The Basics of GameFi in the World of Crypto

The Basics of GameFi in the World of Crypto

Over the years, with the rising popularity of GameFi, it has been more and more improved, taking over the traditional gaming industry today. This is getting popular primarily because of how it offers players an opportunity to make money while having fun. GameFi actually refers to play-to-earn blockchain games, offering economic incentives to players. Players can typically earn cryptocurrency and NFT rewards by completing tasks, fighting other players, and progressing through the various game levels. And unlike traditional video games, most blockchain games allow players to move game items outside of the virtual world. This allows gamers to swap their NFT items and crypto winnings on cryptocurrency markets.

In the gaming and blockchain industries, GameFi has recently become a very popular notion. Traditional video game players, who are accustomed to paying to play an online game, are drawn to blockchain video games, in which they can be compensated for their time and work. Thus, GameFi can be defined as the merging of video games and decentralized finance in a simple way. Blockchain technology is employed in this form of video game, and it allows players to be the single and certified owners of the game’s virtual parts.

“Play-to-Earn” Approach of Gaming

The most common paradigm in traditional video games is “pay-to-win,” in which players must pay to acquire an advantage — upgrading, lessening waiting times, or purchasing a virtual product. GameFi, on the other hand, introduces the “play-to-earn” approach. With this, it is the players who profit from their knowledge or time investment.

GameFi is an emerging crypto-gaming category, having the potential to make playing a full-time profession for the masses. It gives players the ability to earn a living in this industry, allowing them to earn digital assets in exchange for their in-game efforts. They can even keep their assets stored on a distributed network.

How Does GameFi Works?

The reward in GameFi can come in various forms, including cryptocurrencies and in-game assets — from virtual land, avatars, weapons, to costumes. Each GameFi project will have its own game economy and model. The in-game assets are usually NFTs that run on the blockchain, and may be exchanged on NFT marketplaces. In other circumstances, though, in-game assets must be transformed into NFTs before they may be traded or sold.

Players can earn rewards by completing certain tasks, fighting other players, or building commercialized constructions on their piece of land, depending on the game. Some games allow users to earn money without actually playing the game by staking or lending their gaming assets to other players.

As mentioned above, the methods for earning a reward vary depending on the game. But then, most GameFi projects share the same characteristics — NFTs and DeFi. NFTs, or non-fungible tokens are digital assets that are primarily created using blockchain technology. NFTs, unlike fungible tokens, are one-of-a-kind, indivisible, and have a holder. Users can own avatars, animals, houses, tools, and other items represented in NFT, just as they can in traditional games. Users can then invest their resources in developing their digital assets before exchanging them for cryptocurrency, making additional revenue.

DeFi, or decentralized finance, on the other hand, is an experimental type of financing that relies on smart contracts on the blockchain rather than central financial intermediaries like banks. Gambling, for example, is allowed in some GameFi projects. Players can thus earn interest by blocking some of their tokens.

How to Start Playing a GameFi Game?

There are thousands of blockchain games available, each with its own set of rules. But then, you should be aware of the websites that you are about to rely on. It is risky to connect your wallet or download games from unfamiliar websites. Create a fresh crypto-wallet exclusively for this reason, and only utilize funds that you can afford to lose.

Create A Crypto Wallet

The initial step you must accomplish would be having to create a crypto wallet, before actually delving into the game itself. You need to have a compatible cryptocurrency wallet for you to access the world of GameFi. You may need to use multiple wallets or connect to separate blockchain networks depending on the game you are playing. Moreover, you may connect your cryptocurrency wallet to the Ethereum blockchain as well, and play most Ethereum-based games.

Unlike traditional games that require a login and password, blockchain-based games require you to identify yourself with a wallet. Your wallet will store your crypto and NFTs, as well as allow you to conduct other digital transactions. It cannot just be any wallet because there are many different types and not all of them operate with every crypto ecosystem. This implies you should double-check compatibility before attempting to put one up.

Connect Your Wallet to the Game

Of course, you must connect your wallet in order to play a blockchain game. Make sure you are connecting to their actual website rather than a spoof. Look for the option to connect your cryptocurrency wallet on the game’s website. Most blockchain games use your crypto wallet as a gaming account. Therefore, you will probably be required to sign a message on your wallet before you can join the game.

Check the Requirements to Play

To get started, most GameFi initiatives will ask you to buy their cryptocurrency tokens or in-game NFTs. The prerequisites differ for each game, but you should always examine the earning potential as well as the overall hazards. Make sure to calculate how long it will take to recoup your initial investment and begin profiting. Moreover, in other GameFi games, you have to gain profits through your avatar or with similar digital assets as well. This implies you’ll have to buy them before you can play. To begin playing Axie Infinity, for example, players must have at least three Axies in their wallet.

How Can a Game be Decentralized?

Traditional games are completely centralized. The studio is responsible for a game’s design, production, and distribution, as well as its updates. However, in most GameFi projects, the goal is to involve the players themselves in the entire decision-making process. This process is referred to as the Decentralized Autonomous Organization, or DAO. A player must first have the “governance token” in order to join a DAO. The player’s power is determined by the number of tokens he or she owns.

The tokens are intended to function as fully functional cryptocurrencies. This means that gamers can convert in-game earnings into cash on a variety of decentralized exchanges. GameFi tokens have the same volatility as other cryptocurrencies that are not tied to a fiat currency. That means that if demand increases, even small winnings might expand significantly. Of course, holding volatile assets can result in significant losses as well as gains, and players who try to cash out during a large downturn may confront difficulty. Some tokens can also be used in a variety of DeFi dapps, earning interest by being used as collateral for loans, for example.

Key Takeaway

GameFi draws gamers by mixing entertainment and financial incentives. With the growing popularity of blockchain games, the metaverse will almost certainly see an influx of large corporations. And without a doubt, people will witness a lot of movement in this industry and all linked technologies in the approaching years. A new sort of virtual gaming environment has arisen as a result of the convergence of DeFi, games, NFTs, and the metaverse. Moreover, players can directly obtain financial rewards that are not available in traditional games.