How Do Play-to-Earn Games Work?

There's been a lot of buzzes lately about play-to-win games.

Some say that crypto games will change how we play games today, while others are more skeptical.

So you don't have an opinion yet? Feel like you don't understand play-to-earn games very well yet?

You've gone to the right place.

By reading this article, you will learn how to use play-to-earn games and blockchain games.

Defining Pay-to-Play Games

The term "play-to-earn games" gives you a good idea of what these games are.

Yes, players can make money by playing games.

Play-to-earn is a business model that works with blockchain technology. Simply put, players can play a game and potentially earn cryptocurrency.

You can also hire a P2E Game Development Company to create an engaging game and generate revenue.

How does all of this happen, exactly?

In play-to-earn games, players can get in-game assets that could be useful. That could be anything, from skins or cards to a specific type of cryptocurrency. The more players play, the more assets they can collect, and the more valuable those assets become.

In traditional games, these assets are only valuable inside the game. But play-to-earn games have real-world value.

Players can take these assets into the real world and sell them for cryptocurrency or real money on their terms.

Also, unlike traditional games, these games don't have a central location. This means that the developer cannot control everything from its power center.

In play-to-earn games, in-game assets are share among players. By participating in the in-game economy, players create value for both other players and the developer.

All of this works for a simple reason.

These games give people two things they want: fun and the chance to make money.

P2E Game Development Cost

Blockchain technology has taken the world by storm. All big leagues are developing games. Facebook has also jumped in with its Metaverse, a virtual universe.

So, it's a hot topic, coming to the P2E Game Development Cost, it's a bit complex, but somewhere between $40-$80k, depending on your requirements.

There are a lot of factors:

When developing an app from scratch, the following are involved:

• Adding a blockchain to an existing system

• Frontend \sBackend

• Cryptocurrency wallet integration

Then there is testing, deployment, and post-app delivery customer support.

Play-to-Win Crypto Games

Play-to-earn games are also called crypto games and for a good reason.

The main selling point of play-to-earn games is, "Hey if you play this game, you can earn cryptocurrency."

In the player's mind, this can easily mean, "If the price of this cryptocurrency goes up one day, you could become very wealthy overnight."

Putting player motivation aside, here's how these games work.

Crypto-based games give players small amounts of cryptocurrency as prizes. They get cryptocurrency by doing tasks, entering contests, or doing whatever the game brings.

There are two main approaches that developers can take here.

Top play-to-earn local cryptocurrencies. Source: CoinMarketCap.com

1. National Cryptocurrency

Developers can make a game's native cryptocurrency in the form of tokens.

To make this happen, they need to create a blockchain project, design tokens, and use intelligent contracts to seal the deal.

These tokens work like most in-game currencies. But, unlike them, they have real-world value.

The most famous example comes from Axie Infinity, the best blockchain game in the world. There, we can find two native cryptocurrencies: SLP and AXS.

These cryptocurrencies live on the Ethereum blockchain. And just like other cryptocurrencies, their value goes up and down. Players can sell them to other players for a payout at any time.

1. Existing cryptocurrency

On the other hand, developers can rely on the existing cryptocurrencies—for example, Bitcoin, Ethereum, Dogecoin, Cardano, etc.

All of these are well-known names.

Because of this, many games based on cryptocurrencies are also name after them. An example is Bitcoin Tycoon, Bitcoin Pop, etc. Not to mention many games with the word "crypto" in the name, such as CryptoKitties, Crypto Dragons, etc.

Even though these games reward players directly with some of the best-known cryptocurrencies, getting a significant amount can take a while. In other words, the process of making money is usually long, and the payouts are small, but they are real.

Play-to-Earn Games FT

You can't talk about play-to-earn games without talking about NFTs.

Let me explain this strange abbreviation.

NFTs, which are "non-fungible tokens," are virtual collectible assets. They can come in different forms, from pictures to music.

In games, they usually show up as things players would want to collect anyway—for example, characters, items, skins, or a virtual land.

All of this sounds pretty typical.

Here's the catch to NFTs.

NFTs are unique, irreplaceable assets that are impossible to duplicate.

Think of them as the same thing as the Mona Lisa painting. Only in the blockchain. And in gaming.

These assets are stored on the blockchain, not just in the game. Also, each of them has its value.

Let's say two players have almost identical NFT characters in the same game. One has a red helmet, while the other has a blue one. If they traded, one would have a more valuable character than the other.

Are Play-to-Earn games free to play?

You might be wondering if these games give out NFTs to players.

It depends on the developer.

Some game developers make their games free-to-play. In these games, players can earn NFTs just by playing the game. All it takes is some time and interest.

Others ask for more than just time.

Some developers ask players to pay upfront before they can even start playing the game. More precisely, they need to buy NFTs from other players. These games are also known as "pay-to-win" games.

Even though they are different, these games still belong to the same category. In both, players can create some value that could lead to a profit.

NFT Ownership of Play-to-Earn Games

NFTs are the players' things. Not the developers, not the games, and not anyone else's. Even if the game ends, they are still in the players' hands.

So, what can players do with an NFT once they own it?

It is entirely up to them.

Usually, players will do everything they can to increase the value of their NFTs. This means they must play the game and commit to it for a while.

When they decide the time is right, they can trade or sell them.

Players can take their NFTs outside the game and sell them in dedicated marketplaces. They will get paid in cryptocurrency if they do manage to sell them.

How the different pay-to-play economies work

Developers can't just think about their profits when making a play-to-earn economy.

Here, players and developers work together as business partners.

When it comes to NFT-based games, it works like this.

The players' job in the partnership is to hold valuable assets and trade them around. This should bring in more people to the game. At the same time that the demand for the game's NFT collection grows, so makes the developers' profit.

There is one key thing that developers need to pay attention to.

Making NFTs has a cost, and it needs to pay off. The developer makes money when transaction fees cut. Every time an NFT changes hands, the developer makes money.

Let's say that a skin NFT has a 5 percent royalty fee.

Every time this NFT is sold to another player, the person who made it (the developer) will get paid. Not just the first time or two, but forever.

So, the developers should set a fee that makes money for them. In addition, they should keep encouraging players to move these assets.

Games that use native cryptocurrency follow the same rule.

What about games that give away coins that already exist? How do they earn a living?

Most of the time, by showing players ads. Time is the main factor here. The developers should make enough money from ads as long as players spend a lot of time playing games to earn crypto.

Why Do Play-to-Earn Games Exist?

So Popular Play-to-earn games have changed people's minds in a big way.

Not only in how game makers make them but also in how players see them.

The main point is that players are starting to realize their importance.

They won't put up with one-way conversations and greedy economies any longer. They want a more significant role in games and to own the assets they've worked hard to get.

But these things don't matter that much to some players. All they care about is making money.

Play-to-Win Games in Developing Countries

In some countries, players saw play-to-earn games as a way to make a living.

This is best see in the Philippines.

When the pandemic started, this country's unemployment rate went up to 40 percent. Aside from that, the minimum wage in this country is meager (about $230 per month, according to Countryeconomy).

Axie Infinity, a game, became a big deal in the Philippines. At that time, players could earn up to $1000 a month by farming the game's SLP currency (101 Blockchains).

All of this got so bad that the Philippine government said that people who play this game for a living would need to start paying taxes.

As you probably know, Axie Infinity is a pay-to-win game.

The next question that comes to mind is, "How do the Filipinos pay the entry fee?"

Players have formed NFT rental communities (guilds) to get around this problem. Axie owners rent out their NFTs to players within these communities for a small cost. The new players can then play Axie Infinity and earn cryptocurrency without making significant upfront payments.