In this article, we will talk about both the pros and cons of GameFi. What are the pros of using GameFi, and why do some people try to stay away from this sector? But before we talk about that, let’s look at what GameFi is in more detail.
What does GameFi mean?
The word “GameFi” was made by combining the words “gaming” and “finance.” It is made up of three main parts: game, decentralized finance, and non-fungible tokens (NFTs).
The games themselves are what GameFi is built on, and decentralized finance is what makes it work. NFTs are digital representations of assets like avatars, skins, and land that can be found in a game.
If you’re new to this, you should Understand GameFi’s features and processes first before diving into this topic.
Key points about GameFi
With all of its useful features, GameFi has made a huge difference in the gaming industry. Before we talk about the pros and cons of GameFi, here are some things you should know about it so you can better understand why using it could be helpful or not:
GameFi is driven by tokenomics
GameFi projects, like NFT games, build an all-encompassing system that uses its utility coin to set up an economy. You’ll need the token if you want to take part in any of the project’s many economic interactions.
Some GameFi projects, for example, use a single token that can act as both a utility token and a governance token. Utility tokens can be used to buy a lot of different things in the game, like clothes and accessories for your character. On the other hand, if you plan to use the tokens for governance, you will be able to vote on how the GameFi project will develop.
Dive more into this topic so you could understand Everything you need to know about GameFi tokenomics
Traditional video games are different from GameFi
In the vast majority of video games, players can use fiat money to buy in-game items to help them win or give them more control over the gameplay. However, these things are usually worthless outside of the game. When you trade your in-game items with other players who aren’t playing the same game, you won’t usually make money from it.
GameFi, on the other hand, doesn’t have this problem. Here, you can buy in-game items, which often come in the form of NFTs, with cryptocurrency. You can also put your in-game items in a wallet or sell them on the market for cryptocurrencies or tokens.
GameFi uses DeFi
There are parts of many GameFi projects that use decentralized finance (DeFi). GameFi uses some of the things that DeFi can do, like yield farming, staking, and liquidity pools. You can stake your tokens to earn interest on them and other perks. In the meantime, the assets you stake will either be used to develop the project further or to buy other assets.
When DeFi elements are added to a game, the way, it is played also changes. Those who have governance tokens, for example, can vote on how the game will be made better in the future. The end result is a game that is not run by a single institution and can’t be controlled by a single group.
With GameFi, players can own in-game assets
Blockchain is a type of technology that lets you keep full control of all of your in-game assets. This also means that you have complete control over any in-game items that you buy with real money.
You can buy a wide range of things inside the game, like pets, houses, weapons, and more, just like you can in other games. On the other hand, GameFi is different from most games since you can fully own these assets. So, you can do whatever you want with the assets, such as develop, make investments, trade, or sell them.
NFTs have a big effect on how GameFi works
NFTs are used in GameFi projects by letting players use and own assets like heroes, weapons, and skins that they buy inside the game. You can also trade these in-game NFTs with other players.
Most GameFi’s projects use the P2E business model
Play to earn or P2 is a new way to play games. To be able to play P2E games, you must make an initial financial investment. This will give you full control over in-game assets by letting you own them in the form of NFTs.
In the cryptocurrency industry, there are also a lot of people who try to scam people. Because of this, you should be very careful before delving into any new P2E games.
Discover Play It Forward’s GameFi projects on this article called: GameFi projects you should check out
Pros of GameFi
Now that you know more about how GameFi works and what it has to offer, let’s look at some of the reasons why you might want to get into this space:
The P2E business model can now be used in the game industry because of GameFi
GameFi lets you make money and passive income by doing things like playing, staking, liquidity mining, and yield farming. You can get real-world money in exchange for your in-game rewards. You can also rent out your NFTs to make extra cash.
As was already said, GameFi also lets users stake their tokens, which means they can become token holders. In a nutshell, this puts you in a place where you can actively take part in making decisions about the game. The end result is a perfect gaming community where everyone is accepted and included.
The P2E business model is a big reason why GameFi has become so popular in such a short amount of time. GameFi makes transactions more clear, which helps build trust and makes the platform more appealing.
You can be involved in the GameFi operations and earn from it at the same time
After you join a GameFi project, you will have full control over any in-game transactions you make. This control applies to everything you have in the game. Using governance tokens, you’ll also be able to vote on how the game will progress and change in the future.
The fact that players help run and maintain the game on a daily basis is one of GameFi’s advantages from a purely operational point of view.
Cons of GameFi
Since anyone can use GameFi, it’s much easier for anyone to take part in the different activities that are held on the platform. This is different compared to traditional video games, where the game developers still own all the assets even after the items have been bought.
However, not every player is swayed by all the talk about GameFi. Some people are still hesitant to join the space. Here are some of the reasons why some gamers might not want to delve into the world of GameFi:
Market conditions that are hard to predict
The situation is similar to how the prices of a large number of other crypto assets are set. When you enter a GameFi ecosystem, you can choose from a number of ways to make money, such as investing, staking, or just playing games to earn cryptocurrency incentives.
When making an investment decision, you should also think about how volatile the cryptocurrency market is. Changing how the game works or how tokens are bought and sold within the game could make the price of tokens go down. A lot of players are scared by this kind of unpredictability.
There are high entry fees
Experts agree that the main reason people play blockchain games is the chance to make money. Those who want to take part in the project, on the other hand, will have to spend a lot of money to get the necessary assets before they can start playing the game. It’s possible that people don’t play P2E games because the costs of the necessary NFTs are too high.
The good news is that there’s a crypto gaming guild like Railings University whose goal is to lend NFTs assets to players who want to play the game in exchange for a share of the user’s overall awards.
Strict regulatory measures
Regulatory restrictions have been put in place in a number of different places because GameFi uses blockchain technology. Even though Asia is one of the biggest markets for both gaming and cryptocurrency, governments in places like China, Japan, and South Korea have passed laws that hurt both GameFi and DeFi.
For example, the People’s Bank of China has issued a “924 Notice” that makes it illegal to trade or invest in cryptocurrencies. So, if you play crypto or NFT games or do business with them, you could face both administrative and criminal penalties.
In Korea, it is against the law to trade game tokens for real money. On the other hand, the Japanese government thinks that all parts of GameFi should be seen as different ways to gamble. Even though GameFi is available in these countries, gamers are hesitant to join because they might get in trouble with the law if they do.
To use GameFi, you need a crypto wallet. This wallet will hold all of the digital items you earn from playing games. It’s also where you’ll keep the cryptocurrency you’ll use to buy the first NFTs and start playing the game.
But hackers are more likely to be able to break into digital wallets. Many players think it would be smart to wait until there are more guarantees of safety before going into the space.
There have been a lot of GameFi projects put out there in the hopes that one of them will be the next Axie Infinity. Some games don’t have a clear plan for how they will be made, and others are being worked on by people who haven’t made a full-fledged game yet. Because of this, there is a good chance that some of these games will have parts that aren’t what they seem to be.
The biggest risk that comes with these kinds of projects is that the people who made them could suddenly disappear with the money that has been put into them. As a result, the players will have lost any value that their tokens had, as well as any value that they had built up from playing the game. This has happened more than once, so it makes sense that many players are worried about the risks it could bring.
Where does GameFi go from here?
It hasn’t even been that long since GameFi was first brought to the attention of the general public. So, in the future, we can look forward to both how its potential will unfold and how it will grow.
The fact that people can have fun and make money at the same time is a big selling point for the space. Even though blockchain technology has a lot of good points, it’s not quite what you’d call “perfect.” People in the gaming community are worried for a number of good reasons.
Even so, we need to be patient and give GameFi a chance to show what it can offer because, in the long run, it could be one of the best ways to make money.
Would you prefer to be a GameFi gamer or an investor?
Believe it or not, there are millions of crypto experts and supporters that contribute in building GameFi, and you’re just one-step closer to being one of them. Be a gamer or an investor now!
Enter as a gamer
Start your gaming career with Railings University (RU) – the only guild managed by Play It Forward DAO for years now! Dive in to the metaverse and start earning through playing blockchain P2E games, you can be involved in varieties of GameFi projects as well.
Our Youtube channel has multiple crypto gaming tutorials and informative events such as Ask Me Anything (AMA), gaming partnerships, and many more. Connect with us through Facebook page of Railings University to learn more.
Enter as a token investor
Despite the huge drop of token prices in the market caused by the worldwide crisis, Becoming a PIF token holder is still promising, as our GameFi projects and partnerships multiply the token prices will eventually rise up again sooner or later.