These days, everyone’s heard about the "hamster" craze thanks to Notcoin. Its success sparked a surge of similar projects that have even attracted those new to cryptocurrencies. But Hamster Kombat and Notcoin weren’t the pioneers in merging games with blockchain. There have been many attempts on both PCs and smartphones. So why is Hamster Kombat so well-known while its predecessors are barely remembered? Is it still possible to make money through crypto games, or has that ship already sailed?
Let’s dive into the origins and types of crypto games, explore their pros and cons, and see if there’s still a chance to cash in. Ready? Let’s go!
The story of GameFi
GameFi blends "game" with "finance," aiming to combine online gaming with decentralized finance (DeFi). Simply put, it’s about integrating blockchain into games.
Fans of GameFi say this setup makes the in-game economy transparent — since players drive the market — and gives real value to in-game items and actions. Most GameFi projects let you earn cryptocurrency directly through gameplay or collect NFTs (non-fungible tokens) that you can later sell.
Background
Games with complex in-game economies aren’t new. Many MMOs like Eve Online, World of Warcraft, and Second Life have intricate economic systems. Eve Online is famous for its complex market, even earning the nickname "Excel spreadsheet simulator."
The idea of using real money in games isn’t new either. One of the oldest examples is Entropia Universe, where the in-game currency can be directly converted to dollars, giving each item a real-world value along with its advantages and drawbacks.
The crypto boom of 2020-2021
The concept of merging gaming and blockchain was bubbling for years. The first major game in this space was CryptoKitties, which launched in 2017. When cryptocurrencies exploded in popularity in 2020, and NFTs became a hot topic, a lot of new projects jumped on the trend.
One of the most famous was Axie Infinity. In just three years, it raised $21 million, and during the crypto boom, its revenue soared. From July to August 2021 alone, the company made $485 million. At its peak, the game’s token, AXS, reached $164.90.
Axie Infinity gained significant traction in the Philippines, where players made up 40% of its user base in 2022. For many, it became a vital source of income amid lockdowns and rising unemployment. But hold on before you get too excited.
This situation created a perfect storm for exploiting the most vulnerable people. In 2020, the cost of essential items to earn money in the game was around $400 — a staggering amount for most folks in Tier-3 countries. As a result, many had no choice but to rent game characters from their owners, who were usually wealthy crypto investors from richer nations. These owners, exploiting the lack of regulations, imposed harsh and often abusive conditions: from demanding players spend up to 16 hours a day in the game to making illegal demands, such as sending explicit photos.
The decline
The high didn’t last. In February 2022, the global crypto market crashed, and Axie Infinity’s currency lost up to 99% of its peak value. With lockdowns easing, player numbers dropped from 2.7 million daily active users at its peak to just 250,000 by 2023.
On March 23, 2022, Axie Infinity’s parent company, SkyMavis, was hit by a massive hacking attack. About $620 million was stolen, marking one of the largest crypto thefts at the time. The game’s currency has been in decline ever since.
Axie Infinity’s downfall is not unique. Many GameFi projects suffered similar fates amid the broader crypto crash from 2021 to 2023, with their popularity and token values dropping significantly.
Notcoin’s success: GameFi is back in the spotlight
We’re now seeing a resurgence of interest in GameFi, thanks to Notcoin’s success and the renewed buzz around crypto projects. Articles are popping up everywhere about which games are best for earning cryptocurrency.
Types of blockchain games
Over the past few years, countless GameFi projects have emerged, ranging from modest budgets to major studio-level investments. While some games are completely different from each other, others borrow mechanics from their predecessors. Here are the three main categories of blockchain games, though many projects might fit into more than one:
NFT Games
Most blockchain games use NFTs in some way. These are often represented as in-game items or character skins. Some games even offer virtual land that players can use or sell.
NFT games provide valuable use cases for their tokens, giving them real functionality and potentially increasing their value.
Examples of NFT Games:
- Big Time
- KIRAVERSE
- Matr1x Fire
- Alien Worlds
- Wreck League
Play-to-Earn (P2E): How to Make Crypto While Gaming
The name says it all: Play-to-Earn (P2E) games let you earn cryptocurrency simply by playing. Typically, you earn in-game currency by achieving goals — like winning matches — and you can either exchange this currency on the market or use it within the game. Many P2E games also feature NFTs (non-fungible tokens), which you can buy with in-game currency or earn through gameplay.
Sounds super tempting, right? But here’s the catch: while P2E games often let you start for free, tapping into their crypto-earning potential usually requires an upfront investment. In many cases, you can only access P2E features by purchasing special items or owning in-game NFTs, which can cost hundreds or even thousands of dollars.
But don’t worry — developers haven’t entirely left the less wealthy behind. Many games offer a “Scholarship” system, where you can rent a character from an NFT owner, and they take a share of your earnings. Axie Infinity was known for this, and now nearly every P2E game has a similar setup.
Examples of P2E Games:
- Axie Infinity
- PlayDoge
- Spider Tanks
- Pancake Protector
- RuneHero
Metaverse: More than just Meta’s project?
You might be wondering, “Isn’t the Metaverse linked to Meta (formerly Facebook)?” Not exactly. Over the past few years, many projects have adopted the term Metaverse, especially in blockchain gaming.
Metaverse projects usually offer functionality similar to Roblox, where you can explore or create your own virtual worlds. The twist with blockchain integration is that every in-game item now has real-world value, and players can potentially profit from their creations. Plus, you can buy your own virtual land for a few thousand dollars.
Examples of Metaverse Games:
- Decentraland
- The Sandbox
- My Neighbor Alice
- Illuvium
- Voxels
The bright side of GameFi: Why it’s worth checking out
So, what’s so great about blockchain games? Crypto enthusiasts often talk about them like they’re going to revolutionize gaming. After reading a few of these hype-filled articles, you might think that soon, every gamer will also be a crypto investor.
Here’s why people are excited about GameFi:
Real ownership of in-game items
One of the biggest draws is real ownership of in-game assets. In traditional online games, items exist only within the game. If the game shuts down or its servers go offline, all your investments — virtual currency, items, progress — disappear.
With blockchain, you can potentially turn your in-game assets into real money. Both in-game currency and NFTs can be traded on the market, and once NFTs are created, they’re permanent. Even if a game closes, your NFTs stay with you.
Plus, blockchain tech allows for cross-game use of NFTs. Imagine moving a character you’ve worked hard on from one game to another. Pretty exciting, right?
Transparent Economics
Another appealing feature is the decentralized economy. Unlike traditional games where money flows directly through developers, blockchain games feature open economies where transactions happen on crypto exchanges, and pricing is driven by market forces.
No regional restrictions
Here’s a big win: platforms like Steam and Epic Games have to deal with regional restrictions due to local laws or policies — like Russians not being able to buy games on Steam.
Blockchain technology bypasses these limitations, making GameFi accessible from anywhere in the world.
The downsides of blockchain games
So, why isn’t everyone rushing to dive into crypto gaming? It sounds like a golden opportunity, right? If it all seems too good to be true, you’re not alone.
These promising concepts often face some tough realities. What’s the catch? Let’s dig into the challenges.
Let’s explore some of the major problems with GameFi projects:
Lack of transparency and shady developers
Here’s the biggest red flag: many GameFi projects have questionable or hidden developers behind them. You might see impressive names and big studio logos on their websites, but often the actual team is anonymous or, worse, entirely fake. LinkedIn profiles might lead to empty or suspicious pages that look like they were created just to make the project seem more legitimate.
So, what’s stopping these anonymous developers from suddenly closing shop and vanishing with your investment? Unfortunately, nothing. Many projects that claim to use blockchain technology don’t actually use it.
Terms of service might state that in-game items aren’t real tokens and can’t be traded on external markets. This means the supposed benefits of “real ownership” are a sham, and prices are inflated to meet crypto hype.
Low game quality
Despite sky-high budgets and promises of top-tier quality, no blockchain game has truly delivered. Many of these ambitious GameFi projects end up being hastily thrown together from stock assets.
Take KIRAVERSE, for instance. It was marketed as a team shooter where you could use your NFTs as character skins. Sounds cool, right?
In reality, it’s just a poorly executed game built on a free template from Unreal Engine’s package. The game struggles with unoptimized 3D assets, resulting in constant lag — even on decent PCs. It also falls short in terms of gameplay depth and tactical variety compared to popular shooters. And those hyped-up NFT skins? They’re a major letdown.
And KIRAVERSE isn’t alone. Most blockchain games are perpetually in early access and fail to deliver on their promises. Competing with traditional games? They’re not even in the same league.
No support from big names
Right now, no major game studio has launched a blockchain-based game, and there haven’t been any big announcements in this space. There’s also no unified infrastructure supported by well-known companies with established reputations. If big industry players backed these projects, it would boost their appeal to developers and investors, and ensure quality for players. But so far, no major company has taken this step.
The promise that NFTs could be used across different games is also falling apart. Making NFTs compatible across various engines and games would require enormous effort — something that’s practically impossible with current technology and without massive budgets.
High barrier to entry for new players
For an online game to succeed, it needs a large and diverse player base. With new projects launching daily, developers have only a few minutes to grab a player’s attention. An easy-to-use interface and simple registration are crucial to attracting and retaining new players.
Imagine you want to try a new game you read about online. You log in, eager to start playing, but instead, you face a complex registration process — linking or creating a crypto wallet, and filling out personal details like your name, passport number, address, and tax ID. It’s a lot to handle, right?
Most players will be put off by this and might not even get to experience the game. Attracting a wide audience with such high entry barriers is a major challenge.
Market vulnerability
The downfall of Axie Infinity shows just how vulnerable the GameFi market is to price swings and global crypto trends. There’s no guarantee that a cheap token will rise in value, or that an expensive currency or NFT won’t suddenly drop in price.
Every new project creates its own token, which only adds to the market saturation. With so many currencies and NFTs, each one’s value can drop significantly. Their worth depends entirely on the success of the project, and if a project fails, the tokens and NFTs become worthless.
To make a decentralized economic model work, a strong anti-cheat system is essential. Without it, a clever hacker could exploit vulnerabilities, flooding the market with tokens or NFTs and causing their value to crash.
Dependence on new users
Play-to-Earn games can’t give out more than they take in. They rely on constantly bringing in new players who spend money without seeing immediate returns. This is usually done through the purchase of special items and rare token drops, which helps maintain prices.
This creates an economic model that relies heavily on new players’ contributions to sustain earlier investors. No new capital is generated; it’s just a redistribution of funds.
When you look at common features of GameFi projects — promises of quick profits, passive income, upfront investment needs, and a focus on recruiting new users — they often resemble financial pyramids. It’s not as tempting as it sounds, is it?
Can you really make money with crypto games?
So, can you actually make money with crypto games? The short answer is: theoretically, yes. But before you get too excited, there are some major caveats. First off, it’s risky, there are no guarantees, and you’ll need a big chunk of money to start. If you’re willing to invest several thousand dollars into a project, you might see a return eventually. However, jumping into GameFi without any cash is pretty risky.
GameFi projects often have very rare drops, and to stand a chance at earning anything, you’d need to spend 8-10 hours a day playing. Plus, with the generally poor quality of these games, you probably won’t find the experience very enjoyable.
As for the future of GameFi, it’s still up in the air. Despite the hype from enthusiasts, big gaming companies aren’t rushing to embrace blockchain, and the value of native tokens and NFTs, along with the number of active players, continues to drop. Maybe it’s too early to tell? Possibly. But right now, there’s no sign of a sudden breakthrough.
Conclusion
We’re not here to tell you what to do. How you spend your free time is entirely up to you. But if you’re thinking about trying out GameFi or investing your money, just remember to stay safe. Don’t share your personal, financial, or credit information with companies you don’t trust.
