Virtual gaming started in the 1960s with games such as Spacewar, which focused on solo gameplay. However, by the 1970s, the trend shifted towards the incorporation of a social component to the competitive experience of gaming, fuelled by the explosion of arcade gaming. Arcade gaming was instrumental in that it allowed players competing for bragging rights at the same game to do so in the same setting. 

Virtual games thus built on this popularity, evolving to enable players to interact with each other primarily through competition and collaboration. This new level of interaction inevitably attracted more gamers, and developers started embedding multiplayer game logic at the core of their products. 

The Dawn of P2E

In 1984 the Islands of Kesmai, allowing up to 100 people to play simultaneously, was released, paving the way for multiplayer-driven virtual games. The collapsing prices of computer networking in the 1990s and the increasing adoption of personal computers further accelerated the prevalence of multiplayer-driven virtual games. 

Early games such as Second Life and EverQuest greatly benefited from these monumental technological and platform shifts towards massive multiplayer gaming, reaching even possibly iconic status. In the two decades since their release, a combination of enormous general technological advancement and growth of the mobile internet has led to games penetrating mainstream culture, with an estimated 2.8 billion video games in existence globally as of 2020.

Play-to-Earn Games

As of late 2021, an estimated 3billion people across the globe play video games while there is a whole infrastructure around professional gaming, one which has generated significant opportunities and wealth for the best players. 

BITKRAFT Ventures, taking into account the widespread hardware, software, and intellectual property involved, reports that the video gaming industry stands at a $336billion market capitalization. Indeed, gaming is now the most prominent media category ahead of the film, linear TV, music, and on-demand entertainment. 

As the gaming industry has grown, certain peculiar characteristics have developed. Most significant is that all game-based economic activity is centralized, thereby vesting the rights to everything going on in the games to the publishers. 

While this model makes business sense for the developers as it enables them to capture the billions of dollars generated in the games when users sell virtual game items and purchase subscriptions, it also means that the players themselves lack a mechanism through which to share in the value generated without pursuing the course of professionalization. 

This traditional model of ownership and sharing of profits has been maintained throughout the industry's growth. Still, it is on the verge of transformation with the advent of Play-to-Earn games which seek to enable players to truly earn and own their digital assets, which they may also sell outside the game at will. 

How does Play-to-Earn Work?

Play-to-Earn games are a relatively new phenomenon in the gaming industry, hoping to provide a holistic experience by combining fun and money. Most P2E games feature an in-game token used to reward players, whose worth is determined by the liquidity in the token. 

Play-to-Earn games are designed for gaming enthusiasts seeking to bridge the chasm between virtual spaces and physical reality. They allow users to own their assets, usually in the form of Non-Fungible Tokens (NFTs), and increase their worth by engaging in in-game activities like unlocking upgrades, breeding creatures, and much more. 

Essentially, by participating in the in-game economy, players create value for the developers and developers who earn a cut of the microtransactions carried out. Players generate liquidity through two main methods: purchase or sale of in-game NFTs or playing to earn in-game digital currencies. 

In the case of NFTs, users may create unique NFTs and sell them to other players either for fiat or cryptocurrency, whereas in the case of in-game crypto, a gamer may use the tokens to purchase more in-game content or exchange them for fiat or other cryptocurrencies. 

Impact of P2E on Online Gaming and the Crypto Community

When the COVID-19 pandemic swept the globe in March 2020, many people were forced into lockdown in addition to losing their jobs. In several nations of the global south, such as the Philippines and Indonesia in Asia and certain parts of Africa and Latin America, several people who lost employment due to the pandemic found a way to eke out a living by playing blockchain-based video games. 

Games like Axie Infinity which moved from a mere 4,000 daily active users to a staggering 2 million just within a few months, demonstrate the potential of P2E to contribute toward building a new economy. Players in countries such as the Philippines and Venezuela have been able to earn more in the Axie Infinity game than they would otherwise earn in their local physical economy.

Does P2E Gaming Serve Its Purpose?

Play-to-Earn games do not inherently or in totality eliminate the centralization characteristic of games because they still require the publisher's authority to define, issue, and limit the asset. Nevertheless, P2E games' greatest promise is still their potential to decentralize marketplaces for the minting, ownership, and exchange of digital assets, along with the potential created when these marketplaces can be linked with the traditional economy, allowing gamers to convert their digital time, effort, and assets into disposable income in real life.