- Andrew Kiguel is CEO and cofounder of nftgamef.com. His firm has invested millions into cryptocurrencies.
- He says Play-to-Earn gaming will be the next big cryptocurrency trend, but there are risks in investing.
- This is an opinion column. The thoughts expressed are those of the author.
Following the popularity of the metaverse and other NFT assets, Play-to-Earn, or P2E gaming, has the potential to be the next digital megatrend that will revolutionize gaming for both creators, investors, and players alike.
For the uninitiated, the difference between P2E gaming versus traditional games can be compared to Pokémon cards versus traditional board games. Unlike a regular board game, Pokémon leaves the player with an asset and wanting to collect additional cards. Just like Pokemon cards, blockchain technology allows players to collect in-game rewards on e-wallets. These rewards can be converted into cryptocurrencies and turned into fiat money for real-world usage. In other words, crypto-gaming is allowing players to make real cash while playing video games.
See more: Investing in axie infinity
NFTs of assets in games like Axie Infinity, a Pokémon-like game where cute animated monsters duel it out, routinely sell for over six figures. Unlike Pokémon, however, players need to invest at least $200 to purchase an in-game character to play with. They can also earn the cryptocurrency AXS while playing the game, which can be exchanged for fiat money. Unlike Pokémon, the average Axie player can make $500 / month by playing the game — and today, there are career players that make a living off it.
The high cost of entry is creating an investment opportunity for institutional investors.
But the high cost of entry and the game’s digital economy have sparked an industry of creative investment opportunities for institutional investors as well. Look no further than the VC firm Andreesen Horowitz, which invested $4.6 million in Yield Guild Gaming, a firm that lends Axie characters to players who don’t have startup capital to play the game. Andreesen Horowitz also invested $152 million in a Series B for the game’s maker, Sky Mavis, a Vietnam-based gaming studio. That deal values Sky Mavis at $3 billion. Investors like Andreesen Horowitz see that P2E is the future of gaming and want to capitalize on this segment before it goes mainstream.
Tokens.com, the company I operate, was the first (and possibly only) publicly-traded company to invest in P2E through a purchase of AXS. By purchasing tokens, retail investors can participate in this trend without having to actually play the game. We purchased approximately 1,000 AXS and 175,000 Smooth Love Potion tokens, a utility token also used within the game to breed new characters. Our investment into AXS is worth more than $100,000 now. Our bet is that we can participate in the profits of the game as more users play — as more players engage in the game, the price of the cryptocurrency appreciates accordingly. The market cap of AXS is currently near $6 billion. AXS has appreciated from roughly 55 cents at the beginning of 2021 and has traded as high as $160, currently trading near $107 for appreciation nearly 20,000% for early investors. We also have our eye on other fast-growing P2E games like Cryptoblades, Mobox, Illuvium, and Splinterlands.
Web 3.0 enables investors and players to share in the lucrative revenues with the creator of the game. We see the migration by gamers from traditional games to P2E and we want to participate in that evolution.
Beware, today’s hot new game can become yesterday’s news. And tokens can lose value.
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The risk, however, is in finding the right games that will capture and retain player interest. Hundreds of these gaming tokens will become available — but beware, they are volatile. Player interest can quickly shift to the new hot game, leaving tokens in yesterday’s hot game worth significantly less. In the future, expect to see celebrities and brands throw their names behind P2E games to earn a cut of the profits, just like you’ve seen in the traditional gaming market. Once that happens, the pathway to a mainstream audience is set.
In the early days of blockchain, people envisioned it would revolutionize supply chain management and many other aspects of corporate life, which hasn’t exactly come to fruition. However, in gaming, we’re starting to see the incredible impact that blockchain can have. Video games built on blockchain technology enable not just gaming, but the ability to earn, store and resell crypto and NFTs earned for winning. The demographic is global and huge. What started as a hobbyist blockchain gaming system is moving to Silicon Valley corporate boardrooms as investors seek to capitalize on games that are not only fun to play, but can also be very profitable. Expect P2E to be one of the most discussed topics in crypto in 2022.
Andrew Kiguel is the CEO and cofounder of nftgamef.com.