Hey. It’s AJ.
As advances in blockchain drive innovation in the world of video games, the use of non-fungible tokens, or NFTs, is enabling new and creative ways to imbue digital items with actual monetary value.
My colleague Stephanie looked into one Vietnamese blockchain startup, Sky Mavis, that is pioneering the integration of NFTs in video gaming in its hit title Axie Infinity. The game allows players to raise, battle, and even create worlds for their digital pets. Think of it as Neopets, but with NFTs. Users can actually generate real-world earnings by spending time playing the game. Its number of active users soared to over 800,000 last month from just 16,000 in January.
But the use of blockchain applications in video games remains fairly niche. Part of the problem is that the application’s reliance on cryptocurrencies means that in-game values are subject to wild fluctuations. To play Axie Infinity, for instance, users need to purchase three pets, or Axies, to get started. It seemed a reasonable ask until the price of the NFTs skyrocketed from USD 20 in November 2020 to over USD 300 this week.
In-game purchases have been around for a while. If you spend money to buy something to be used in a video game, there’s no guarantee that you can resell it to another player. This essentially locks your money in the game with no way to extract it. But the use of NFTs is opening the door to the exchange of digital assets for real-life currency, paving the way for video games to be a new means for people to generate income.
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