What is GameFi and Why is it Important?
GameFi is a term used to describe the fusion of finance and gaming. Combining the power of blockchain technology and the massive gaming industry will revolutionize the way we play, invest, and earn money doing something that so many people across the globe already do. GameFi does not just mean video games, but also includes other popular sectors such as sports betting, casino games, and even virtual real estate.
There has been an unprecedented growth rate in the gaming industry. Blockchain technology and Web3 are about to transform it in a dramatic way. The gaming industry has always been lucrative, with billions of dollars in revenue generated every year. However, gamers have always had limited ways of monetizing their skills and achievements. GameFi offers a solution to this problem by allowing gamers to own, trade, create, and monetize their in-game assets and achievements. This not only provides a new source of revenue for gamers, but also creates a new market for investors who can invest in these assets. You can take a closer look at the GameFi analytics dashboard at footprint.network below for a detailed breakdown by chain activity.
The importance of owning Web3 assets like non-fungible tokens (NFTs) is becoming increasingly apparent, and it’s time to pay attention to them. Here’s why owning Web3 assets is crucial for GameFi and how it’s going to change the way we play.
Why is ownership of Web3 Assets Important for GameFi?
There are a variety of reasons that ownership of assets will change the face of how we look at gaming, but from my perspective you can combine a majority of the benefits into a few main topics.
- True Ownership
This is probably one of the single largest benefits of web3 gaming. Unlike traditional in-game assets, Web3 assets are stored on a decentralized blockchain, and the owner holds the private key to access and transfer the asset. This means that the owner has complete control over the asset and can sell it, trade it, or even gift it to someone else. Traditional in-game assets, which are under the control of the game developers and studios do not allow for any trading, selling, or management of anything by the players. They simply collect your money through microtransactions and move on. For instance, in Call of Duty, players frequently buy skins, weapon blueprints, and attachments. Once purchased they are bound to that account in that version of the game. In 12-24 months when the next Call of Duty comes out, those purchased items are no longer usable and basically dead money. That player will now have to buy more skins or weapons in the current version. In web3, those assets should be able to be brought into the next version of the game or sold throughout the existence of the old version to other players to recoup some or all of the original cost. Rare, limited time skins could become valuable based on what the community wants and is not dictated by the gaming studio. Players can take advantage of all the potential given in this new GameFi environment and have full control over their Web3 assets.
Another advantage of Web3 assets is interoperability, which goes hand in hand with ownership. These assets can be used across multiple games, platforms, and even outside of the gaming world. The possibility to take these NFTs and use them across multiple games opens possibilities that we have not even begun to scratch the surface of when it comes to gaming. This interoperability creates a new level of freedom and flexibility for gamers as well as creators and developers who can put their skills to work to bring numerous communities together.
Scarcity is another factor that makes Web3 assets valuable. Unlike traditional in-game assets, Web3 assets have limited supply, and their value is determined by the market demand as opposed to pricing by the game studio. A gaming studio rarely ever releases a limited amount of anything because this would cap how much they can make off the items so eventually, if the item is good, everyone will have it and it is just a requirement to stay competitive. With third party developers having the ability to create NFTs for a game, they can set the number of items for release. If the number is set low and the community loves the release or has a major impact on the game, this scarcity will make the assets more valuable, and this can provide an opportunity for gamers to invest and make money. The scarcity of these assets creates a market for collectors and investors, who are willing to pay premium prices for rare and unique assets.
On the flip side of this however, this could potentially open game breaking releases. For example, if a skin was released by a developer that would blend into the background of an environment making them almost impossible to see, this could send the community into an outrage if the number of NFTs made it impossible to obtain. Since these assets are owned by the player they cannot be easily patched or removed as we have seen down in web2 games. How these situations are navigated will be extremely important as the web3 space develops.
A key part of web3 is transparency. Blockchain technology’s decentralized nature ensures that every transaction is recorded on a public ledger, making it transparent and auditable at any time. With this, gamers can track their assets and history more easily, and creators can see the price history of popular assets so they can improve on or rework them for future releases.
Web3 is Poised for the Future
With the right resources in place and the billions of gamers around the globe, web3 gaming is poised to take the place of traditional web2 gaming. There is still plenty of work to be done with ensuring each game has a sustainable economy, the appropriate security measures in place to avoid exploitation, and can seamlessly onboard traditional gamers who may have a negative opinion about crypto and web3 gaming. That being said, with industry titans like Epic Games, Amazon, and more entering the market, it’s clear they’ve done their research and realize the potential that web3 has to completely change how we have looked at gaming during the last 3 decades.