Why GameFi Is Crypto’s Hot New Thing (and What Is It?)

Mom and dad playing video games with their daughter.

One of the hottest things in the crypto world right now is GameFi. Generally, GameFi refers to decentralized applications (“dapps”) with economic incentives. These typically involve tokens given as rewards for performing game-related tasks such as winning battles, mining valuable resources, or digital farming. This is an approach also known as play-to-earn.

Basically, acquiring tokens in games that are growing in popularity can increase the value of those tokens. This means that the game is not only competition with the digital dragon, but also a kind of monetary speculation. The token is designed to function as a full-fledged cryptocurrency. This would theoretically mean that players could convert their in-game winnings into cash on a variety of decentralized exchanges. GameFi tokens have cryptocurrency volatility that is not pegged to traditional currencies. This means that even a small profit can increase significantly when demand increases.

How do GameFi companies make money?
Game developers usually get tokens for their work, so the more people play the game and the more coins they trade, the more money they make. Some games charge a fee for certain transactions, and this money goes to the relevant company or the Ministry of Finance to receive money from the developer. Currently, regulators are still trying to catch up with the early wave of crypto development. They have already made it clear that they are concerned about the freewheeling DeFi world, and they could announce additional rules this year.

 

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