Bridging the Crypto chasm

5 min readOct 26, 2021

The Metaverse

With more time spent online and in the Metaverse, it is only natural that an increasing amount of value will be created and consumed digitally. This is something we have already witnessed for years outside of crypto, with skins and loot boxes being sold and traded outside of the gaming platforms. In this old paradigm of gaming, gamers were spending hard-earned money to buy game assets instead of getting rewarded for playing and owning the things they’ve created, won, or traded.

To that end, we believe traditional monetary policies and fundamentals have their limitations in the Metaverse, mainly due to centralization and proof of ownership, and could therefore never serve as its economic backbone or monetary foundation.

Enter NFTs

NFTs are fundamental for the progression of the Metaverse as it enables virtual worlds and economies to be owned and controlled in a decentralized fashion, by their creators, participants, and contributors — All of which is core to the concept of crypto.

This is important as the premise of NFTs holds the key to one of the big shortcomings of the online world; Proof of ownership. Being able to prove true ownership enables digital scarcity, unlocks trading, and (perpetual) monetization. This put into context (gaming, trading, collecting) will serve as one of the bridges between the non-crypto and crypto world, one of our core need-to-beliefs in order for crypto to go mainstream. To that end, NFTs, in turn, built on the principles of crypto, are the economic backbone and foundation on which the entire concept of the Metaverse will be built on.

NFTs can in turn be bucketed largely in three ways all with their unique distinctions. What they all have in common is that they enable a “decentralized, universal, digital representation and proof of ownership through which scarcity, uniqueness, and authenticity can be transparently managed”.

Digital Arts; Traditional art, music, videos, fashion, and culture
Collectibles; Crypto collectibles (BAYC, CryptoPunks, etc), sport collectibles
Functional NFTs; Game specific NFTs, virtual real estate, tickets, domains

The important distinction here is while the first two classes have similar attributes in terms of scarcity and proof of ownership, they are trading and collector goods driven by speculation. However, since they are limited with the quantity decided already upon minting they might prove more valuable and outlast functional NFTs (not to mention the social flex they stand for) which are tied to finite gameplay, meaning you eventually complete most games if you put in enough time. (unless you build for instance a skill-based and/or sports game, where there’s a natural progression with each new game or season). Functional NFTs on the other hand are just that — functional — in the sense that they are connected to an ecosystem where they serve as a function to larger gameplay, e.g. Sorare cards and Axie’s.

Functional NFTs are part of and fundamental to blockchain-based gaming and key to the success of Sorare and Axie Infinity. These blockchain-based games are in turn part of Play to Earn (PTE), a much larger trend within gaming and one that might flip the industry on its head.

How blockchain-based games are flipping the gaming industry on its head

Conventional games are generally developed along with two economic schools of thought; Free to Play or Pay to Play. Free to Play games are designed to be “inflationary in order to generate revenue at the expense of a game’s virtual assets and their scarcity”, whereas blockchain games such as Axie or Ember Sword typically are (to a variable degree) player-owned, centered around a crypto economy and seek to generate value for their virtual assets (NFTs) and their scarcity. So rather than selling game items or copies, which the player doesn’t own in the traditional gaming world, the focus is on growing the player-to-player economy while monetizing by taking small fees along the way. Game resources are tokenized, meaning they can be sold to anyone, anywhere on open peer-to-peer markets, or even cashed out for their local currency, as has been the case in the Philippines with AXS & SLP (Axie Infinity in-game tokens). Here blockchain ensures tracking, ownership, scarcity, enables marketplace dynamics, and allows for a rich incentive system.

But what is perhaps more interesting, and important, is the long-term incentives PTE creates for gamers. Building long-term incentives for gamers, or engagement if you will, is in one sense the most crucial and hardest thing for game developers to accomplish over time. This is true for both pay-to-play games and free games where the incentives for game developers to continue to develop the game diminishes with time as engagement fades. With PTE you turn the model on its head and rather than have developers squeezing out as much value from players as they possibly can, they let the players decide how much a game is worth for them by incentivizing long-term engagement through NFTs.

Why is this exciting?

The Metaverse, regardless of how we choose to define it, is happening and there will be huge brands built in the intersection of social, gaming, brand, infrastructure, and protocols. At the same time, there are lower-hanging fruits within the gaming world that can be solved with the help of crypto. There are for instance extensive black/grey markets that live in parallel with the gaming economies due to the lack of legal alternatives. Here building the economic foundations of the Metaverse on blockchain makes sense as it solves some of its biggest challenges and shortcomings;

Allowing for online monetary policies, governance, and protocols to be put in place
Ensuring ownership and transparency
Bridging online & offline and allowing for wealth transfer

The example with Axie Infinity showcase the power of blockchain-based games and a Metaverse built on crypto/NFTs as Axie is suddenly

A sizeable employer in the Philippines
Leveling the economic playing field, globally
Becoming a super-app as there are now more Filipinos with an Axie/Ronin connected wallet than citizens with a credit card

All this while effectively and effortlessly bringing crypto outside of the crypto realm by creating some of those applications skeptics have voiced never would be seen emerging from crypto. PTE gaming is in that sense one of the first true manifestations of the Metaverse and much more than just a game, but also a;

Social network and community
Educational platform
Leveled playing field and means to make an income (casual or full time)

The result?

Bridging the crypto<> non-crypto chasm will likely be spearheaded by gamers where, ultimately, owning core pieces of digital goods and nations in the form of NFT’s will generate huge financial returns to early adopters many of whom will be from emerging markets. And once people realize that you can monetize the time you are spending playing there is no going back and this will, in turn, lead to the creation of multiple $bn businesses built within blockchain-based gaming and the wider Metaverse in the coming years.

Sources and inspiration

Bridging the Crypto chasm

Written by William Jilltoft