So long were the days when video games and general gaming only meant losing money in exchange for entertainment. With the increasingly popular concept of GameFi within our horizon, not only are gamers seeing more innovative ideas implemented on various games, but they now also have the chance to earn money while they play. Today’s video games are no longer just an investment for enjoyment and high entertainment – they are now also amenable to being a bona fide financial investment.
This article aims to comprehensively detail the rise of GameFi, its definition, and how it actually works. On top of that, we would also explain how the very concept caught the gaming community by storm and what the future may hold for the industry amidst the ever-rising number of play-to-earn (P2E) and blockchain-based games.
What is GameFi?
Akin to decentralized finance or DeFi, the term GameFi is also an amalgamation of two words – “game” and “finance.” While GameFi can be summarized as the financialization of video games using blockchain-related concepts and sometimes, cryptocurrencies, the term itself could be expressed even further due to some games falling into the GameFi category despite incorporating entirely different financial elements compared to their other brethren. For example, some titles reward players for completing various tasks in-game, while others may facilitate revenue generation from the particular digital assets players may accrue from playing the game.
Those unfamiliar with blockchain games and P2E games may quickly brand GameFi as gambling due to its prevalent incorporation of real-world money. Although the games considered part of the emerging sector involves a lot of luck, it is not the principal factor in determining who wins the game or who would be eligible for its monetary rewards. Much like traditional games, GameFi titles also require their players to utilize a mix of strategy and skills to ensure that they get their money’s worth – and perhaps even more.
Gamers may now be fond of the gaming term “pay-to-win” – a predominant model found in games where players can commit more money on their favorite titles to gain some advantage compared to others. This involves immediate upgrades, valuable in-game purchases, and reduced waiting times. Nowadays, with the emergence of GameFi and P2E, the very model of pay-to-win was turned on its head. As mentioned above, the players who commit the most time and effort to comprehend the game’s winning strategies and complex concepts are now the ones who have the most chance to make substantial money. It is also worth noting that some GameFi titles require initial monetary investment before players can begin playing.
With all that being said, let us now look at the history of GameFi and how it evolved through the years.
How GameFi started and evolved
GameFi was first introduced to the world in Wuzhen, China, at the 2019 World Blockchain Conference when the minds behind the blockchain game developer MixMarvel stood on stage and talked about how cryptocurrencies have the potential to revolutionize the already-thriving gaming industry. Considering that the video gaming industry was already the top entertainment sector at that time, boasting over $175 billion in market cap, many felt skeptical about how incorporating crypto and blockchain could even elevate it further. In just a few years, however, such skepticism was immediately dismissed as the utilization of such concepts has now proven to be a huge hit. The term GameFi is no longer just an ambitious concept; it has grown so much that even the biggest video game publishers today are looking to join the party and inject blockchain tech into their upcoming titles.
While the term GameFi itself has only begun popular over the past two years or so, its history could loosely be partnered with the rise of Bitcoin (BTC) itself. Before the prevalent incorporation of various digital assets in today’s most-recognizable games, BTC has already been integrated with various mainstream titles in an effort to gain even more money for the game publishers and the players alike. These titles include Bombermine and Minecraft, as well as in Gambit.com servers back in 2013 and other peer-to-peer services. Although the very concept was still far off back then compared to what we have now, these early efforts to incorporate innovative monetization tactics on games represent the early stages of GameFi.
The growth of GameFi concepts was then expedited by the emergence of nonfungible tokens, or NFTs, which have become a staple of the rapidly growing entertainment and arguably investment sector. The overwhelming popularity NFTs had generated for itself on top of the utilization of blockchains to optimize performance and stability inspired many innovations for the gaming industry in such a short span. Today’s gaming landscape represents how far the GameFi concept has evolved throughout the years – rendering P2E and blockchain-powered games more prevalent than ever before.
What the future may hold for GameFi
As established briefly above, GameFi is only just a bit over 2 years old and is still in the effort of attracting mainstream appeal despite how popular they may be for some already. Perhaps no title falling into that very niche could better represent how successful GameFi concepts have been other than Sky Mavis’ Axie Infinity. Just this past August, Axie Infinity became the first blockchain game in existence to surpass the $1 billion total token sales – recording over one-fifth of that impressive figure in just a single week – making it arguably the biggest title to date that incorporates P2E concepts, NFTs, and more. Notably, Axie Infinity also hosts more than 1 million daily active players who enjoy the game for what it is and treat it as a viable income-generating activity.
The success of Axie Infinity and many other blockchain titles today have compelled some of the biggest names in the gaming and blockchain industry to believe that games are the best avenue to promote further adoption for cryptos and blockchain. And they have all the evidence they could possibly need to believe so as the rate of adoption rose in conjunction with the rise of NFTs and blockchain games.
Even though some gamers still believe that the gaming industry is far better off without GameFi – arguing that traditional games devoid of any monetization concepts are the way to go – video game developers clearly disagree. Co-aligning themselves with the supporters of GameFi, particularly the Blockchain Game Alliance, an amalgamation of various enterprises aiming to raise awareness regarding GameFi concepts, some of today’s mainstream game studios firmly believe that blockchain technology and innovative monetization tactics have a place in the industry’s future. Sooner rather than later, the organization believes that most players would see blockchain technology’s clear benefits for the gaming world – both financially and in terms of a particular title’s development cycle.
With that in mind, expect to see more and more blockchain-powered P2E games from recognizable video game brands within the horizon as the sharks of the industry now push to get ahead of the curve. It has become seemingly inevitable to see such concepts incorporated within mainstream titles – and considering how successful GameFi is doing nowadays, such games would only grow in numbers. A clear example of this is Ubisoft’s announcement last year that it would be transitioning some of its focus towards GameFi.
Given how bright GameFi’s future looks today, it is not difficult to imagine it taking a larger chunk out of the global video games market soon. Despite that, experts argue that its future is still incredibly difficult to predict accurately. While the features and advantages and the increasing number of GameFi titles discussed within this very article wouldn’t go anywhere any time soon, the pace at which blockchain technology is evolving nowadays could signal another sharp curve. This means that the emergence of another – perhaps more innovative concept – may take over the momentum GameFi has generated isn’t far off from happening. Nevertheless, several of the breakthroughs surrounding GameFi will surely find their way into video games and the industry as a whole.