What is GameFi? GameFi is a term used to describe a new generation of games that combine the best features of video games, social media, and cryptocurrencies. GameFi games are designed to be addictive and engaging, allowing users to earn rewards that can be exchanged for other cryptocurrencies. The question of how to buy cryptocurrency for GameFi worries many people. In this article, we will take a closer look at the investment options and problems of GameFi.
What is GameFi?
The term “GameFi” is a combination of the words “game” and “finance.” Gaming finance is the gamification of financial systems to generate profits through participation in play-to-earn crypto games. Typically, players can earn in-game rewards by completing tasks, battling other players, and progressing through the various game levels. They can also transfer their assets outside the game to trade on the crypto market and NFT marketplaces.
The origin of the term GameFi can be traced back to November 2019, when the founders of Mix Marvel, a blockchain platform for game publishing, gave a speech at the Wu Zhen World Blockchain Conference in China about how the underlying technology of blockchain could completely revolutionize the video game industry.
The mechanisms by which players can generate returns through their GameFi play vary from game to game. Still, there are some commonalities here, and that’s because blockchain-based games primarily revolve around three main functions: Play-to-Earn, Decentralized Finance, and Ownership of In-Gaming Assets.
Advantages and disadvantages of GameFi
Is GameFi investing in crypto? Yes, that much is already inevitable. However, the GameFi model has flaws — there are drawbacks to consider alongside the numerous GameFi advantages.
Advantages:
- Earn money with gaming or blockchain gambling.
- Numerous ways to earn money (staking, yield farming, NFT trading).
- Complete control and ownership of in-gaming assets.
- Job opportunities in developing countries.
Disadvantages:
- Blockchain games are so far inferior to AAA games, with poor graphics.
- The in-gaming economy is only sometimes sustainable.
- High volatility of in-gaming tokens.
- Earnings in developed countries are vanishingly small.
The AXS token is a purchasing crypto that can be used for all transactions in the game. This token can also be bet, which in the long run, motivates players to play Axie Infinity and earn more AXS through their activities.
A feature of GameFi’s combination of many components is that the players own NFTs as game characters or objects. Thus, you can also transfer your NFTs to other blockchains or sell them on NFT trading floors outside the game.
GameFi is the next big trend in crypto and merges the decentralized finance and gaming industries. Enabled by blockchain technology and DeFi services, GameFi allows gamers for the first time to get paid for playing games (play-to-earn) and to control and own their in-gaming items fully (by issuing them as NFTs). Numerous blockbuster games are currently developing, and great role-playing and collectible card games are already on the market.
Game developers finance themselves by selling native in-gaming tokens and in-gaming items or even virtual land of the game map in the form of NFTs. Players can farm purchased virtual land and create further income opportunities. The ultimate vision of GameFi is an open, decentralized metaverse where any user or organization can create their own game, events, or facilities on virtual land and earn money.
GameFi potential problems
Along with the opportunities, there are risks and future performance for developers introducing GameFi into their video games. Above all, an important point is a responsibility to make decisions about the success or failure of investors only through their development.
Game creators face many security, privacy, administration, and development issues.
They must ensure that investors’ money is safe and that hackers cannot steal or misuse funds because of programming errors. You must cooperate with the financial authorities and clarify what conditions and rules exist for the issued tokens.
At the same time, they should ensure long-term user interest in the game through constant progress and new incentives.
From a player or investor perspective, there is a high risk that their investment is quick in a short period. For example, because of new features in the game, some items could no longer be worth anything. Of course, even worse would be a total loss due to hacking attacks, in which user confidence falls.
For example, Adue made headlines due to the Ronin sidechain hack, where hackers managed to take possession of a three-digit million-dollar sum.
