What is GameFi?

The gaming world is changing, and this is due not only to improvements and developments in in-game modes or an enhanced interface for players but also to the potential to earn money while playing games and competing against other gamers.

Initially, you could only make money as a gamer by participating in tournaments, special competitions, or regular betting on the game. In this situation, the relationship is one-sided as you are just supporting the game’s producers and publishers in making money.

However, a revolution is emerging, with the concept of Play-to-Earn snowballing. As a result, gamers have fun while playing and earn cryptocurrency.

What is GameFi?

The term GameFi is a combination of ‘game’ and ‘finance,’ which rewards players with financial incentives. It refers to games built on a blockchain protocol that allows users to make money by playing. The GameFi ecosystem combines and utilizes cryptocurrencies, non-fungible tokens (NFTs), and blockchain technology to create a virtual gaming environment where every participant earns.

Previously, video games were hosted on centralized servers owned by a gaming company with the unquestionable right to turn off the world whenever they pleased. In addition, players had no genuine ownership of the stuff they obtained from their dedication to the game. This means everything ends within the game, and it all lived within the bounds of the game and had no real-world significance. Moreover, the closest reward or the most popular paradigm in traditional games is the “Pay-to-Win” concept, in which players must pay to gain an advantage, such as upgrading, reducing waiting time, or purchasing a virtual product.

Contrarily, built with blockchain technology and no central authority, GameFi utilizes the “Play-to-Earn” concept. As a result, the players profit from their knowledge and time invested in doing what they enjoy.

Unlike traditional games, where the developer has complete authority over deleting or changing anything as needed, the awards you have or the assets you purchased through the game cannot be taken away or removed by anyone.

As a result, if the creator decides to discontinue the game or remove certain features, you will not lose any of the assets you collected while playing.

How does GameFi Work

Players can earn in-game tokens by winning battles, completing daily tasks, fighting other players, or building commercialized buildings on their piece of land in GameFi projects, which use creative Play-to-Earn models. The Play-to-Earn concept involves providing financial incentives (tokens) to players in exchange for them playing and progressing through levels in games.

These tokens are digital assets that can be traded on decentralized exchanges (DEXs) or third-party exchanges. In addition, players can exchange them for more well-known cryptocurrencies such as Ethereum, Bitcoin, or other stablecoins to convert them to fiat currency. However, player rewards differ between GameFi games. Often, the reward will be the project’s native token. But most times, gamers may be rewarded with NFTs like avatars, avatar customization goods, or even virtual land. These NFTs can be traded on the NFT marketplace for any crypto or fiat currency.

Additionally, rewards gained from these games can buy other in-game products or upgrade your gaming character. You can also use them to buy non-fungible tokens (NFTs). Since NFTs are the in-game currency in some cases. This means that players can own in-game items and sell or trade them.

Because all information regarding achievements and ownership of various things is maintained in the public blockchain, the GameFi ecosystem is secure.

Advantages of GameFi

Take Charge of Your Gaming

The certainty of complete ownership over your assets is the most significant benefit in GameFi, as there is no developer or any central authority. GameFi projects permanently save all data relevant to your in-game assets and tokens on blockchain networks. In situations when the game fails, you are not at risk of losing all of your valuables as they are updated in real-time on the blockchain network.

No Central Authority

No single entity owns blockchain games. Players and creators collaborate to keep games running in a market-driven environment. The more the popularity, the better the experience, and the greater the number of players. Every player in the game space can help improve and upgrade the game. Players who have gained game governance tokens can vote for a better game experience to update and improve the game.

DAOs Governance

The game’s governance tokens are the most rewarding in GameFi; holders of Game token tokens can vote to upgrade the game or suggest development plans. DAO makes GameFi fully participatory by allowing token holders to propose and vote on project changes. DAO organization management is a widespread technique in decentralized apps, allowing users to become more than just gamers, with the ability to influence the game’s future development.

Low-cost Involvement

Most of the games in the GameFi ecosystem are entirely free to download and play. You can gain from the accessibility of all sorts of Play-to-Earn games. However, certain games may need you to purchase the project’s native token and begin using in-game assets, characters, and other gaming items.

How to Get Started with GameFi

Thousands of blockchain games are available; each game has its economy and model. However, most of these digital assets offer similar monetary value to their users.

Create Web3 Wallet

Unlike traditional games, GameFi does not use the standard username/password account setup. Instead, a Web 3.0 wallet is required to access the game ecosystem. To find out which wallets the game supports, go to the game’s official website. While crypto wallets do not keep money like traditional wallets, they store the encryption keys for digital assets, allowing you to access, send, and receive cryptocurrencies. However, the wallet needed to play will vary depending on the network where the game is hosted.

Connect With Web3 Wallet

Connect your cryptocurrency wallet to the game. In contrast to traditional online games, which require you to create a username and password or submit your email address, blockchain games create an account using your crypto wallet. Then, on the relevant game’s website, look for the option to connect your wallet. Your wallet will ask you to sign a site message to confirm the action.

Verify Game’s Requirements

Learn about the game’s specific requirements. For example, many Play-to-Earn games require users to start by purchasing in-game cryptocurrency tokens or NFTs; since GameFi relies on a cryptocurrency network, a player must first obtain that coin. If you don’t have the funds to purchase a token, the ecosystem has a scholarship mechanism that allows you to borrow NFTs from other players. But, If you take the scholarship route, you will have to share your gains with the NFT owners.

Final Takeaway

The GameFi growth trend is expected to accelerate as blockchain technology progresses. GameFi is especially appealing in emerging economies due to owning in-game assets and earning cash from games. However, it is critical to understand that GameFi is not gambling. To earn cash, the games we consider part of this developing sector require players to use a combination of skill and strategy.

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