Why Your Favorite Game’s In-Game Currency Could Be Worth More Than a Dollar

\ \ \

\ “Instead of economy being embedded in social relations, social relations are embedded in the economic system.”

\ -Karl Polanyi

\ Many aspects of society are already, in a sense, gamified. The richest billionaires are ranked by Forbes, Warren Buffett has compared the stock market to a sort of game, people compare their vanity metrics on social media, and many apps use game-like incentives to keep users coming back. Without going too deep into the matrix, gamification also influences politics, romance, social life, and communication. Ludwig Wittgenstein’s theory of language posits that words and sentences derive their meaning from their use within specific contexts or “games.” Over the years, many intellectuals have described aspects of modern human life in relation to games.

\ Is life just one big game? Whether you say yes or no to that question isn’t really the point. Gaming began as simple shoulder-to-shoulder, head-to-head competitions like Pong, where players tried to gain the upper hand. Now, it’s evolving into an interactive ecosystem of digital value and wealth creation against a material world facilitated by fiat currency. For instance, the NES sold about 34 million units worldwide in 1988. Fast forward to today, and there are an estimated 3.24 billion gamers worldwide, thanks to the growing industry. People play on PlayStations, PCs, and now even mobile phones, allowing more people than ever the opportunity to engage with video games.

\ Gaming today is more of a social activity than anything. Some people don’t care about winning or competing; they simply want to go online, explore interactive worlds, and build a second life. Socially interactive game worlds like Second Life allow players to explore virtual environments, socialize, and even sell digital assets for Linden Dollars, which can be exchanged for real currency. That’s just one example of a social game, but there are many others where the goal isn’t to win. Instead, the focus is on exploration, collection, and simply experiencing the game.

\

Open virtual gaming worlds aren’t new, but I believe these digital landscapes, combined with technologies like blockchain (which facilitates the buying and selling of cryptocurrencies like Bitcoin), virtual reality, augmented reality, and artificial intelligence, will merge and become even more widespread. The basis for this convergence is already happening. Platforms like Decentraland, a decentralized gaming platform, allow users to join a virtual world, use virtual reality, and engage with real people in its own metaverse. It also enables users to buy and sell NFTs and even purchase and rent land using $MANA, the platform’s cryptocurrency.

\

I believe this is the future of gaming: countless tokens across platforms that can be exchanged with one another, especially in games whose developers share compatible principles and interests. Just like in the film Ready Player One, players will be able to earn and use virtual reality, interact with other players, communicate with agents pretending to be human, and even encounter agents interacting on behalf of human players who are AFK (away from keyboard). This ecosystem of endless activity and transactions will attract big “whales” and investors, who will inject money into the digital ecosystem for reasons they deem suitable.

\

As it stands, most popular games do not utilize cryptocurrency or blockchain technology. Instead, they implement their own in-game currencies, which can only be purchased using real currency. In this system, government-backed fiat currency — which has more operability and utility in the real world, such as buying food, shelter, entertainment, or paying staff — is dominant because it is widely accepted in the status quo. Currently, cryptocurrency isn’t accepted for everyday purchases, but the new presidential administration is said to be advocating for wider adoption of Bitcoin.

\ Even so, in the current system, developers create digital assets within games and lock them behind paywalls. These assets can only be unlocked via the purchase of in-game tokens, which have no utility outside the game. This mirrors the trading of international fiat currencies, where one currency often has more utility than the other. In gaming, fiat currency with wider utility is used to purchase tokens with lesser utility, which means the player exchanging fiat for tokens loses optionality in the process. They only receive the digital asset, which often has no value outside the game. Moreover, in-game tokens cannot be refunded. This imbalance of value exchange seems implied when buying digital goods that aren’t “real,” but it doesn’t necessarily have to be that way — this is why cryptocurrency and blockchain technology are so appealing.

\ What if, in the near future, the tokens purchased in-game had exchange value? What if they could be traded for other tokens or currencies? And, because they would have value against other cryptocurrencies, they would also have value against fiat currencies. This would imply a wider network of activity across various platforms. Where there is money to be made, there is activity; where there is activity, there is energy being produced and consumed, and money being exchanged.

\

\

We live in a world where there is more and more information, and less and less meaning.

\ -Jean Baudrillard

\