Web3 and NFT games have become the talk of the town among netizens. The play-to-earn model has built a whole new paradigm for creating real-world value from gaming items and digital commodities through the use of non-fungible tokens (NFTs), which are based on blockchain technologies.
The funding graph of Web3 gaming clearly testifies that the buzz is real and a lot of investors are inclined towards it, despite a small dip in the last few months of 2022.
Therefore, gaming aficionados are slowly entering the NFT space as well with the help of NFT gaming vibe. Also, not to miss, a lot of play-to-earn titles are now generating the latest buzz with the help of NFTs to attract Web3 enthusiasts, startups and investors.
Total investments in Web3.0 games in 2021 equaled $4 billion. This number has already been surpassed in 2022 as investments currently amount to about $7 billion. If that pace remains, expectations are that the number will soar to $10.2 billion by the end of 2022.
Don’t take our words, simply have a look at the monthly Google search for Web3.0 and its related terms to believe that Web3.0 has taken the world by storm.
While everything might seem rosy to you, but in the real sense – it isn’t. The road through Web3 and NFT gaming is quite a tumultuous one and you must take every step with utmost caution and care. Let’s dive into the rewards and risks associated with Web3 gaming.
Rewards:
Web 3.0 and NFT gaming are very well hailed to provide a bucket full of advantages, especially as the industry grows in popularity and creativity.
Let’s have a look at some of the primary incentives or perks they offer to excite content creators, users, collectors and fan communities.
1. Well engaged community
The Web 3.0 gaming ecosystem is distinct on many levels. But the one that grabs the attention is the community-level interaction that is drawn from the space’s underlying values.
The Web3 and NFT community is a space where people interact with each other and engage their time by sharing and working on ideas, as well as supporting and investing in one another’s projects.
An apt example of an interconnected NFT community is the Bored Ape Yacht Club, which is a club for people who have the same type of NFTs.
2. Ecosystem grows exponentially when it works
Just after a year of its inception, Yuga Labs (owner of Bored Ape Yacht Club) raised USD 450mn In March 2022. Given the huge success of the NFT and Web3 gaming space, it’s remarkable how quickly some of these ecosystems can grow.
You can find several projects that are successfully utilizing blockchain technology for a long time, therefore amassing a widespread community of creative content creators, collectors and loyal fan base.
At the same time, significant influencers and industry figures are also progressively identifying and betting on the Web3 & NFT space, creating the much-needed buzz among their followers and the public.
3. Massive profits to be made
When it comes to generating revenue and profits, the Web3 and NFT gaming space is quite a good bet.
Created for free (only needed to pay gas fee), Crypto Punks are now worth millions of dollars. Web3 gaming developers, NFT buyers and investors have drawn out a lot of money. A case in point: Beeple’s NFT being sold for $69.3 million last year transformed the way the world looked at digital collectibles.
NFTs open a lot of avenues for generating profits including:
- creating and selling your work around art, music, memes, audios, and videos, as a NFTs.
- trade NFTs by buying and selling them at a profit, which necessitates a thorough understanding of the piece in order to profit from resale in the future.
- play blockchain-based Web3 games that allow you to buy in-game items as NFTs, which can then be traded in the secondary market to make money.
- CryptoKitties is one such game, and its NFTs are currently extremely valuable in the market.
But, Martin Repetto, CEO of Mokens League, a sports-based blockchain game said, “A model where everybody gets rich playing a game will never work. “You want to have people frustrated enough that they want to keep on trying, but not so frustrated that they just want to quit the game.”
4. Livelihood
Games like Axie Infinity, process millions of dollars in transactions every month and provide a sustainable income for many gamers.
When gamers purchase in-game assets as NFTs, they get ownership and portability to move them to wallets and trade them with other users or between different games. This allows the gamers to capitalise on supply and demand in the secondary market and monetize their digital assets.
Risks:
Well, Web3 and the NFT gaming ecosystem isn’t a bed of roses. It comes with a certain set of cons and bottlenecks that should be considered:
Well, Web3 and the NFT gaming ecosystem isn’t a bed of roses. It comes with a certain set of cons and bottlenecks that should be considered:
1. Regulatory Uncertainty
Web3 has taken the internet industry by storm and led to the next level evolution of the internet with the apt use of the blockchain technology.
Therefore, the web3 includes categories such as
- non-fungible tokens (NFT)
- crypto-currencies
- decentralized finance (DeFi) and
- decentralized autonomous organization (DAO).
Since the legal environment surrounding crypto-currencies is still quite blurred, having a proper clarification on the legality and classification of virtual digital assets is critical. Needless to say, the majority of the Web3 and NFT games have a lot of digital assets in use and their accountability, conversion and distribution stir quite some concerns.
But despite the regulation risks, the investments continue to happen all across the globe, resulting in an extensive growth of the Web3 ecosystem.
2. Problem of Mass Adoption
Gamers may not (yet) like crypto or NFTs, but they still do like games. There isn’t any reason why web3 gaming should be an exception to that rule — we just have to overcome the stigma.
Although the concept of in-game trading is not new at all, NFT and Web3 games have been struggling to receive good support from the traditional gaming community.
Onboarding in blockchain games is at times confusing and time-consuming, while the quality of gameplay of the web3 pioneers falls short of the AAA web2 blockbusters.
Traditional players — convinced by equally sceptical gaming media — usually find it hard to trust web3 games, expecting to be robbed of their investment at the first opportunity. As a common notion, the promise of web3 gaming feels too good to be true — and the games are just not that fun.
Wondering what can bring a change of mind?
Web3 studios with non-predatory business models to back their games that are fun, on top of the blockchain. If they aim for mass adoption, they will need to prioritize the quality of their gameplay and become more accessible for traditional gamers through engaging marketing and gamified onboarding.
3. Rug pulls in Crypto space
Frauds and scams are an inevitable part of every industry, so is in the Web3 and crypto space.
It is very normal to come across pump and dump schemes aka the rug pulls – where developers illegally take off investor money and abandon the project after allocating a huge amount to a fake crypto project.
Thus, such scam Web3 gaming projects are generally created by people with malicious intent. Therefore, it is very important for investors to do a detailed background check before investing in any project and be very much aware of cyber criminals who intend to mint out the invested money.
While all this may seem to be a Herculean task, they must not be ignored keeping in mind the pie-in-the-sky promises from Web3 gaming projects, as scams tend to revolve within. Although the list is endless, listed below are some of the most crucial factors that can help you spot the black sheep. Irrespective of the kind of association that you may develop with any Web3 gaming project, ensure that its a green signal at every step.
4. The myth of complete decentralization
Decentralization is a quite powerful philosophical and marketing aspiration, which the current tech infrastructure lacks. Based on blockchain technology, Web3 games are no exception.
Simply put, a blockchain is a distributed database spread out among several network nodes at various locations. Its decentralized arrangement helps to maintain the fidelity of the data stored therein. if someone tries to change a record at one instance of the database, the other nodes would not be affected.
Compared to a network reliant on a single actor, a decentralized system enables more transparency, often praised in the context of decentralized financial transactions, which become immutable as a result.
In reality, a lot of blockchains today don’t achieve the degree of decentralization needed to deliver the security promise, with some nodes actually being hosted on a single server — and no authority to disincentivize such practices.
Conclusion
Finally, the Web3 and NFT space has already made a lot of noise in the world, and there are a lot of prospects for ordinary people like you and me. It also spawned a fair portion of the benefits and concerns that come with Web3.0 and related digital collectibles. Hence, it is up to you to weigh the benefits and drawbacks before entering this ecosystem in search of opportunities.