What is GameFi in Cryptocurrency?
GameFi is a combination of video games (Gaming) and decentralized finance (DeFi). It describes integrating blockchain technology into video games in one form or another. One of the most common examples of GameFi is decentralized ownership of in-game assets. For example, players can be the sole owners of weapons, characters, skins, digital real estate, etc.
GameFi applications can also be used to incorporate decentralized payment systems in video games. Play-to-earn (P2E) games, which use this payment system, rose in popularity around 2020. Unlike some traditional games, which use a pay-to-win model, P2E games reward players for investing time in the game.
A Deeper Look at GameFi
GameFi has quickly become a very popular concept in the gaming and blockchain industries. Traditional gamers who are familiar with the traditional pay to win model are being attracted to the play-to-earn model where they are rewarded for their time and effort.
The owning of scarce digital assets is central to many games in the GameFi industry. Bitcoin first introduced the concept of digital scarcity on the blockchain. NFTs further built on this technology by applying this scarcity to items other than currency, such as art and in-game assets.
While this technology is still relatively new, it has opened up the earning potential of NFTs. Players who earn in-game assets, such as weapons, skins, armor, abilities, etc., can sell them on an NFT marketplace. The rarer an item is, the more it can be sold for.
Another strategy that is quickly gaining traction is NFT rentals. This mechanism allows players to lease their digital assets to other players for a fixed amount of time.
Some of the most successful GameFi video game titles include CryptoKitties and Axie Infinity.
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