The Economics of the Online Games Industry
The online gaming industry is more diverse than many people think. This economic sector, which in 2019 generated more than $150 billion, keeps growing at an annual rate that keeps inching closer to 10%. In the early days of this industry, pay-to-play was the only business model that applied to video game cabinets within arcades or at establishments such as bowling alleys, bars, and family restaurants. These days, video gaming is ruled by multiple business models such as boxed, freemium, microtransactions, subscriptions, free-to-play, advertising, and a few others.
As its name implies, play-to-earn is an activity that you can partake in for the purpose of investing or generating some kind of revenue through playing games. The concept is not new; if we go back to the heyday of Second Life and its Linden Dollar virtual currency, which was actively exchanged for fiat by means of private deals between players, we can see that this activity has been going on since about 2013. Second Life was not the first game to feature a virtual economy, but when we look at modern games such as Axie Infinity, we can see just how far we have come.
Meet Axie Infinity
Axie Infinity can be described as a Pokemon-like online platform inhabited by cute digital creatures that can be raised, trained, traded, and acquired before players can set them off to battle. New Axie players must get their hands on small love potion (SLP) tokens, which are the official currency of the virtual world. It so happens that the Axie virtual economy runs on an Ethereum blockchain; what this means for holders is that they can trade them for other cryptocurrencies, typically ETH or stablecoins, on major exchange platforms such as Coinbase and CoinEX.
As of August 7, the SLP/USD currency pair was trading for about $0.18. Getting started on Axie is a matter of registering and begin developing an acquisition strategy. You need three creatures to start with, and they can be borrowed or purchased for less than $200 each. Needless to say, most new players get started with borrowed Axies, which immediately become non-fungible tokens. Once one of these digital creatures becomes powerful or rare, its SLP value will increase, and it doesn’t take long before demand starts spiking.
The Enormous Venezuela Market
The world of Axie Infinity is filled with opportunities to earn SLP. While the bulk of earnings is centered on Axie battles and trading, there is also real estate and in-game items you can acquire and exchange through playing. Enterprising players have managed to boost the value appreciation of their Axies in excess of $100,000; that was in 2020, but there have also been real estate transactions valued at more than a million dollars. It should not be surprising to learn that players from Venezuela make up a large segment of Axie Infinity demographics; after all, the value of that country’s national currency has plummeted to worthless depths, thus making Bitcoin and other tokens indispensable.
Other Crypto Options
While Axie Infinity is the most exciting and promising game where you can play-to-earn, there are others you can explore. CryptoKitties is similar to the Tamagotchi toys of the late 20th century, and it allows you to earn directly in ETH. The Sandbox is a Minecraft copycat that features a virtual economy where NFTs settle transactions. These games are just the beginning of what is becoming a new era of fun in the cryptocurrency world.
What is CryptoKitties?
CryptoKitties is a game centered around breedable, collectible, and oh-so-adorable creatures we call CryptoKitties! Each cat is one-of-a-kind and 100% owned by you; it cannot be replicated, taken away, or destroyed.