25 ‘techies’ from across the globe all walk into a bar
No, this isn’t the start of a bad joke, but this is a common occurrence in most Massively Multiplayer Online (MMO) video games – digital realms that have successfully connected the earth to play, socialize, and create new worlds together. But of course, where people congregate and create new communities, they also create economies surrounding them. Over the last two decades, entire industries have been created through virtual worlds – buying and selling digital goods and services for real-world currency. The most well-known practice of farming currency in games is colloquially known as Gold Farming, and even has its own pages on Wikipedia and Encyclopedia Britannica.
Virtual Economies, Blockchain and the Impact on Developing Countries
Despite being banned by most games’ End User License Agreements (EULA’s), what started as small cottage-industries of individuals selling their online goods rapidly transformed into an entire industry offering full-time employment to those in developing nations. Perhaps most famously, people in Venezuela have turned to farming gold in various games for financial stability and regular paychecks – selling their digital assets to western gamers as their primary source of income. Due to the restricted nature of digital trading by gaming behemoths, much of the power in this industry is stripped away from the workers, with businesses dominating the landscape.
This has started to change with the advent of the blockchain. Most recently, huge numbers of people in The Philippines turned to crypto-based video games to help support them through COVID-19 lockdowns. 2020 saw non-traditional “gamers” such as grandparents, cab drivers, store owners etc all turn to using a new video game to generate and sell items on the blockchain. The most notable difference between these crypto assets and the traditional gold farming was that these games actively encouraged users to create and sell their digital assets – moving control from the businesses who employed staff to farm gold, back to the individuals who played. By creating Non-Fungible Tokens (NFTs) of the digital assets, each individual retains personal ownership of their items, and can buy, sell, or trade whatever assets they want to whomever they want.
What Does This Mean For the Future of Gaming?
With the gig economy in full swing on American shores, and other Western Economies, the advent of crypto-based income from games opens up an entirely new world for those looking to start a side hustle, or even a full time business. While many of the traditional gig economy jobs revolve heavily around time or labor, the creative arts have not been monetized as quickly. New games allowing users to create their own limited edition NFT assets within the game, to be bought and sold by their peers, may open the door to an entire new class of side income to artists and other creatives.
In recent years, the video game industry has leaned heavily towards a pay-to-win model – with games offering loot boxes in exchange for real-world money, to help players get an advantage in their games. Not only does this alienate the majority of the player base who can simply be out-spent by their competitors, but it creates a financially unsustainable environment which relies on a small number of heavy spenders – who may lose interest and switch games at a moment’s notice.
As a way to combat this, many games are now relying on monetizing cosmetic items – digital assets that change your character’s appearance without impacting gameplay. With the cosmetics market now estimated to be worth approximately $40 billion per year, this provides a perfect balance for gamers who want to express their individuality, without breaking the game mechanics or creating an unfair advantage – yet doesn’t provide a financial incentive for the user base.
Introducing Play-To-Earn – Rewarding Gamers for Playing or Creating
By allowing the user base to create and vote on cosmetic items, and allocate these to players as rewards for completing challenges within the game, the Play-To-Earn economy will revolutionize how people interact with the economies of their favorite games. A creative designer could create a cool new hat featuring their branding, which would have a finite number of NFT’s of the item generated with the game – to be awarded to another player for reaching a certain milestone or achievement. This player could then sell their collectible hat – a share of the profit then being distributed back to the artist.
By having all digital assets in the form of NFT’s, buyers can be certain they truly have purchased a collectible item, and creators can know they’ll be paid fairly for their work. This creates a more fair and accessible marketplace, enabling gamers around the world to profit from and enjoy the game in whatever way they prefer.
About the Author
Mark Laursen is the Founder and CEO of Bright Star Studios, creator of upcoming MMO Ember Sword – a love letter to the gaming community which will build its economy upon the blockchain. Mark is a unique gaming pro and entrepreneur – he was previously a Counter Strike Pro-Player and renowned MMORPG World Champion (2 years and 3 months undefeated in all events online/offline). In 2018 he founded Bright Star Studios, a global independent video game development studio working on next generation MMO experiences. In May 2021, the company announced a $2M funding round and subsequent land sale.
Featured image: ©Nomad Soul