Throughout time, video games have continued to evolve as new technology emerges and new heights are able to reached within gaming. Simply put, innovation is at the heart of gaming. As the cryptocurrency world began to give rise to a new sector of many industries, the video game industry was one that quickly built roots.
What is Play-to-Earn?
Play to earn is a new category of gaming that allows for ownership of the digital assets in the game world to lie within the player. This is a complete change from the current state of the industry. In the modern gaming world, players would purchase cosmetics or upgrades that are bound to their account, however, have no transfer rights and are lost upon account deletion. With Play-to-earn, any assets that a players buys or own is digitally owned by that person, giving them the right to re-sell or trade on the open market.
This allows gamers to get paid for their time and provides an incentive to keep investing more time and money into the project. This gateway between the mass consumer market of gaming and cryptocurrency is still being developed and entirely in its’ infancy, but its clear that it will be a standout for years to come. Early projects in the industry such as Axie Infinity quickly exploded across the industry due to its nature and similarity to a timeless classic. This game allows players to obtain and train creatures through PvP fighting, adventure mode, and other techniques. For playing the game and completing quests players are awarded SLP, the native currency of the game, which holds real world value. Although this is just one example of the wider space in play-to-earn, it is symbolic of what is possible when someone creates a truly captivating gaming atmosphere around digital asset ownership.
How do Assets have value?
The interesting thing that comes along with the play-to-earn concept, is that the decentralized marketplace allows for player ran economies. This means that the assets hold value depending on the needs and interests of the players. Most value will stem from the limited supply of these wanted assets. As the game rises in popularity and new players want to join in, there is an immediate bottleneck on the supply of these NFT’s that can artificially raise value until things settle down again. As time progresses, the market begins to see the average transaction price of a certain asset and can stay fairly stable.
How are my earnings taxed?
As the user continues playing one of these P2E games they tend to passively accrue the native currency of the game. Either through on-chain transactions, or simply through their playtime. This passive income is taxed similarly to any other passive form of income and needs to be reported similarly. If you do decide to jump into this world of play to earn and even pick yourself up some NFTS, you need to make sure that you have the proper tools on hand to help you manage your financial accounting needs. One of the best solutions for you will be Ledgible.
With all that being said, If you do decide to jump into this world of crypto and even pick yourself up some tokens, you need to make sure that you have the proper tools on hand to help you manage your financial accounting needs. One of the best solutions for you will be Ledgible.
With Ledgible, you can report and keep track of your crypto transactions with the supported integrations as you dive into the crypto space with this new information. If you want to learn more about Ledgible and get started for free, click here.
Disclaimer: The author and Ledgible do not provide investment advice and nothing in this article is meant to be taken as such. This website is presented solely for informational and entertainment purposes and is not to be construed as a recommendation, solicitation, or an offer to buy or sell / long or short any securities, commodities, cryptocurrencies, or any related financial instruments.