With so many different types of cryptocurrency, investors have a variety of projects they can check out. Gaming coins, a relatively new type, have been growing.
Gaming coins combine two extremely popular industries: crypto and video games. Many are online games that use a cryptocurrency as the in-game currency. Players can use the game's crypto for purchasing characters and weapons. These games also often use a play-to-earn model, where players can earn crypto as they complete tasks.
Blockchain gaming companies raised $476 million over the first half of 2021. Since this is a new industry, gaming coins could have serious growth potential.
Gaming coins to watch
Here are some of the best gaming coins to watch and consider as an investment:
| Cryptocurrency | Market Capitalization | Description |
|---|---|---|
| Decentraland (CRYPTO:MANA) | $1.35 million | A virtual world where players can own land that they use for games, art, activities, and more. |
| My Neighbor Alice (CRYPTO:ALICE) | $260 million | A builder game with plots of land where players can create their own farms. |
Axie Infinity
Axie Infinity has carved out a place as the leader in crypto gaming. It's the biggest cryptocurrency game, and it has also become one of the biggest cryptocurrencies in the world.
Inspired by Pokémon, Axie Infinity lets players buy, trade, and battle creatures called Axies. These Axies are non-fungible tokens (NFTs), and you need to buy at least three to start playing.
One reason the game is so popular is because players can earn AXS gaming tokens for playing. Some players report earning hundreds to thousands of dollars worth of crypto per month by playing.
Early investors are undoubtedly happy with Axie Infinity's stock performance. It was worth about $0.54 at the beginning of 2021 and would later surpass $150, an increase of more than 28,000%. Gains will almost certainly slow down, but, as crypto gaming grows, Axie Infinity will be the one of the first names seen by new investors.
The Sandbox
The Sandbox is a decentralized platform where players create their own 3D game worlds using visual scripting tools, which means no coding knowledge is required. Players make games and store assets on LAND, The Sandbox's digital real estate.
SAND tokens power The Sandbox. Players use these tokens for in-game transactions, such as buying equipment and LAND. There are a limited number of LAND plots available. Only 166,464 will exist, and some have sold for more than $50,000.
So far, The Sandbox has amassed a large and varied list of partnerships that could help build its user base. It's working with gaming company Atari to create virtual theme parks. Several celebrities, including Snoop Dogg and Deadmau5, have also gotten involved with The Sandbox and set up their own virtual estates.
DappRadar reports that more than 100,000 worlds are created on The Sandbox every day. This crypto game's token has seen several large price movements in 2021, including gains of more than 3,000%.
Enjin Coin
Enjin Coin is a different way of investing in gaming coins. It's not tied to one specific blockchain game. Instead, Enjin Coin is made to work with a variety of different games.
The company behind this cryptocurrency, Enjin, offers software development kits. Developers can use these kits to create digital assets, such as in-game currencies or special items, for their blockchain games. Players can use Enjin's wallet to store their inventory for games connected to Enjin's platform.
When developers make digital assets on Enjin, they must lock Enjin Coin into a smart contract. This ensures that assets on Enjin have real-world value.
Enjin Coin started 2021 at $0.13 and had risen to $4 in April. The price dipped after that, and since then, it hasn't grown as much as other major gaming coins. However, this cryptocurrency's versatility could help it do well in the future.
Decentraland
Built on the Ethereum (CRYPTO:ETH) blockchain, Decentraland is a shared virtual reality platform. Similar to other virtual worlds, it offers plots called LAND that players can purchase and use however they want.
What makes Decentraland special is its freedom for players. LAND can be used for games, artwork, activities, digital tourism, and much more. Decentraland also has communities, called Districts, dedicated to specific themes. For example, one of the largest Districts, Aetheria, is built around the cyberpunk aesthetic.
The native token for Decentraland, MANA, is used for in-game transactions, such as buying LAND. It's also a governance token that gives holders voting rights.
Decentraland is still in the early stages of building its user base, with monthly user numbers in the hundreds. That's a double-edged sword for prospective investors. On the one hand, the platform may not catch on. But, if it does, there's the potential for explosive growth.
My Neighbor Alice
A new blockchain game that's still in the testing phase, My Neighbor Alice is a multiplayer farm and builder game. Players can buy land spread around six islands, farm it, and buy animals from the marketplace. It has a lighthearted design that will remind many gamers of the Animal Crossing series.
ALICE tokens serve as the in-game currency. They're used for marketplace purchases, and players can earn ALICE tokens by completing quests. Token holders can also stake crypto and earn rewards.
My Neighbor Alice is one of the riskier crypto games to invest in. The value of ALICE tokens fell considerably after their release. Since the game isn't out yet, it's hard to predict whether it will be a hit. This is another gaming coin that may or may not be successful but could grow quite a bit if the game takes off.
Illuvium
Set to launch in 2022, Illuvium is an open-world RPG with elements of the Final Fantasy and Pokémon games. Players control characters called Hunters, and, as they explore, they encounter creatures called Illuvials. These Illuvials are NFTs, and when you capture one, it's stored in your wallet. As this is a play-to-earn game, players will be able to earn Illuvium tokens for winning competitions and tournaments.
Although Illuvium has been compared to Axie Infinity, there are several major differences. Unlike Axie Infinity, Illuvium will be in 3D with an open world and will have a story mode. If it lives up to the hype, it could be the rare crypto game that also connects with traditional gamers.
Illuvium's price and market cap have risen significantly in anticipation of the game's release. The fact that it has already increased in price so much is something to consider before investing. If nothing else, it's worth keeping an eye on Illuvium to see what gamers think when it comes out.
Yield Guild Games
Most of the most popular blockchain games use NFTs. Yield Guild Games is a decentralized organization that aims to maximize the value of investing in NFTs used in different games, including Axie Infinity and The Sandbox.
It does that by selling and renting NFTs. This allows owners to make money from their NFTs and other players to purchase or rent them. For example, if you own any Axies (the creatures used in Axie Infinity), you could offer them through Yield Guild Games. Another user could then rent your Axies in return for a share of the profits they make playing the game.
Yield Guild Games is another new project, launching in July 2021. Over the next month, it rose in price by almost 550%, but then it lost more than half its value. Considering how important NFTs are to blockchain gaming, Yield Guild Games has a clear use case, and it could do well if the industry keeps growing.
Should you invest in gaming coins?
Even for crypto, gaming coins are a risky investment. Several have had extraordinary success in 2021. The question is whether this will be a continuing trend, or if it's just a flash in the pan. For those who don't want to spend time diving into gaming coins, cryptocurrency stocks are a good alternative.
If crypto gaming has caught your eye as an investment opportunity, the traditional advice of doing your research is more important than ever. Since gaming coins are so new, they don't have an established track record yet. Take your time learning about what they offer and what their goals are to make an informed decision.
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Lyle Daly owns shares of Ethereum. The Motley Fool owns shares of and recommends Ethereum. The Motley Fool has a disclosure policy.