The crypto and non-fungible token (NFT) space have taken the world by storm with Play-to-Earn (P2E) emerging as the next big model. Play to earn is exactly what it sounds like, video games where players have the ability to earn revenue while they play.
What are NFT Games? An intro into P2E gaming
To understand P2E gaming a little better, a good start is to understand the mechanics behind these games. While they might seem completely normal on the surface, there are certain mechanics in the back that separate them from normal games and allow players to gain value from playing, other than just entertainment.
Earning revenue through these sorts of games is usually connected to non-fungible tokens. An NFT is described as a purchasable unit of data stored on a blockchain represented by digital art. These NFT collectibles are perfectly suited for the digital world as they can represent characters, items, or even land.
NFTs are one factor where value comes in P2E. It’s not always necessary to own an NFT to earn in P2E games, but in most cases, this is the way to maximize your earning potential. It’s also possible to earn without actively buying NFTs for a game, but this will limit the earning power.
It can be said that by a player owning NFTs in a game, he/she owns an actual stake in the virtual world itself. The NFT represents a part of the game that you actually own. Since every NFT is unique, this digital item is yours until it’s sold.
As players grind away, they’ll be rewarded with the game’s native cryptocurrency. These crypto tokens are built into the game’s tokenomics and virtual economy where they’re automatically awarded through the game’s smart contracts.
Winning PVP battles, completing quests, solving puzzles, and selling items, are just a few ways players can earn. As players continue to earn revenue in a P2E game, they’ll, at some point, want to either cash out or reinvest.
Both options are possible, it’s just a matter of choosing which the player prefers. Cashing out can be done through a crypto exchange where the funds are converted to fiat or converted to another cryptocurrency. The earnings could also be reinvested into the game by buying stronger characters, items, etc.
Are NFT games an investment?
Playing NFT games often means investing more than just time. As many titles require players to purchase NFTs to start playing, these games have more at stake than usual. This raises the question, are they an actual investment?
In a way, NFT games are an investment because players are able to own parts of the game through NFTs. By owning an NFT its value will be affected by how well the title performs. If it ends up being a big success with many active players, then the NFT should see an increase in value. On the other hand, if it’s a flop, then players might see themselves stuck with a worthless NFT or need to resell at a lower price than they bought.
Another way to invest in NFT games is through its native token. Axie Infinity is a great example of a game with a highly-valued currency. In Axie Infinity, players will come across a “governance token” ($AXS) and the in-game token ($SLP). With the AXS token, players are provided with the ability to vote and influence the direction of the game and, thus, have a say as an investor.
For the SLP token, it’s used in the game to breed Axies. This token is earned through playing and helps players become stronger and more capable in the game.
In the case of Axie Infinity, both tokens are essentially ways to invest in the game aside from purchasing and using NFTs.
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