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Without a keyword

Crypto games, NFTs, blockchain, investments in tokens – these words are now heard and are increasingly being heard in the context of the development of the gaming industry. Vyacheslav Utochkin, Deputy Director of the Competence Development Center for Business Informatics at the Higher School of Business of the National Research University Higher School of Economics, in an article for HSE Daily, tells what is happening, who benefits from it and what classic gamers think about NFT (spoiler: nothing good).

What is cryptogaming

Crypto games did not appear yesterday: how they work and why they are needed was discussed back in 2018, and even then it was assumed that the hype had passed. However, time shows that interest in this area is only growing. This year, this growth has generally crossed all boundaries. The level of hype, as well as the level of investment in this area, is now at its maximum. But, unfortunately, the maximum level of scammers. Therefore, one must be extremely careful with cryptogames. Nevertheless, the direction itself is very promising, and if you approach it intelligently, with a full understanding of all processes, risks and opportunities, you can earn hundreds, thousands and even tens of thousands of dollars playing.

Vyacheslav Utochkin, photo: Higher School of Economics

So, for starters: what are crypto games in simple terms? This is a special model of games – play-to-earn (feel the difference from free-to-play and buy-to-play), that is, gamers make money on games. How exactly? They buy digital property (characters, virtual islands, plots of land, a digital sword with armor, and so on), but, importantly, its authenticity and uniqueness is confirmed by blockchain technology.

This is not the same as in-game purchases, when you take a premium tank, and then, if you stop playing, it remains a dead weight on your abandoned account, since selling this tank inside the game to other players for real money is impossible, and selling account is prohibited by the rules of the game. With crypto games, everything is different: the good you buy there becomes your digital property, which you can dispose of at your discretion. This means that it can be exchanged and sold, both inside the game and on third-party trading platforms – in other words, earn money. For example, they bought a chest with heroes in one of the crypto games for $100, a legendary rare hero fell out of it, and sold it immediately for $7,000. True, it can, on the contrary, drop garbage that is not even worth $ 100, but which you can still play with, gradually accumulating cryptocurrency, which can eventually be withdrawn from the game. In many crypto games, for example in Axie Infinity, even the developers themselves say that the mission of Sky Mavis, the creators of the game, is not to make an interesting game, but to create jobs through the game so that people can earn money by playing.And the opportunity to earn in the game is more important than the fun.

One of the technologies that allows you to get digital property is NFT (Non-Fungible Token), a non-fungible token. It differs from bitcoin in that each NFT is unique, it has an “electronic tag” with information about the transaction, authorship and owner. Thus, two birds with one stone are killed: authorship is confirmed and ownership of the owner is fixed. By the way, NFT is now being added to the AAA games we are used to, so the technology has already gone beyond crypto games. True, players are often very unhappy with this. So, the developers of S.T.A.L.K.E.R. 2 changed their minds about getting involved with the NFT after criticism from players.

Why developers need crypto games

A successful crypto game is synonymous with impressive earnings. Thus, the monthly trading volumes of characters in Axie Infinity amount to hundreds of millions of dollars.

It is also a new, unoccupied market, where companies with less than a hundred employees are entering the billion dollar capitalization. For example, Sorare, recently valued at $4.3 billion, has only 34 employees! And Sky Mavis was valued at $3 billion in May and employed just 80 people. And this is after the expansion of the state! Just compare with 10,000 employees at Activision Blizzard and 11,000 at Electronic Arts.

Axie Infinity characters, photo: axie.substack.com

And one more important point: NFTs, tokens, crypto games – all this is now on the buzz. As Bloomberg writes, nothing excites venture capitalists more than the thought of decentralized databases, especially when combined with the acronym NFT. Major game publishers have also stepped up: now they are assuring shareholders that they are also keeping up with the times. Electronic Arts CEO Andrew Wilson called NFT an important part of the future of gaming. True, he added that it is too early to think how it will work. Ubisoft believes that blockchain has revolutionized and the company wants to become a key player in this area.

But it is worth remembering that hype attracts scammers who make ordinary fraudulent pyramid schemes instead of quality games, thereby reducing the credibility of the technology. Therefore, it is necessary to be attentive to the choice of a game project, to look at its developers, partners, the presence of an audit and a number of other factors.

Why do players need crypto games

Igor Demchenko, one of the students of the Competence Development Center for Business Informatics at the Higher School of Business of the Higher School of Economics, launched a crypto game a few years ago and said that in such games gamers gain freedom due to the fact that they can transfer purchased values ​​from one project to another, at any time to sell to other players and keep the acquired even if the studio that released the project went bankrupt.

Players earn in such popular projects as CryptoKitties and Axie Infinity. In the first case, they create, crossbreed and sell rare cats, and in the second they collect, grow and sell creatures that can fight in arenas and earn in-game currency. In both cases, NFTs are used.There is an opinion that NFT and the gaming industry have a great joint future, because non-fungible tokens are well suited to create characters, locations and in-game items.

Moreover, according to Stephen Walters, CEO and founder of Gallant Token, parents can create crypto wallets for their children, who will play play-to-earn games in the future and thus earn money for college or simply save for the future.

Earnings in Axie Infinity for many people, especially in the Philippines, has already replaced work and allows you to earn no less than on the same fishing. And yet, unlike normal work, real miracles sometimes happen in the NFT market. For example, when the Bored Ape Yacht Club art collection first went on sale, one man, John Knough, bought an image of a smoking monkey in a spacesuit with laser beams in its eyes immediately after the collection was created for $320. Six months later, John Knough sold the rights to the picture for 347 Ethereum, which is equivalent to $1.4 million. He says it has changed his life for the better.

What classic gamers think about NFTs: S.T.A.L.K.E.R. 2

In December, GSC Game World announced the launch of the S.T.A.L.K.E.R. metaverse and NFTs. 2. The idea was that the shooter would be the first AAA game that players could own a part of. It was supposed to be more than an immersive gaming experience.

The tokens were supposed to work like this: items will appear on the DMarket platform in the form of separate drops. In January 2022, the first drop will take place in the auction format, where you can buy the first metahuman: it will be copied from the owner using photogrammetry and added to Stalker as an NPC. In February, the developers planned to give away top-secret genesis kits.

GSC representatives emphasized that they want to introduce a unique meta element into the game, but items in the form of NFTs will not affect the gameplay and will not give players any advantages.

Nevertheless, the effect of this news can be compared with the digital explosion of the fourth power unit at the Chernobyl nuclear power plant: gamers began to scribble thousands of nuclear comments and bury the game under radioactive waste, and with it the creators and the gaming industry as a whole. In their opinion, NFT is a scam, an attempt to sell players air, the destruction of the “tube” gameplay and an unnecessary advantage of some players over others.

Frustrated gamers even demanded that the game be removed from Steam as violating the rules of the site, they were going to cancel pre-orders and cross Stalker off their wishlists.

All this happened on December 15th. And already on the night of December 16-17, the developers of S.T.A.L.K.E.R. 2 have announced they are ditching NFTs due to the scandal. “The interests of fans and players are a priority for our team. We make the game for you to enjoy, whatever the price. If you care, we care too,” wrote the GSC Game World team.

Cryptoskepticism of Steam, investors and individual game developers

The Steam platform has already expressed its unequivocal position on crypto games: a special item has appeared in the list “What should not be published on Steam”. Games with NFT and blockchain are prohibited, Valve plans to ban such games. This is due to the fact that the company does not allow the use of in-game items that have real value.

In general, some investors and bankers are also skeptical about cryptocurrencies: let bitcoin and Ethereum be recognized on Wall Street, but there are hundreds of other, unverified currencies. There is no guarantee that unstable tokens can be converted into cash. This can be prevented by technical failures and sudden price spikes. Of course, rich investors will survive this, but ordinary market participants may find themselves in a vulnerable position, financiers say.

With game companies, too, not everything is so simple. Now they are investing in blockchain because it can become something cool in the future, but not because this technology has practical applications here and now, writes Bloomberg. So, the company Zynga Inc., which makes casual games, has hired a vice president for blockchain. True, CEO Frank Gibaud doesn't yet fully understand what this role means. According to Gibaut, allowing players to own and invest in virtual items is important, as this concept can be used to make cool new games. But only in theory, but how and when is not yet entirely clear.

“It’s not entirely clear yet” is perhaps the key thing to say about the skyrocketing market for cryptogaming and NFT games. A lot of people are in a hurry to jump on the hype train, and it is possible that they will succeed greatly. On the other hand, you may have to jump off hastily, and so carefully so that you don’t get blown away by another train.

The topic of cryptogaming is very interesting, but carries great risks. So it would be best, before starting to do this, to thoroughly pump your technological literacy, reasonably weigh all the risks, not run after imaginary mountains of gold to where there is still no regulation and no one can ensure your safety from yourself. But if taking these risks is part of a strategic plan for professional development, then this area is not only attractive from the point of view of the potential unwinding at the speed of light, but also simply, in my experience, fascinating. And when you do something that you enjoy doing, the results are usually better.