Investing into Blockchain Games: A Beginners Guide in 2020

Therealbarra
19 min readFeb 24, 2020

This time i want to write my thoughts about cryptogames and how they attracted me as an additional investment strategy.

Introduction — What is a Cryptogame?

First of all, everyone reading this should be aware what a cryptogame is. In general, it is just a game accepting ethereum or any other cryptocurrency for participating/interacting within the game, either by owning some kind of assets, or benefits in general. But it is way more beyoned just a game accepting cryptocurrencies as a payment method. Theres a complex ecosystem behind such a game keeping the value of assets in mind, and furthermore always trying to improve that value. Therefor you can achieve a higher value of your asset portfolio and benefiting in profit.

My thesis is that cryptogames are some kind of additional investment strategy which will become increasingly popular in 2020 and later.

Lets break it down with my point of view of Investments itself, and how does it affect everyone from young to old. When I first started thinking about investments my goal was to make more money and with the dream to build my own house. However, I have a lot of things i can barely achieve with my current salary. Then again to invest i need the money i get from my job, cause winning the lottery shouldnt be a plan of any kind of investment strategy.

So!

Q: What is realistic investment in general?

1) Investment:

A: As soon as you start reading a bit about investments you will realise by just putting some of your additional money into some ETFs or speculating on currencies doesnt bring you far, since after all the first thing you need to check is, whether you are prepared for an investment or not.

Preparation:

I created a simple, yet a bit challenging image of a staircase you have to climb up:

Attention: My point of view is very strict, i don’t like risks, and I want to minimize the possibility of losing everything by just speculating. So this is the point of view, you can still choose if thats too harsh for you and you want to start investing earlier.

We will start at the Monthly In/Out:

This is the first step you need to achieve, having your monthly salary may be a thing, but keeping it till the end of the month will be harder, so make sure you can pay everything with your salary and still be able to have atleast one monthly salary on your bank account. If this is already hard, you may not be prepared well enough to invest.

Spare Money:

Everyone should have an additional spare bank account, where all the money goes which is not yet to use during the month. Make sure you keep 2–3 monthly salarys on this account, to have some money in the back if your car gets broken, you quickly need a new dishwasher or other stuff.

Save Money for Purchases:

Apart of the unplanned things, there are also planned things you wanna do in future, like going on vacation, buying a new car, moving out to a new flat. It all costs money but shouldnt be payd by either the two steps before. Since usually the time you go on vacation, karma hits you and your television dies, or something else in your house. Happened to a lot of people already. ;)

Future/Investments:

While you are working, you are able to gain a lot more money, as when you are old. And in 2020 its blind to not try to save up for your future. Here we have a lot of possible ways to do so.

  • We can step into additional life insurances to save up money.
  • We can invest into ETFs we have a trust on.

AND (not or)

  • We also could think about cryptocurrencies, and investing in such.

While just buying “Ethereum”, “Bitcoin” or other currencies, playing a game with tradable assets might be the option you are seeking for, since it makes it possible to understand the value of assets without beeing a stockholder financial investment guy. As a player of a game, you know whats worth and whats not, which Items or Characters compete well, which wont, and this impacts the value of such assets. So its an easier way for gaming interested people to understand whats also happening in the “real world” with companys and their stocks.

So after you climbed up all the stairs you probably have a lot of money prepared for the worst things to happen. Now you can sneak peak on the quiet new world of cryptocurrencies.

2) Investing in Cryptogames

Cryptocurrencies:

Cryptocurrencies are highly affected with investment, since crypto itself is a long story of up and downtrending Valuability of your daily $ or € or Yen. They basically work like currencies in the virtual world, you can already buy in various shops supporting cryptocurrencies, and you can also use them for many games.

Assets:

While buying new shoes with cryptocurrencies makes you instantly gain something for your daily usage, cryptogames support assets which can be bought, and belong to your wallet. Since those assets will work as long as the game exists, the demand on such assets therefor the lifetime is much higher than just shoes you some kind of “use up till they are broken”.

Lifetime of an Asset:

Within that lifetime of assets, they gain or lose value, more like a share in financial ways. Its comparable to shares you have in a company, it goes up and down in value, till the day the company doesnt exist anymore. While shares give you the benefit of “holding” it, you can do a lot more with assets in cryptogames, like use them ingame to gain more assets. So you can have a direct influence on the value of your overall portfolio.

Therefor games supporting cryptocurrencies can be seen as some kind of investment, rather than investing in currencies like Ethereum in general, you invest in some kind of Asset, mostly tradable due to Ethereum, which — then again — can get transferred into your favorite country currency.

Cryptogames:

Sure, there are plenty of cryptogames in the world, therefor there are plenty of different mechanics how cryptocurrencies are implemented into a game. The most famous games gather some kind of promising value to your assets, you bought due to cryptocurrency. One of those is MyCryptoHeroes.

MyCryptoHeroes — Game:

In this game you use the currency ethereum to buy either the ingame currency “GUM” or assets like land sectors, heros or extensions for your heros.
This game gained a lot of attention in 2019 due to it’s daily trading volume. MyCryptoHeroes is one of the leading cryptogames. 200–350 ETH got traded on a daily base in 2019. No other game managed this continuous activity. Therefor, there must be some kind of reputation, making people invest a lot of money into a simple game.

Mechanics of MyCryptoHeroes:

The mechanics are well thought, but still its a pixelated battle experience, where you equip your heros with extensions to quest against enemys for the chance of collecting tradable assets, and fight in duels to win prizes (again assets). The whole goal is to get a hold on tradable assets, you can use either to trade for ETH or upgrade your own team power.

Ecosystems of cryptogames:

We have two views on such games:

Inside:
The ingame view, where you store your heros and extensions you use daily, using the ingame currency to buy more extensions or heros, and participate actively with your assets.
How can I use my assets inside of the game.

Outside:
Then we have the outside view, on the blockchain. You can transfer your assets to your wallet on ethereum network, trade them for real ETH without beeing able to use them ingame anymore.
How much is my asset worth (against a cryptocurrency) and will the value increase.

So we have basically two ecosystems to protect.

Ecosystem inside the game:

The inside ecosystem, backed with the ingame currency, controlled by ingame factors like:

  • How useful is the asset ingame
  • How hard is it to gain the specific asset ingame either by purchasing, farming or winning.
  • What are the ways ingame to farm ingame currency to achieve the asset.

Ecosystem outside the game:

The outside ecosystem, only backed with ethereum which is always defined by value against the dollar.

  • Whats the current ethereum price
  • Whats the popularity of the game, and therefor the demand
  • How stable is the value of the asset in case of holding it without ever participating ingame

Sure some factors impact ingame and outside of the game, or stay in close relation to each other, while others not overall.

Impacts:

For example if ethereum price rises, but the ingame currency is still the same hard or easy to get. The ethereum prices of assets on the outside of the game will drop, since its more expensive to buy ethereum, while the ingame prices of assets in ingame marketplaces may stay much longer, or even keep their price for ingame currencies.

Therefor it should be said that the ingame currency can barely be translated to dollar, it depends on the ability to gain that ingame currency, since it can be aquired by several ways. Either buying it with real ETH, or by trading assets inside of the game, or by getting daily rewards, or collected rewards due to Toku Aquisition.

Ethereum again can only be aquired by selling assets on the blockchain, or by buying it with your real money.

Relation overview:

3) Why Cryptogames are an addition to my investment strategy:

Examples from my past:

Life Insurance:

In the past I invested in a lot of things, with pros and cons. When i first started working, an insurance guy from my company offered me a pension insurance. I was young and accepted by offering 80$/Month of my salary. 5 years later i had to move this insurance to another company and they said the administrative expenses would just barely make the move possible, after 5 YEARS! So i started again by 0$ cause administrative expenses used up all my savings in that insurance. Thats the first time my trust made me actually lose money.
Long story short: I invested into another life insurance while reading loads of paper about it to determine all the risks i have. But sure it took a lot of time, and self studys.

Cryptocurrencies late 2017:

Apart of that I traded a lot in cryptocurrencies in 2017, (yep the time when Bitcoin went from 2.000$ to 18.000$…):

While the ups and downs of ethereum, bitcoin and co in late 2017 made me look at loads of charts each hour of the day, almost preventing me from actually living my own life, and focussing on whats important to me, family. I cannot recommend this, since it requires a lot of chart analyse and knowledge, except you think of putting your money once in and let it stay for 10 years no matter what happens.

ETF:

My most successful investment yet was ETF. I have a monthly save plan for my ETF, no matter how high or low the ETF I invest into is at the first day of the month i invest my money automatically, and the resume after 1.5 years was a plus of 15%.
That said, i don’t care anymore how the market rises or falls, it doesnt matter, i read a study that even if you bought Shares in the bank crash in the early 2000’s most people wouldnt have had loss if they just kept their shares for long enough (15 years if i remember correctly) cause the market will always grow again. Putting everything into one company of course doesnt help if the company itself goes broken. Therefor ETFs combine a lot of companys, and depending on the ETFs these are even companies from different sectors and continents. So you spread the risk over a global range. Therefor you dont have a total loss if some sector or area of the world gets in danger “financial wise”.
Overall this is my long time investment strategy, even if i lose 20% next year, I will invest atleast another 5–10 years and then resume probably with a + at the end.

Cryptogames — my new investment:

Late 2018 i started reviewing how to finally get my own cryptokitty. I didnt want to invest at all, i just wanted a Kitty!

Mid 2019 after a lot of breedings and realising this requires me to study Blockchain Kitty Scientology if i ever wanted to actually keep my money, I checked opensea and read about MyCryptoHeroes.

I got highly interested and started playing for free.

The more I played the game the more I realised I can easily transport the ecosystem of MCH into my own financial investment knowledge.

MCH supports Heros, making it possible to farm extensions(assets). You can trade the farmed extensions against GUM, or sell them on opensea for ETH. So there is a direct way of “making money”.

Your Gameaccount as your Portfolio:

That said i see my MCH Account as some kind of portfolio. I started without paying anything. Yet i had heros able to farm assets. I farmed like 2 common extensions:
0 invest <-> 2 common extensions (opensea price around 0.02ETH/unit at that time)

To raise my chances i bought prime membership, got an additional hero, and was able to farm a node which drops more extensions. After a few weeks i farmed 10 more extensions, (all on prime node, it had a high droprate back then)

0.1 ETH invest <-> 12 extensions worth around 0.14 ETH maybe.

Sure it didnt made me make money at all, but i realised i dont make loss too, since i kept realtime values of my assets in mind and what I invested. Then I reviewed my financial plan, and thought about money i could spare for MCH, invest into additional heros, to farm more, participate in duels etc.

I always kept an eye on the market value of those heros, and started buying them. I made an excel sheet of the prices i paid and the actual value against $ at that time beeing. The game itself is also calculating your heros and extensions and summarizing them into a specific sort of “Asset Value”:

I consider my assets ingame as some kind of money like i have in my ETF, and sure there are times the prices fall, and times the prices rise, overall with farming additional assets ingame i try to increase my overall portfolio value. While the first assets are very cheap, i always try to increase their value by trading them, and buying better ones.

Risk Diversification:

The only trouble I have with MCH compared to ETFs is that MCH is a single game, while ETFs include a lot of different segments and companys. And eventhen regarding ETFs i go into separate ETFs again to take a lower risk of losing everything. Therefor I am looking for other opportunitys in cryptogames aswell, trying to spread my investment as far as I can so i don’t lose everything just from a single crash.

Other games I am still looking into are: infinitystar, cryptokitties, bravefrontierheroes.

It is really reliable to real investments, never set everything you have into one thing. Same goes for your saving plans I’d mentioned the sheet above. We have a double saveness.

We spread our money into different pots like savings for future, savings in your bank account, savings for stuff you wanna buy, and savings for investing, and investing itself get spread out too into insurances, shares, ETFs, Cryptogames while Cryptogames themself again get spread again into different games or companys.

Lets focus on the fourth Chart and always treat the stuff as “examples”:

But always calculate the effectiveness, some things require a bit of amount to cash in. Putting a dollar into every single opportunity just for the sake of diversification wont help at all. You always need to think about the goal you wanna reach and the minimum requirements of invest to reach that. I cannot invest 5$ a month into ETF and expect 2000$ at the end of the year. A pension insurance should be threatened for example for the next 30 years as a monthly investment, resulting in a good outcome, while ETFs or Shares can be seen as 5–15 years investments and cryptogames on current pace more like a 1–4 year investment.

4) Types of Investors based on MCH and where I see myself:

F2P — Free to play:

Free to Play players will gain the best In/Out in a general view, since they dont invest anything and overall will always make profit. Every asset they gain is a profit, without any risk, or invest. But surely the amount you get is determined by the amount you pay in. F2P players gain less valued assets, on a less frequent pace. They have no realistic chance winning the duels at all, since they always need to compete against investors who have higher assets.

Farmers:

Farmers invest into heros no matter the value, they try to buy as cheap as possible and use every ressource they have for farming, to gain more assets. They spend a lot of time farming, while they can calculate their monthly income the best, since it always goes like -> more heros -> more chances of assets -> more experience to consume for Tokens etc.

PvP:

PvP invest into high tier heros and extensions, they participate in duels and earn prizes for their participation, they are also able to farm the highest nodes for assets, while they may not have a lot teams the chance of farming is not as high as compared to a real farmer. They can participate in any kind of top tier tournaments, raids or else ingame, and win extensions and other prices by their participation, also they keep an eye on their assets competition which impacts their assets value too. They participate on new hero sales to have always the advantages to stay competitive.

Merchants:

Merchants buy and sell at a frequency, they buy assets when they are low, while they know they can sell them later on for higher, they know a lot about competitive assets, and the current needs of the community. They probably spend the most time cause they need to calculate a lot of factors, they also have a high ETH amount in stock to always react when the market is right.

Land Owners:

The most passive way without any other kind of participation would be a land owner, like a king. Owning lands gains a seasonable income without participating anywhere. But the income of lands compared to the price they cost is not really high. So beeing just a land owner isnt the case, usually the land owners also participate in any other segment of MCH.

Mixed Players:

Farming a lot, while staying competitive requires probably the most amount of ETH and therefor leads to the most revenue. Usually a mixed player still has a focus he lays on, either farming, or pvp.

Myself:

I consider myself more a kind of farmer, trying to get as much heros as possible. Those are my Shares on the company MCH, while my profit comes from the assets i gain from Farming, or the other ways i earn my ingame currency like offering my farmed experience to the ingame System which benefits you by either GUM or other Tokens.

5) Comparison of Cryptogame Ecosystems based on MCH vs Infinitystar

Why MyCryptoHeroes is a good example of a cryptogame to invest into:

The thing MCH does better than most of the other cryptogames is protecting their ingame currency almost as much as the government would protect the Dollar. They daily keep an eye on the ways how to aquire GUM (the ingame currency), they managed to find ways to distribute GUM for basically “free” actions ingame by still thinking about the impact it might have on the value of the currency. Therefor the basic rule is ETH is backed 0.1 ETH<-> 1000 GUM.

Thats the amount of Gum you can buy by ETH.

The goal is to keep that value, otherwise people would never think again of buying GUM by ETH, since even the smallest player realises soon enough what GUM is really worth.

That said i must say ETH <-> GUM is not that accurate. From my personal point of view its more like 0.1 ETH <-> 1500–1900 GUM.

This sounds much at first, but still GUM is a currency free to earn by selling farmed assets ingame, by daily rewards, and by Token Aquisition you get by just playing the game. That said, you gain GUM without even investing, which again attracts F2P Users a lot.

I can compare it with other games.

What do other games do worse then?

Lets compare it with infinitystar.

I really really love infinitystar don’t get me wrong. But there is one thing preventing me from investing:

A character costs around 6.900–8.000 Diamonds (ingame currency)

6.900 Diamonds are around 0.8 ETH (Diamond Box 3.600 = 0.4 ETH)

After a few weeks the character is worth barely 0.2–0.05 ETH, just because they implemented a way how to craft shards to get this character even F2P.
On the other hand I have to say infinitystar offers a lot for F2P, so while its not a good investment game, its a good game overall for F2P.

So again you have the ingame ecosystem and the outside ecosystem, while this time the ingame ecosystem barely manages it to keep their value due to easier ways to aquire the assets by less demand in general.

Protection of Assets:

MyCryptoHeroes protects their assets, not making it possible to farm heros. And the chance to gain an extension determines extension prices. The factor used to determine the chance is called MYZO in MyCryptoHeroes.

Regarding MYZO:

MYZO shows how many Original extensions are hidden in the Node. MYZO will be decreased as players obtain more, but at the same time enemies bring Original extensions from somewhere. So as time passes, MYZO is replenished up to the maximum issue number. But when players retrieve all (=maximum issue number) of original extensions from the Node, it won’t be replenished and no one can get original extensions from there (still tradable with other players ).

So they hard cap heros while they make it such difficult to gain specific extensions that even those farmable assets still keep their value. And they always can adjust the MYZO value whenever they need to take care of valuability and the ecosystem.

Thats why i think MyCryptoHeroes is one of the most successfull games by now. Their economic system works out, surely not satisfying everyone, but still it keeps assets value. The impacts this game had in the past, were surely determined by changes in the ecosystem, but never let an asset lose like 70% of their value at all.

Problem of cryptogame ecosystems:

But one big problem every cryptogame has is, its underlying continious support of investors, and new people to invest. Developers arent paid with air, therefor we need to find ways to make investors, participants profit in the game, to still keep attractivity, while salarys of developers are kept. This can’t be fulfilled by just transfer fees, trading fees, or ingame currency buys. Especially since the goal of an ingame currency is to stay almost equivalent against the original value of cryptocurrency.

Factors for success of a cryptogame:

  • high trading volume (therefor high participation)
  • overall value stability
  • active community
  • long time surviving ecosystem

(There can be short term high trading volumes for a specific game generated due to a hype, but thats not an indicator of a successfull game until it has proven to stay on that volume for a longer period of time)

6) Risks and Opportunitys:

From a capitalistic economic point of view each cryptogame just can get successfull on a long term by steady growing community, steady growing amount of investors and people willing to pay. This works same as in the real world where companys need to have a concurrent demand to exist. They need to continually sell their products or services since they always need money to pay workers, rent, machines etc. A cryptogame therefor has to continually offer assets to the players, pay developers, server infrastructure, marketing and so on.

Protecting the ecosystem:

But this growtrend may end at some point, and what will happen to the game itself, when this point is reached, or furthermore when this point is nearly reached?

Will those developers just stop developing and supporting the game?

The answer should be no, so its yet to find the solutions making the ecosystems stable for the future. Mostly every cryptogame is barely 2 years old, so there is no scientific way to determine how this goal can be reached.

From my personal point of view, we need cryptogames to require more investment, by more payback, by more attractivity overall for the gameplay itself.

There must be the people just willing to pay for the sake of the game, the people willing to invest for the sake of profit, and the people willing to pay for the future.

The community must grow overall, so we can aquire more benefits due to partnerships, commercials, tournaments, and some kind of fees. Otherwise every cryptogame will barely survive the first year at all.

7) Future of blockchain gaming:

While there is still a lot of development involved in the future of cryptogames. We can already see that the overall reputation and public awareness increases a lot since 2019.

New launches like a cryptogame based on the famous fantasy RPG Brave Frontier series increased the public awareness and made cryptogames accessable for the average gaming community.

Still there is a lot of understanding required regarding the differences of “just a videogame” and a “blockchain game/cryptogame” because the aspect of money is threated very differently. While you would say a normal game where you need money to stay top is called “Pay2Win” a cryptogame requires it from scratch. There is no discussion necessary about “Pay2Win” since paying for assets, gaining those shares in your portfolio is one of the main aspects a cryptogame is based on. Your competition and success is highly affected by your invest.

Blockchain gaming is nothing id recommend for kids, eventhough the overall layout of some games is childish, it requires a lot of knowledge about valuability and your understanding on how to invest efficient and wisely without taking the risk of losing money you actually need for yourself, your real life.

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Therealbarra

Former Cryptoinvestor, now addicted to blockchain cryptogames. Main focus on MyCryptoHeroes and Infinitystar. Works in IT, germany.