In recent years, the cryptocurrency, finance and gaming industries have converged and given rise to an exciting new frontier known as GameFi. This innovative fusion of gameplay with decentralised financial incentives has begun to transform the gaming industry, offering players novel experiences and ownership of in-game assets.
Cryptocurrencies (and their associated blockchain technologies) have already displayed their potential to disrupt several key markets in the gaming industry, while gaming is currently being touted as the «largest-scale opportunity» for crypto. The two are undoubtedly an advantageous pairing, but what exactly is the deal with crypto gaming, and how can ordinary gamers get involved?
The Evolution of GameFi
GameFi, a portmanteau of 'gaming' and 'finance', represents a new breed of blockchain-based gaming activities that enable players to earn, trade, and own in-game assets, including cryptocurrencies. GameFi titles utilise decentralised finance (DeFi) concepts to create immersive and rewarding gaming experiences, enabling players to reap the benefits of the play-to-earn (P2E) sector, in which their gaming skills are directly tied to real-world financial games.
One of the most impactful aspects of GameFi is how it's transforming gaming monetisation models. Traditionally, video gamers invest countless hours and resources into their favourite titles, only to find themselves without any tangible rewards even when they've paid for in-game items like character skins, new levels, or accessories and equipment.
However, with the integration of non-fungible tokens (NFTs) into gaming, players are now rewarded for the time they spend playing with unique in-game assets. These assets have real-world value and can be sold and traded on blockchain marketplaces, effectively giving rise to a brand-new virtual ecosystem.
As with all things crypto, games that fall under the GameFi banner are decentralised and run on various blockchain networks, eliminating the need for intermediaries and empowering players in the process. Using these decentralised platforms, players can engage in peer-to-peer activities and even contribute to the governance of the gaming ecosystem. Not only has GameFi opened up new avenues for P2E opportunities, but it's also democratising gaming, enabling players to connect, collaborate and self-govern their virtual communities.
The Disruptive Impact of GameFi
One of the most impactful ways in which GameFi has disrupted the gaming establishment is through the emergence of P2E. The financial incentive of being actively rewarded for playing, as opposed to paying to play, attracts a massive wave of players worldwide who, in turn, are learning about and actively engaging in the cryptocurrency sector.
Furthermore, with the concept of cross-play now becoming a burgeoning trend, GameFi has the potential to facilitate cross-platform interoperability to the point where gaming metaverses can exist comprised of players using a vast range of devices.
The concept of decentralised gaming is also making big waves in the real money gaming sectors. While the poker vertical, for instance, is still dominated by big-name, established operators with comprehensive gaming platforms offering an array of variants, space is being made for new crypto entrants.
Despite proving to be challenging for iGaming incumbents to integrate into their existing offering, crypto can still offer several benefits to both players and operators alike. Security is paramount in real money entertainment industries, with operators needing to prove the transparency of their games, apps and gaming platforms on a regular basis. By leveraging blockchain technology, operators can strengthen their provably fair gaming practices and provide a seamless deposit and withdrawal process with digital currencies.
Could GameFi be the Future of Crypto?
While the cryptocurrency industry has reached mainstream notoriety, it's yet to reach mainstream acceptance. The industry is as controversial today as it's ever been, with crypto purists firmly believing that decentralised currencies are the future of finance, while naysayers see them as nothing more than the latest in a long line of digital trends. The potential for crypto to revolutionise asset ownership and wealth management is substantial, but having been subjected to numerous declines and surges over the past decade, it's easy to see why the sector continues to inspire mistrust.
Could GameFi, then, be a key player in increasing crypto acceptance? According to Sandeep Nailwal, co-founder of Ethereum-based blockchain platform Polygon, gaming could provide an excellent opportunity for large-scale cryptocurrency adoption. In fact, many analysts believe that GameFi, particularly in its role as a driver for Web3 experiences, may well lead to the next crypto bull run.
