What is GameFi and How does it work?

Problems with Conventional Games

Though traditional video games have in-game currencies that allow users to upgrade their characters and skills, they do not bring any value to the lives of gamers. These in-game currencies do not have any real-life monetary value, and neither do their values appreciate. The scope of these gaming assets is within the game, and they cannot be traded or monetized for fiat money in real life or outside the game. 

Also, the major problem with conventional gaming is that these assets are not owned by the gamers but by the game developers themselves. This limits the gaming experience and scalability of the games. 

Introduction to Blockchain Games

The in-game assets in blockchain-based games are either cryptocurrencies or NFTs, and the gamers can completely own that. These in-game digital collectibles can be transferred to crypto wallets, and they can be traded for money in cryptocurrency exchanges or NFT marketplaces. Thus, blockchain-based games combine every human's two favorite things - playing games and earning money. There is no wonder these games are a massive hit and have revolutionized the gaming industry. After the advent of blockchain games, the sales of NFTs have surged, as NFTs find their best application as transferrable and unique gaming assets with a verified digital signature. 

What is GameFi?

GameFi is a fusion of two terms, Game and Finance, literally referring to play-to-earn (P2E) blockchain games that offer real-life monetary benefits to the players. The GameFi involves the creation of a gaming ecosystem fueled by cryptocurrencies, NFTs, and blockchain technology. There are various gaming genres like war simulation games (rewarding players for winning the battles), e-sports betting games, and adventure games. The concept is simple. The players have to complete tasks or win battles or make progress through different gaming levels to earn rewards that can be traded on marketplaces either for gaming characters like skin and upgrades or can be exchanged for fiat money. 

How does GameFi work?

The rewards vary from game to game, including but not limited to cryptocurrencies, gaming characters like avatars, weapons, and costumes. Every game has a unique gaming plot and storyline. Also, different games are deployed on various blockchain networks depending on the needs. 

How a game offers real-life monetary benefits is the most frequently asked question about GameFi. Most of these games use NFTs as their gaming elements. The users can acquire these gaming assets and trade them for other NFTs or money in an open NFT marketplace like OpenSea or Rarible. 

Also, the values of NFTs are associated with their market emotions or demand. When the game is a hit, the utility of the gaming assets becomes highly sought after by players across the globe, increasing its value over time. Now, the NFT holders can wait for some time and trade them at higher prices. Also, these NFTs can be utilized for better gaming performances, consequently resulting in better rewards. 

Getting started with GameFi

Now, getting started with GameFi is easy, as there are no fancy requirements. All You need is a smartphone and an active internet connection. But, while getting started, make sure you choose the suitable game. There are thousands of GameFi projects in the blockchain space, and not every project is authenticated or genuine. Once you have found a genuine and safe game, you need to connect your cryptocurrency wallet to the game. Then, you are good to go!
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Annamalai V

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An enthusiastic writer on the crypto and blockchain niche. Content strategist and whitepaper writer who has worked with a ton of leading projects in the cryptocurrency space. My passion to draft content will never get old.

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