Play to Earn: The path to a bank account

Play to Earn: The path to a bank account

The COVID-19 pandemic and the ensuing lockdowns created a massive demand for work from home opportunities. While many white collar workers transitioned to working online, blue collar laborers were forced to leave their jobs without alternative forms of income. Play to earn games such as Axie Infinity have emerged to fill the needs of those unemployed due to the pandemic, and it has quickly become one of the fastest growing industries in the region. Despite its recent emergence, Axie already has 3 million daily users as of November 2021, and of those, 40% are from the Philippines.

But what about this technology has led to such rapid adoption, particularly in the Philippines?

To understand why, we have to take a look under the hood of play to earn gaming.

The inner workings of Blockchain tech can be complicated, to say the least, but the fundamental concepts behind play to earn are fairly simple. For the purposes of this article, there are 3 things to know.?

1. Cryptocurrencies are essentially "mined" by computers, aka nodes, which solve algorithms. For every correctly solved algorithm, the node is rewarded for its work with a coin.?
2. The brilliance of the play to earn model is its ability to turn players into nodes. Under that model, algorithms are solved not by the work of a computer, but via the player’s in-game choices. When the player succeeds at the game, they are rewarded for their work with a coin, in a similar manner that a computer mines coins for correctly solving algorithms on the Blockchain.
3. Play to earn games essentially leverage high unemployment by giving blue collar workers a means to earn cryptocurrency on their phones.

This model has fit the Philippines like a glove. In the past year, Axie Infinity has enabled users to earn as much as P25,000 per month, far above the P7,385 monthly minimum wage.

Growing economies like the Philippines, Vietnam, Indonesia and others have unique circumstances that make them fertile ground for this new technology. First, these economies have a high proportion of blue collar workers, whose jobs cannot be performed virtually. Second, they have high penetration of smart devices- there are now more than 79 million smartphone users in the Philippines. Lastly, play to earn gaming has arisen at a time when gaming for profit has recently become a mainstream concept. Today, as opposed to five or ten years prior, gamers can earn on streams, through sponsorships, or by winning e-sports tournaments. The legitimacy of gaming as a means of income has never been stronger. Enter Axie Infinity.

Axie Infinity led the charge as the first and most widely adopted play to earn game. It was valued at $3 billion in October. As a first mover in the space, Axie’s valuation benefits from being the only fully operational example of this model that has been brought to a global scale. And although that number may seem astounding, it is hard to deny that the concept of being able to make money by playing a game has intrinsic value. We’ve seen the rise of the gig economy as people have taken to Uber, Postmates, and other such platforms to perform simple tasks for money on their own time. Now, with play to earn, people can run a few rounds of a game to earn some quick cash from the comfort of their beds.

And because of this incredible value, competitors are beginning to enter the market at breakneck speed. Games like Thetan Arena, which launched in the first week of December and already has 7 million users, are quickly challenging the play to earn leader, touting gameplay that is “more fun” than Axie, but with the same fundamental play to earn capacities. Others on the horizon include Kart Racing League, a racing game reminiscent of Mario Kart, where players can buy and level up their NFT racers and race to win coins. Yet another is NFT Champions, which hopes to capitalize on the popularity of games like Pokemon, allowing players to raise and battle their own NFT creatures, similarly to Axie but with more advanced 3D animations and a more enticing gameplay experience. These types of projects spell massive growth for the industry as they appeal not only to those looking to make a profit, but also to casual gamers who might simply want to play the games for fun.

Earning together

One crucial element of play to earn’s growth is the emergence of guilds. Play to earn games require an initial investment from the player. For Axie Infinity, that means purchasing a team of three “Axies,” which generally range from P60,000 to over P100,000. As you can imagine, this can be a high hurdle for many players. Guilds such as YGG aim to solve this issue by covering the buy-in fee in exchange for a portion of the player’s earnings. This revenue sharing model creates even greater penetration for play to earn games in low income communities and has been a huge proponent of Axie adoption in the Philippines.

The opportunities created for Filipinos have been game changing. Over the past few months, Axie Infinity proved to be a lucrative opportunity for Filipinos to earn money and, perhaps more importantly, has begun to change the landscape of the job economy. Many players have left their full-time jobs to focus solely on Axie Infinity. Take Mavs Ignacio, for example, who resigned from his job as a Manila call center agent to run a small team of Axie players with his wife.?

For others, Axie Infinity is a way of earning passive income. Ginger Arboleda, a co-founder of tax assistance startup Taxumo, established an Axie Infinity guild as a side business where she currently handles up to 40 players (aka “scholars”) who have their own jobs as well. Her scholars are looking into filing their gaming earnings as freelance earnings.

It’s clear that Axie Infinity has become a perfect use case of blockchain technology as a democratizing force, enabling people to earn without a background check, a credit score, or work history. Absolutely anyone can play to earn. This then begs the question: can gaming be the key to financial inclusion in the Philippines?

The potential of video games in banking the unbanked

Even before blockchain games came to be, traditional video games have always offered players the chance to experience virtual economies and deal with virtual currencies. The only downside is that these virtual currencies can only be used to purchase in-game assets. Real-life transactions were also only possible through peer-to-peer trading. No doubt millions of Sims players would’ve cashed out their Simoleons if they had the opportunity to use that money in real life.

Axie Infinity and many other play-to-earn blockchain games have evidently changed the game by allowing players to use both fiat money and crypto to purchase in-game assets and turn them into investments they can trade in real life. With Filipinos making up 40% of Axie Infinity’s user base, blockchain games have spurred a rapid increase in digital transactions in the Philippines. Players of Axie Infinity, for example, are required to fund their MetaMask and Ronin wallets with ETH, which they can purchase through bank transfer, credit or debit card. This funding process emphasizes the role that digital payments and mobile banking apps play in this new age of gaming, and further opens up opportunities for Filipinos to utilize digital solutions without having to learn much about their technicalities. Today, we see blockchain and crypto not only available to early adopters, but to the masses as well, thanks to Axie Infinity and other play to earn blockchain games.

As independent think tank Consultative Group to Assist the Poor (CGAP) pointed out, games allow players to digest the technicalities of finances through patterns and connections between ideas. The general idea of gamification makes it easy for anyone to learn about new innovations when they’re applied in real-life applications. If we take the example of blockchain games, players stand a chance at entering and participating in the formal financial system if they were previously unbanked or underserved. With more than 51 million Filipino adults remaining unbanked, blockchain and crypto has the potential to improve financial inclusion for half the country.

How blockchain and crypto are changing the financial system

With blockchain games continuously rising in popularity even as the world recovers from the pandemic, it’s clear that blockchain solutions and crypto are here to stay and change the way people handle their finances. NFT based play to earn games have emerged as an exciting new possibility for the Philippines, among other growing economies, offering millions a new way to earn a living wage.

But if these opportunities are to last, they need to be galvanized with a proper financial infrastructure. Players, especially those that are underbanked, as so many are in the Philippines, need rails that allow them to move, save, and invest their cryptocurrency earnings. Unfortunately, the accelerated growth of the crypto space has left regulators scrambling to catch up and so few institutions prepared to handle the new needs of crypto earners.

That is precisely why we need federally regulated entities to facilitate, not impede, the benefits that crypto brings to the world, to create systems that support players as well as guilds and investors.?

UnionBank has long championed the evolution of DeFi and the adoption of cryptocurrency as a legitimate financial tool. Now UnionDigital, the Philippine’s first blockchain native digital bank, is designed to support this rising economy and create the financial rails for the future of digital finance. We aim to reach the unbanked through blockchain-based solutions. We believe in uplifting communities with this technology and further empowering the Philippine economy by enabling the use of crypto anywhere at any time of the day, whether that’s for simple retail transactions or transferring assets from NFT games.

In this day and age, digital is king. While most Filipinos have yet to understand what blockchain and crypto can do for their lives, play to earn blockchain games are rapidly accelerating the penetration of the technology, helping people familiarize and kickstart their journey into the Metaverse. Blockchain games have created a new gateway for Filipinos to earn income with just their mobile phones—an all-in-one tool that they already rely on and will continue to use in their daily lives.