What is Play-to-Earn Gaming? — “Explained Like I’m Five”
The future of gaming will be play-to-earn gaming, where players will be able to earn money for playing video games
Estimated reading time: Only 2 minutes and 58 seconds
Gaming has provided a way for us to escape reality and better connect with our peers, build virtual towns, and even play as our favorite star athletes.
But, it seems as if there’s a new sheriff in town…
What is so bad about the games we have now?
Traditional gaming platforms take away our time, money, and overall value.
Gamers invest hours of sweat equity into games where they do not receive any real-life value in return.
For example: If Clash of Clans were to shut down tonight or you simply decided to stop playing, you would lose ALL of the time and money you had spent building your empire.
Basically, gamers are beginning to realize their value and want a piece of the pie.
Got It! Now explain what “Play-to-Earn” gaming is…
In 5-year old terms: You play an online game that you already play for free and earn Crypto, NFTs, and other forms of payment while doing so.
Where does the money come from?
From a business standpoint, there any many ways that these games deliver monetary value to their players. Here are a few of them:
In-game Currency: Players earn in-game digital currency while playing their game of choice
Each game has its own cryptocurrency token that they pay out to players as they complete tasks, win challenges, and devote more time to the game.
So the value proposition to players is “Hey Gamer! If you play our game we will give you X amount of our coin when you win. If the price of our coin goes up (Basic supply & demand principle), you get rich!”
This is the price chart of the in-game currency that The Sandbox has been giving out to its players. The coin first began trading at around $0.05 and hit a high of $8.40 in November 2021.
Meaning if a player had earned some in-game tokens worth $100, they would have been sitting on $16,700. Not bad for playing a “video game” right?
NFT’s: We covered NFTs in a prior issue, but if you were reading it half-asleep…
An NFT is a digital proof of ownership that you own a one-of-a-kind item.
NFTs are used to pay out players in the P2E ecosystem by being used as in-game assets. For example, players might be able to own rare Fortnite “Skins” in their virtual wallets.
Players are then able to trade the in-game assets they have earned to other players. If a game is gaining popularity, the overall prices of its NFTs will also increase.
Bitcoin, Ethereum, and other bigger name cryptocurrencies:
With this payment structure, players are able to receive a coin that possesses less risk, but payouts are often much smaller and take longer to build real wealth.
How will these platforms make money?
The games are able to earn revenue from transaction fees charged for purchasing items, appreciation of their coins, and royalty fees from the sales of NFTs.
Let’s say I purchase an NFT on Sandbox for $100, Sandbox could take a small fee off the top of my purchase.
Every future sale will follow this same procedure, and the new seller will be giving back a small percentage to the platform.
Does it seem too good to be true?
Play-to-Earn gaming is still in the very early stages of development and will most definitely run into future challenges in the coming future.
Some potential risks and weaknesses to keep an eye out for include:
- The idea of earning money can hurt the gaming experience
- In-game currency and NFTs are not guaranteed to increase in value
- Potential scams or hacks
It’s still very early, and we’re sure to see new approaches to this space emerge every day.
P.S: If you enjoyed this read and want to become smarter about Bitcoin, NFTs, and other complex Web 3.0 topics…
I simplify one Web 3 topic from $ETH to L2’s every Friday in “5-year-old terms” — Subscribe for free here!
Join Coinmonks Telegram Channel and Youtube Channel learn about crypto trading and investing
