Once only seen as an impossible dream of young children around the world, the realities of playing video games for a living are not only becoming increasingly possible, but are actually already taking place in at least one country — and for people across all ages.
Welcome to Web 3.0, where new economies and new economical models like these are only just beginning, and where humanity is only beginning to scratch the surface in the new ways that blockchain and cryptocurrencies are changing our daily lives as we know it.
Playing video games to earn a living may sound like a desired profession from a ten-year old — but this growing reality is becoming what’s known as the “Play-to-Earn” economy (or “play-to-earn” business model), where gamers from all four corners of the globe can join a specific game, earn points and in-game currencies, and then convert those points and currencies into real money — which can then be used to pay rent, buy food, and conduct daily financial transactions, as needed.
First Things First — What Exactly is the Play-to-Earn Economy, and How Does it Function?
At a high level, the play-to-earn gaming model embraces the open economy and financially rewards every user who adds value by playing and spending time in the gaming ecosystem. In many ways, the play-to-earn business model is not a new one. While early games like Pong, Super Mario and Street Fighter entertained its players for set amounts of time, complex games like World of Warcraft, Final Fantasy, and others, needed ways to hook its players into the gaming ecosystem for months (if not years) at a time. These hooks, in the form of sophisticated storylines, levelling up, and earning in-game rewards as you go, in many ways could be considered the first play-to-earn economy.
However, these play-to-earn economies were very limited. Stop playing the game and all of the hard work and in-game assets earned would immediately go to waste. Taking those assets out of the in-game economy was out of the question (literally impossible), as well as even exchanging in-game. Even an ability to exchange in-game would have limitations in terms of any real benefit. Because if the player ultimately wanted to leave the ecosystem all together, he/she would not be able to walk away with some economical benefit outside of the gaming platform.
Luckily, the times are changing.
Blockchain, cryptocurrencies, and all which these technologies enable, are challenging existing business models across all industries — gaming included. In its simplest form, new games which are released on the blockchain provide access to a real-world economy through crypto tokens.
For the uninitiated, we explain briefly how cryptocurrencies function, and the high-level capabilities which they enable. At its core, cryptocurrency is typically decentralized digital money designed to be used over the internet. They are often associated with blockchains (e.g. Bitcoin, Ethereum), and in addition to being used as a medium of exchange between two parties, are also often used as a means to pay for transactions which occur on-chain (that is, transferring crypto between one person and another is not free — the transferor will likely need to pay transaction fees to the blockchain system (validators) to validate the transaction. These fees, often known as “gas” are also common ways for cryptocurrencies to be used.
Because cryptos are generally viewed as a form of money (or a store of value), they can qualify as assets. As a result, there is a market for such assets, and by extension — this is why cryptocurrency market exchanges exist, with the most popular being Binance and Coinbase. In these crypto markets, participants from all over the world on-board into the market with fiat money (e.g. US Dollars, Euros, RMB, etc…), and exchange these government issued currencies with cryptocurrencies.
This is what enables the magic of gaming for a living to happen.
A New Generation of Games — Enabled by Blockchain & Crypto
The next generation of games has already arrived. These games, which leverage the capabilities of the blockchain, have introduced a new way for gamers to earn in-game, and to turn those earnings into fiat currencies by exchanging their earnings in crypto markets around the world.
As of this writing (November, 2021), the most popular decentralized blockchain game is far and away Axie Infinity. With more than 1.85 million daily active users, Axie has single-handedly transformed the play-to-earn industry — increasing their active user account by more than 4,700% since April, 2021.
This increasingly popular game is one that anyone can play across multiple devices (Android, iPhone, PC). It draws inspiration from Pokemon, where players have a team of three creatures (named Axies). These creatures have specific skills — which the player leverages to battle against other in-game players or computer controlled opponents.
By playing and battling, the player earns Axie Infinity tokens ($SLP — or Smooth Love Potion). These tokens, which are exchangeable on marketplaces like Binance, among others, allow for users to convert their in-game earnings into digital stablecoin (e.g. USDT, USDC), and from those, into government issued fiat.
How Lucrative Could Playing a Game Be?
Certainly, the average player is not making a five figure US dollar denominated salary — yet. However, depending on the country, a day’s work in the Axie Infinity gaming ecosystem may be just as lucrative (if not more lucrative) than a day in a job in the real world.
The Philippines has become a real-world example of how the play-to-earn economy could eventually become a reality in all parts of the world. Axie Infinity, which has taken off in popularity in the island country, is literally providing an economic lifeline for many of its residents — especially during the recent downturn in economic opportunities resulting from the devastating impacts of covid-19.
In the Philippines, the average daily salary seems to range between $5-$11 US Dollars per day. After discovering Axie, many of the island residents have found that time spent on the Axie platform not only can earn them real money, but often at multiples of what their daily salary could be in the real world.
According to a recent report, at least one Filipino family has experienced racking up around 1,500 SLPs per day. At today’s (November 1st, 2021) exchange rate of 1 SLP = $0.06USD, this equates to a $90 daily income — 18 times greater than the lowest average daily salary of the country, and still more than eight times greater than the highest country average.
Further, as SLP is an exchange-traded digital asset, its price is not fixed and therefore does not remain static. At its highest, SLP has reached a value of $0.35USD per 1 SLP — which, at a daily income of 1,500 SLP, would have translated to $525USD in earnings for the family — 100 times greater than the lowest daily average wage in the country.
The Future of the Play-To-Earn Model
While arguable of how lucrative play-to-earn can continue to remain in the future, it is unlikely that this new business model is falling by the wayside any time soon. There is a clear demand (and need, in many cases) for such a gaming model, and while it can be debated whether or not Axie Infinity continues to be the main provider (or several other upcoming play-to-earn blockchain based games) of this form of earning, the model will undoubtedly provide a new form of income stream for many going forward.
Due to the universalness of gaming, it may be arguable that at its most extreme, play-to-earn games could set the new standard for a global minimum wage. As seen with just one example above, Axie Infinity can easily beat the set minimum wage in one country, if not several others.
Exciting times lie ahead, and the blockchain and crypto communities are only beginning to scratch the surface in reimagining what future economies can look like.