founder and CEO of blockchain-based gaming platform Spielworks.

“People can make money on these tokens by buying them early and [hoping] for a lot of players to come into the game after they bought the tokens,” Krion says.

Some crypto games earn money via advertising or sales of in-game items, such as certain weapons, skins or even virtual lands.

The developers then incentivize players to devote more hours to the game by paying them in crypto or NFTs for completing quests. These quests are typically simple tasks that involve interacting with the game in some way, such as killing a certain number of enemies or collecting a specific amount of resources.

Other crypto gaming platforms offer ways for crypto investors to gamble their currency on casino games and other games of chance.

BitStarz, 7bitcasino and mBitcasino are among the three most popular crypto gambling platforms.

Top Gaming Tokens

The global gaming token market is worth more than $12.8 billion, according to data collected by CoinMarketCap.

These tokens may only have utility within a particular game or gaming ecosystem, but the top tokens also have significant real-world value. Here are the top three by market capitalization:

ApeCoin (APE)

ApeCoin (APE) is the most valuable gaming token, with a market capitalization of $2.23 billion.

ApeCoin is the native coin of the Bored Ape Yacht Club, a collection of non-fungible tokens built on the Ethereum (ETH) blockchain. Third-party developers have incorporated ApeCoin into their games. For example, players of the P2E mobile game Benji Bananas earn special tokens they can easily swap for ApeCoin.

Decentraland (MANA)

Decentraland (MANA) is the native token for Decentraland, a virtual world built on the Ethereum (ETH) blockchain. Users can buy and sell digital real estate, interact with other users and even play games in Decentraland.

Players use MANA to purchase Decentraland NFTs defining virtual land parcels or exchange them for other in-game goods and services.

MANA’s market capitalization is more than $1.8 billion.

Sandbox (SAND)

The Sandbox is another metaverse, or digital world, running on the Ethereum blockchain. The Sandbox (SAND) tokens facilitate different gameplay transactions, including purchasing plots of digital land called LAND.

SAND has a market cap of around $1.6 billion.

How To Earn Money With Crypto Gaming

Crypto gamers can think of in-game rewards as small paychecks they receive for completing quests or other requirements.

Harry Turner, former hedge fund manager and founder of The Sovereign Investor, says in-game items such as weapons, armor, skins and other equipment can hold tremendous real-world value.

“By completing quests and collecting NFTs, investors can generate a profit through the sale of these items,” Turner says.

DMarket is just one example of an online marketplace for NFTs and other virtual in-game items, many selling for millions of dollars.

Zain Jaffer, founder and CEO of Zain Ventures, says similar to investors buying stocks, crypto gamers who invest early in a successful game will likely be the biggest winners.

In 2001, RuneScape players received digital Party Hats for free as part of the game’s Christmas promotion. Twenty years later, Jaffer says these party hats are now worth billions of in-game gold pieces. The most sought-after color of party hat sold for 57 billion gold pieces (close to $6,700), according to Runescape.

“It will not be surprising if history repeats itself, and early investors in crypto gaming platforms and currencies will be the ones to reap the newly real-world rewards,” Jaffer says.

Crypto Gaming Risks

Unfortunately for crypto gamers, there are plenty of risks associated with crypto games and tokens at this stage.

One major risk to crypto gaming tokens is that they are subject to supply and demand dynamics associated with the game’s popularity. Once players abandon a game, demand for an in-game currency may completely dry up and make its tokens worthless.

“Because these games are very new and their staying power has not yet been proven, there is no guarantee that their assets will remain valuable over long periods,” Jaffer says.

Turner says there are also significant risks associated with holding in-game currency.

“The volatility of the market can directly impact the value of your in-game assets. For example, if you’re holding onto a stockpile of Aurum (the in-game currency of Crypto Raiders) that you plan on using to buy virtual items, then its value could drop dramatically overnight and leave you with far less purchasing power than you had before,” Turner says.

Because cryptocurrency is relatively new and not well-regulated, criminals are always looking to take advantage of crypto gamers via hacks and scams. Just because a game’s underlying blockchain is secure doesn’t mean its engine or marketplace is secure. Digital wallets that store crypto gaming tokens can also be hacked or mishandled.

Earlier this year, hackers stole $617 million in Ethereum and USD Coin (USDC) from the users of the crypto game Axie Infinity. Axie Infinity is one of the most popular crypto games and had a peak monthly active user base of more than 2.7 million players before the hack. In June, Axie Infinity developer Sky Mavis said it would reimburse only about a third of the crypto its users lost in the hack.

Axie Infinity is considered the most popular play-to-earn game.

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Originally Published HERE