Many teenagers grow up with a dream of earning a living by making and playing video games. With the rise of non-fungible token based online games, that dream can be a reality for many. One of the hottest cryptocurrency trends in 2020 was playing video games to earn NFTs on platforms like Axie Infinity and Animoca.
What Is an NFT?
Non-fungible tokens are digital assets that correlate to digital investments in art, video games, videos and music. The market first saw NFTs in 2014, although they didn’t gain popularity until the last year or so.
What Is the Purpose of an NFT?
NFTs offer a way to monetize digital assets. For example, Jack Dorsey — one of Twitter’s co-founders — sold the first tweet he ever wrote as an NFT and profited over $2.9 million.
Are NFTs Cryptocurrency?
No, NFTs are not a cryptocurrency.
NFTs are similar to cryptocurrency only because they exist on a digital platform and utilize similar technology. Physical money and cryptocurrency are considered “fungible” because you can trade dollars for dollars and tokens for tokens based on a uniform value for each currency.
NFTs do not offer a uniform value and cannot be traded in the same way. Each NFT has a unique digital signature. NFTs are basically like unique physical collector’s items — only they’re digital. Think baseball cards, art on the walls and autographed memorabilia.
How Do NFTs Work in Online Gaming Platforms?
NFTs are a way of decentralizing video game ownership. Instead of major corporations taking all of the profit from gamers, the gamers are stakeholders within the platforms. NFTs in online games work in two ways. The first is with platform-specific NFTs and the second is earning NFTs for playing.
Good To Know
Gaming platforms that reward players often require an up-front investment to gain access to the network. Some games cost over $1,000 before players can join. It’s possible to join with less money, but a lower initial investment also lowers the profit margin of earnings within the game.
Each NFT has its own set of rules that outline how gamers can trade and use it. It is important to note that some gaming NFTs only exist within their platform. For example, someone may create a character or avatar and sell or trade it to another gamer. The idea is to trade up and earn more valuable NFTs as time goes on.
The technology that regulates NFTs is called a smart contract. These are the rules for how an NFT may be used within a game. The smart contracts are then stored within a blockchain to establish a history of value and trading.
Earning NFTs for Playing Video Games
There are also ways to earn NFTs for playing on certain online gaming platforms like Axie Infinity and Animoca Brands. The platforms reward users with tokens and NFTs for playing longer.
NFTs may exist within the game or outside of the game in the general digital realm. Tokens are usually a more stable asset because they are easier to trade 1:1 for a steady value, but many gamers enjoy earning NFTs, too.
Turning NFTs Into Money or Cryptocurrency
The question that many consumers have is: How can you turn an NFT into real dollars or cryptocurrency?
How much a player earns is based on the perceived value of the asset within its platform. Players can sell and trade assets using an online market, auction house or exchange platform.
If players sell NFTs for cryptocurrency tokens, they can use the tokens in digital assets with retailers and businesses that accept cryptocurrency as payment. They can also sell cryptocurrency tokens for real money if needed.
What Are the Challenges of NFTs?
Right now, NFTs appeal to a small demographic of consumers. They are highly technical, so they present obstacles to the consumer that isn’t as tech-savvy. Another hurdle is that an NFT’s value is implied based on how gamers and other consumers value it. Consumers face a risk of losing money on NFTs in the long term.
There’s also a risk that some gamers won’t use NFTs as they were intended, within their digital platforms. Selling an NFT outside of its platform for profit may have a negative impact on gaming platforms.
Earning NFTs in online games may be a lucrative way to earn money — not to mention fun. Learning more about the rules and regulations before getting involved in trading NFTs is the best way to cash in on NFTs safely and securely.
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About the Author
Katy Hebebrand is a freelance writer with eight years of experience in the financial industry. She earned her BA from the University of West Florida and her MA from Full Sail University. Since beginning to work full-time as a freelance writer three years ago, she has written on topics spanning many fields, including home building, families and parenting, legal and professional/corporate communications.