Visitors experience Sony Interactive Entertainment's Gran Turismo Sport at the Tokyo Game Show in Tokyo, September, 2017. Photo: REUTERS/Kim Kyung-Hoon/ File photo

Growing interest in cryptocurrencies leads more Brazilian players to NFT-based video games

Altcoins, as NFT-based video game digital currencies are called, however, are a rollercoaster in financial terms

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The non-fungible token (NFT) market has undergone strong expansion and one of its aspects are video games that promise to reward users with digital assets that can be redeemed in traditional currency, something that has caught the attention of players, including in Brazil.

NFTs are property titles over digital goods that can be traded for monetary value and represent everything from cartoon monkeys to clothing for avatars to wear in metaverses. This business already moves billions of dollars around the world.

The market has given rise to business models such as that of the Brazilian company Orbe888, whose main activity is the management of NFT-based video game accounts that are accessed by players associated with the company. The startup also monitors trends within the games, analyzing which ones are most worth playing by users regarding financial gains.

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As NFT video games often require users to make upfront investments, “Orbe888 takes on this risk and players associated with the company receive a percentage of the earnings as they progress through them,” said Orbe888 CEO Juan Alcasar.

The company was created last year in the interior city of Conceição do Pará and is already moving to Belo Horizonte, capital of the state of Minas Gerais, in the Southeast of Brazil, to obtain a more stable infrastructure after the heavy rains that hit the state.

The company’s project, which is still being implemented, includes hiring professional players to represent it in several of the biggest cryptogames launched in the “play-to-earn” mode.

Tokens purchased through company accounts remain with the company. Players keep 60% of the profit from NFTs they mine in games where the company has an account, as long as they are under the player’s responsibility and their contract remains active, explained the executive.

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Bruno Leite, 19, plays Bombcrypto and Luna Rush for Orbe888. The former is similar to the Bomberman video game, and players need to blow up chests to mine BCOIN cryptocurrency. He claims that he received BRL 2,500 ($485.55) when BCOIN reached its high. In Luna Rush, he says he received BRL 3,000 ($582.66) at the peak of the game’s native cryptocurrency, LUS.

However, the monetary withdrawals accumulated in each account vary according to the rules of each game and the blockchain wallet used. “Bombcrypto, for example, you can only withdraw when you accumulate 40 BCOINS,” explains Leite.

The altcoins’ roller coaster

Also called “altcoins,” digital video game currencies based on NFT are subject to more intense fluctuations than traditional cryptocurrencies such as bitcoin, which have a much larger user base.

BCOIN, for example, was trading this Friday at $0.54, according to CoinMarketCap. But in late November, it peaked at $8.46. In the last 24 hours, the coin has dropped 24%, operating below the initial price of US$ 1.7 in January the previous year, when it began to be traded, according to the platform.

In addition to Bombcrypto and Luna Rush, the market has several titles available to players, including Axie Infinity, the most popular among them.

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“If you take peripheral countries, especially in the Philippines, there are people who left their jobs to live off Axie Infinity because it is much more profitable than the guy working in the market, in a cafeteria, for example,” said Bruno Milanello, executive of new business do Mercado Bitcoin, one of the largest cryptocurrency exchanges in Brazil.

“With concentration in a few places, these currencies are sensitive to price fluctuations. Even in the case of Axie Infinity, which is more popular, it has a substantially lower volume than bitcoin, for example,” says Milanello.

Axie was quoted this Friday at $50.40. At its peak in June last year, it hit $160.4, representing a market cap of $9.8 billion, according to CoinMarketCap.

The risks of assets linked to games

But the euphoria around that market poses risks.

“While new players enter, there are those who buy, but there may come a time when the producer can disappear and disappear with its crypto assets,” said Isac Costa, professor of Law, Technology, and Finance at Ibmec/SP.

The scam known as “rug pull” has already been applied to a project where Orbe88 had an account and occurs when developers abandon a project and run away with investor money.

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“It is important that our future players are properly oriented towards the NFT Games market; this is because it is a high-risk area that demands high-value investments and therefore requires great caution,” the company said in a statement.

But, beyond the investment, players are interested in better spending their entertainment time. Subway worker João Barreiros, 45, plays MIR4, a blockchain-based multiplayer online role-playing game (MMORPG).

“I’ve always liked online games, so why not try spending the money I would have spent on games that don’t bring me any return, on something that could bring some return?” said Barreiros, who is not associated with Orbe888. “Combining fun with likely capital gain,” he added.

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Barreiros says that he plays with two accounts at MIR4, and each one was valued at around R$3,000. He has not yet taken money out of the game, preferring to reinvest the gains as the cryptocurrency market rebounds from recent lows amid the investor flight from risky assets that have hit bitcoin and the rest of the cryptocurrency market.

“We are living in the first generation, the prehistory of the relationship between video games and NFTs, because, with the metaverse concept, game producers are still analyzing how they will position themselves in the market,” said Costa.

(Translated by LABS)