So I’m pretty active on Quora. I do get a lot of answer requests there and yes, a lot of them tend to be about crypto and blockchain, despite the fact that my skills and areas of expertise are a lot more diverse than that.
To be fair, I do respond the most to questions that have few (or inaccurate or incomplete) answers, if any, and those happen to be around crypto and blockchain. So I suppose the algorithm detects that since I’m answering more questions in those fields, those will be the questions I’m more likely to provide answers to.
Investment, speculation, or gamble?
And of course, many discussions now are centered around NFT projects, metaverse projects, and blockchain gaming projects. They do seem to also come hand in hand now. You can’t really view a blockchain game that doesn’t also have some aspect of metaverse of NFT, however they may or may not be actually related.
The majority of these questions are about investments -- whether people should buy a particular crypto, whether a project is legitimate, whether or not the price of A token will go up 1000%. Technically, they are investments, since people expect to see a profit from their financial outlay. But the way the questions are framed, the expectations that already are there from the onset, I think objectively, it’s also fair to say that these are related to speculative activity (buying something in the hopes you can sell it on later for a higher price).
Now, here’s an unpopular opinion (surprise, surprise): I would even go as far as saying that most of these activities are actually related to gambling. Why? Simply because, when you’re buying a token for a blockchain gaming project, or any crypto startup for that matter, there are just so many characteristics, behaviours, risks and expectations that more closely resemble speculation than investment. And I know there are many who believe that market speculation tends to be more of a gamble for the regular participant than anything else.
New token investment isn’t quite the same as trading
Of course, it’s really tempting to think that investing in blockchain gaming is similar to crypto trading. But it’s really not.
a. There is likely to be a win or lose situation
Unlike in crypto trading, where established digital assets are unlikely to ever go crashing down to 0 cents, investing in a new crypto token -- and it doesn’t get any newer than blockchain gaming -- puts you at risk of total loss. It’s not just about the project failing either, you run the risk of investing in an outright scam or fraud. Ever stopped to ask yourself what would prevent the project token managers to simply disappear one day, halting the project and happy to keep all the funds raised from selling tokens to you?
Whereas in regular trading, or trading with Bitcoin or Ethereum, tokens and stocks are too big too fail, always innovating, always upgrading an existing product, that can lead to increased value. Even if they do suffer crashes, they always have a chance to pick up. So there is no win or lose, there is simply profit or loss.
b. You are only encouraged to buy (and hold)
Trading in the stock markets or established digital asset markets encourage the participants to both be buyers and sellers. You’ve got an entire sub-industry of P2P traders in both markets, not seeking to hold or to keep stacking, but to continue buying and selling to diversify ownership and spread utility. They’re buying to use it, and they’re selling to let others use it.
Investment in a blockchain gaming token is a purely one-sided buying activity. There’s no product to use it, and there’s no one willing to sell it yet because sellers are only seeking to make profit.
c. There is very little understanding from the investor of a project’s viability
I’m not talking about all the hundreds of discussions on Twitter about token A’s “potential” that you’ll find everywhere you look. These discussions are based almost purely on market capitalisation or some form of pseudo-technical analysis that can’t possibly apply to a token that’s far from maturity.
Bitcoin, stocks, precious metals -- these markets have been around for over a decade and are diverse enough, deep enough, and decentralised enough to provide some meaning to a keen analyst. On the other hand, no Elliot Wave reading from a blockchain gaming token that can barely form a 200MA line should ever be taken seriously!
Some gambles are good. Blockchain gaming is one.
That said, I now arrive at the point I’m making with this article.
Investing in a blockchain game right now is a gamble. But understand also that in life, and especially in high-risk investment, putting your money into any new enterprise is a bold move, and a gamble. But that doesn’t mean you have to throw your money into the crypto roulette ether and hope it lands on the right spot, leaving your fortunes entirely to luck.
a. Gaming is a recession-proof industry
There are very few industries that continue to grow and expand in spite of (or even because of) global crises. Whether it’s conflict, recession, or even pandemics, gaming is one of the few industries to have expanded, rather than contract, in difficult times.
In fact, as consumer electronics become cheaper and more accessible, and as internet connectivity continues to blanket the planet, more and more people will come online to play video games with each other.
So if a blockchain gaming project makes a good game, you can be sure its userbase can only grow (and thus, its token increase in price).
b. Gaming and gamers are hungry for innovation
The 21st century has seen huge improvements to hardware, allowing for more content, higher quality graphics and more realistic experiences in games. But gamers will probably agree that gameplay hasn’t really evolved in true innovative fashion -- games have gotten bigger, prettier and more realistic, but have yet to take steps into the future that can be considered truly revolutionary.
Metaverse and NFT concepts are a pathway to these innovations. Projects like Cradles are using blockchain technology to trial a first-ever implementation of “entropy-increasing” worlds, made possible by a new type of NFT. In other words, a metaverse where the passage of time and its physical effects are reflected in a perpetual world, just as they do in the real world. NFTs here aren’t simply static collectibles, but components of every single game element that enable characters, items, and the world itself to evolve with block time. And while I dislike P2E and I believe the models are unsustainable, I can’t deny that games like Axie Infinity introduced the very first concept of revenue generation that involved the players.
Should these concepts take off and fix their shortcoming, they could very well be the standard for any game that uses a perpetual virtual world system. Something like that? That would be worthy of a true step forward in gaming evolution.
And so, I am of the opinion that although I’ve backed and supported blockchain gaming, with my words as well as my wallet, I can recognise that these are gambles that can fail. But if you’re putting money on projects that actually are working to bring innovation to gaming, and have the right resources to put out a viable product, instead of buying tokens purely based on speculative hype, chances are, you’re backing a winner.
But if you make bets as calculated gambles, the payoff can be very rewarding.