top of page

Gamification of Digital Investments

A cauldron of crowd-funding, wild claims and rampart scams...

I recently had the pleasure of experiencing a breath-taking story of fantastic proportions which by the end, had me shedding a tear. It was the story of Aloy, an orphan child growing up in a primitive tribe that labelled her an outcast from birth. Longing for a connection to her culture, her people and her land, she ventured forth into an unknown world in search of who she believed to be her mother, Elizabet.


This may sound like the back cover of a best-selling novel, or the synopsis of an Oscar winning movie… but it’s not. It is in fact the award winning, best-selling video game, Horizon Zero Dawn. With an emotional story-arc and a rich cast of memorable characters spanning a 60+ hour adventure, it is nothing short of a masterpiece.


Games like this are wildly impressive and are built by passionate veterans in the game development world. Horizon Zero Dawn was made by the hundreds of people at Guerrilla Games Studio, taking 7 years to develop and cost a whopping $72 million dollars (NZD). For a measly $99 dollars, you, yes you, could buy your very own copy of this game and hold it physically in your hands.


 

Now, let’s compare this to a troublesome trend emerging in cyber space – Non-Fungible Token (NFT) games that replace in game currencies and items with purchasable, and more importantly re-sellable digital tokens stored on a blockchain.


Almost every mainstream video game studio has attempted to dip a toe in this NFT pool which has universally been met with outrage by the gaming community. To see a recent example of this outrage, you just need to look at the NFT announcement from Ubisoft Studios which was one of the most disliked videos on YouTube in 2021.


Almost all mainstream game studios have realised that the pool water is freezing and have decided to stay dry. Even the world’s largest digital game market, Steam, announced an outright ban on NFT games being sold through its platform.



So why the hate?


Simply put, NFT games aren’t built to tell an amazing story with cutting edge graphics like Horizon Zero Dawn - they are built to raise money. The entry for new players is hindered by the excessive cost to play, often reaching upwards of $1,000 for a game will likely be centred around endless micro transactions. That is of course if the game is made at all.



What happens when these games are made?


A small percentage of the NFT games that are made are quite successful. However, as the final product looks closer to a $2.99 iPhone game instead of a triple 'A' gem, the player base aren’t gamers – they are NFT investors looking to capitalize on their original NFT investment.


Investors use their NFT to generate the in-game currency which allows them to purchase yet another NFT, and so the cycle continues until they cash out their NFTs hoping to sell them the next investor. This is effectively the money engine of Axie Infinity, a popular NFT game.


 

What about those games that don’t get made?


As with all angel investing, there is the risk that the project team is unable to deliver on their promised roadmap. In the NFT space, there are wild promises of a metaverse that does not and may never exist, big returns on your initial NFT investments, crypto giveaways and free puppies to all NFT holders.


In reality, behind the genuine NFT projects is an individual or small team that have the intention to deliver but with no proven track record or capability to do so. Even worse, a huge percentage of these projects are flat out scams designed to raise millions of dollars, leaving you with a worthless digital fart token.



How can you tell if an NFT project is a scam?


Simply put, you can’t. Most NFT projects have a slick website and Discord community you can join, but this is in no way proof of authenticity. How a project spends the money they raise is really the only early indication of whether the project is a scam and by then, its often too late.


One of the largest NFT marketplaces in the world confirmed that more than 80% of the NFTs on its platform are stolen or scams. This makes it immensely difficult to find the genuine projects run by honest people trying to make a real difference in the world.



How do we protect people playing in the NFT investor space?


As these projects are funded with crypto, the distributed ledger of blockchain allows anyone with the skills to openly audit the money trail and see exactly where it goes. This aspect of blockchain has been vital for the survival of crypto exchanges with meeting their anti-money laundering obligations.


In an ideal world, the traceability of crypto could be used to identify potential NFT scams. An actively monitored system used by a governing body could be enough to deter bad actors and enable investigation into potential fraud.


In the case of the 20-year-old creator of the NFT ‘Pixelmon’ project, he recently raised $103 million dollars to make a game by using what appears to be deceptive promotional material. The distributed ledger allowed the world to see how he spent his first $2.4 million, which doesn’t appear to be directly related to the development of his promised game.


Image: This is ‘Kevin’ - An example of a ‘Pixelmon’ NFT investors received after the project raised $103 million dollars.


 

We need a mechanism to hold these people accountable to their investors. Under normal circumstances in New Zealand, the Fair-Trading Act would deter this kind of behaviour and allow the Commerce Commission to open an investigation into wrong doing. Unfortunately, both of these agencies are asleep at the wheel.


It pains me to say but there is effectively zero consumer protection when it comes to the sale of digital tokens. This has allowed scammers in this space to run wild, stealing hundreds of millions from investors with no handcuffs in sight.


By putting the gamer’s experience above all else, it is possible to make a game that utilises the best parts of blockchain while delivering a triple A adventure. However, with the cost of entry so high and the rampant scams destroying trust, why would any gamer spend thousands on digital tokens for a game that doesn’t and probably won’t exist. Especially when you can just play as Aloy in Horizon, invest in the story and guide her to a much happier conclusion than a lack-lustre NFT project.

Recent Posts

See All

Comments


bottom of page