To understand why Mark Zuckerberg thinks “the metaverse” is the next frontier, consider the case of Sam Peurifoy. The 27-year-old chemistry PhD from Columbia University left his job at Goldman Sachs at the height of the pandemic and is now seeking out his fortune in crypto by playing video games.
He has recruited dozens of people from Mexico to the Philippines to a “Guild” that plays under the command of “Captain” Peurifoy. In exchange, he ponies up the funds needed to enter Axie Infinity, a game where players collect Smooth Love Potion—a digital token that can potentially be converted into real money.
The metaverse of Zuckerberg’s dreams is the sort of place where everyone’s plugged into a virtual reality, able to teleport, make things happen merely by thinking about them and effectively step beyond the limitations of the physical world into a brave, new digital one. The billionaire concedes this is still “a long way off.”
But what Peurifoy and his Guild are now doing on Axie offers an early glimpse into this future. It’s not quite “Ready Player One”—Steven Spielberg’s dystopian sci-fi adventure based on Ernest Cline’s book, or even “Snow Crash,” the 1992 Neal Stephenson novel that coined the term “metaverse.” Rather, it’s an online arena where “decentralized finance,” or DeFi, reigns—fusing together cryptocurrencies, blockchain technology, non-fungible tokens and video gaming.
This world is filled with dangers though and is far from altruistic. Investors and bankers have profound disagreement about how cryptocurrencies will shake out in the end, but what they do know is that prices have been extremely volatile. While Bitcoin, Ethereum and others are gaining more Wall Street acceptance, the larger universe is populated by an ever-expanding number of new and untested meme coins—some so questionable they are literally known as shit coins.
With technical outages and sudden price shifts, there’s no guarantee these tokens can actually be converted into cash. And in the crypto world, it’s also seen as a rite of passage to be scammed at one point or another. That may be fine for wealthy investors who can stomach the risk, but could leave market participants, including in the developing world, vulnerable.
Axie Infinity Boom
Axie—which is at the forefront of this “GameFi” trend—has already generated more than $2.5 billion in trading volume. Several other rivals offering games that lure players with the promise of crypto are also gaining popularity. Venture capitalists and hedge funds are trying to cash in on this new online gold rush in which they predict billions of people will swipe, crush, shoot or kill in the hope of earning digital tokens.
Axie isn’t much to look at next to the many startlingly realistic games out there. It centers on Pokemon-like characters that fight and breed in a simple game of strategy. What sets it apart is the fact that aside from earning stars or hearts or crushed candy for winning this game, players get something much more valuable, at least theoretically: Smooth Love Potion.
The ability to earn by playing a game has transformed the lives of some players, many in the Philippines where it exploded in popularity as the pandemic locked many out of work, and dollars—as well as digital tokens—go far. At least when their prices are up.
It’s impossible to say exactly how many people are playing to earn. But all the signs are pointing up. One marker: the relationship between games and digital wallets, those accounts people use to receive and store crypto. As of last March, about 51,000 daily active wallets were connected to gaming-related contracts in the blockchain ecosystem, according to DappRadar, a firm that tracks data on decentralized finance. Three months later, that figure had skyrocketed to 359,284—a 599% increase.
Games like Axie show why tech titans are gravitating toward the concept: The metaverse and its possibilities have the potential to upend not just how we work, earn and spend, but also the fundamental ways in which we live, plan and run our lives. In essence, they promise to transform the way capitalism functions.