Game tokens: how to find the champion?

The gaming industry is invading cryptoactives, and this should have been obvious when the new generation started using V-Bucks, the currency of the Fortnite game. Remember that these items do not use blockchain and only work within the platform itself. Serve to customize the character, acquire weapons, shields and the like.

The transaction of digital items is centralized on servers from Epic Games, the game’s developer. In short, if tomorrow the player decides to only accept transactions in their own environment, using a specific currency or token, the player is held hostage.

The same happens if the company decides to ban a certain player, or even entire countries due to trade sanctions. In this way, it is clear the benefit of the NFT token for gamers, and even for the gaming industry, which is potentially free of taxes, app store fees, and ultimately increases market potential.

The myopia of decentralization

Let’s assume that all Fortnite game V-Bucks and digital items are converted to non-fungible tokens (NFT). There are two big risks of dilution, the first, most obvious, being Epic Games itself to continue creating these tokens, or others very similar.

In fact, even if the Fortnite game is discontinued, other game developers may offer integration of these tokens, acting as an attraction for this large number of users. However, there is an incentive for this new platform to create its own NFTs and capitalize on it, creating inflation.

In summary, having “control” of centralized game digital items, which depend on a company or entity, is not of much value.

The era of decentralized games

Little by little, truly decentralized games emerge, which can work independently of the existence of a certain sponsoring group. In this case, the smart contracts limit the number of NFTs and V-Buck style tokens that can be created.

However, there is no rule that forces EA Sports games to accept NFTs from Epic Games, behind Fortnite. So, as much as they are unique tokens, there is direct competition in these markets. Anyone investing in game tokens with fewer users will likely end up with a worthless digital asset.

Venture Capital (VC), this investment monster

Realizing the potential of this market, startup investment firms (VC) created mechanisms to remunerate new players. Something similar happens in decentralized finance (DeFi), when platforms are born with US$ 500 million invested.

The secret is precisely the firepower of these VC, kicking off to remunerate new entrants and put the system to run. The problem? Tomorrow an even bigger VC plays a competitor, and everyone migrates to the new platform. In short, be careful not to have a “cheek” in your hand!

About the author

Marcel Pechman worked as a trader for 18 years at UBS, Deutsche and Safra banks. In 2017, he became a cryptocurrency trader and analyst. Convinced maximalist, he also subscribes to the RadarBTC Youtube channel.