June 27, 2022

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Crypto and gaming collide in high-risk ‘play-to-earn’ economies

2 min read

Jarindr Thitadilaka says he made as much as $2,000 a month last year from his collection of digital pets, which he would breed and send into battle to win cryptocurrencies. 

The 28-year-old from Bangkok was playing Axie Infinity, one of a new breed of blockchain-based online games, dubbed “play-to-earn,” which blend entertainment with financial speculation. 

These games can make for lucrative businesses amid the hype around non-fungible tokens (NFTs) and virtual worlds, attracting millions of players plus billions of dollars from investors who see the games as a way to introduce more people to cryptocurrency. 

In Axie Infinity, users buy virtual blob-like creatures with varying attributes as NFTs — digital assets whose owner is recorded on the blockchain — for anything from tens of dollars to hundreds of thousands. 

Players can then use the pets to earn money by winning battles, as well as creating new pets, whose value depends on their rarity. The assets can be traded with other players on the platform, which says it has about 1.5 million daily users. 

“It’s not just a game any more. It’s more like an ecosystem,” said Mr. Thitadilaka. “You can even call it a country, right?” 

The dangers of this speculative ecosystem, and the largely unregulated crypto gaming industry, were brought into sudden focus last week when Axie Infinity was hit by a $615 million heist. Hackers targeted a part of the system used to transfer cryptocurrency in and out of the game. 

Axie Infinity’s Vietnam-based owner, Sky Mavis, said it would reimburse the lost money through a combination of its own balance sheet funds and $150 million raised by investors including cryptocurrency exchange Binance and venture capital firm a16z. 

Sky Mavis’ co-founder Aleksander Larsen told Reuters that if he could do things differently, he would have focused more on security when growing the game, which was launched in 2018. 

“We were running 100 miles per hour, basically,…

wiNSEcIoNTaINkES

2022-04-08 03:39:28

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