Cryptocurrency, blockchain, and NFT technologies are in the news a great deal these days. It’s invaded the video gaming community in a big way with major gaming platforms embracing the technology. I’m not going to get into a lengthy discussion about what cryptocurrency is or is not. Nor am I interested in discussing its long-term viability as a medium of exchange.
What I will discuss today is crowd sourcing and in-game purchases used to fleece people of their money.
What is Crowd Sourcing
Crowd sourcing is a way to generate revenue from people in order to create a product. In this case, the product is a purported video game which uses cryptocurrency, NFTs, blockchain and other buzzword technologies. The developer and associates spread information on various social media platforms touting the video game as a way to make a lot of money. People then send money to the developers in hopes of a large return.
In modern times, the developer pays influencers to promote the video game which creates a buzz and more people invest.
Another way the developers make money in this scheme is to sell virtual product in the game. It might be plots of land, vehicles, mounts, outfits, weapons, or anything else a crafty developer purchases from an asset store. People pay money for these things.
Often times a resale market is established where one investor can sell purchased items to a second investor with the game developers taking a small percentage of each sale. All these virtual markets are established long before any game is created.
The people who jump in early hope to see a massive profit later when others pay them a premium for these items. These early investors then use social media to promote the game itself and the in-game purchases as a way to make money. This is often called Pump and Dump which I’ve written about elsewhere.
The problem is only the early purchasers take a profit because, as it becomes clear the game will fail, the market plunges and all items become worthless.
The windfall comes when the game fails. The developer took millions from crowd sourcing, millions more from in-game sales but after trying to create a game for any number of years, they fail. Off they sail into the sunset with your money.
The reason this is generally legal is developers spend just enough money and time to make a case they tried to develop the game in good faith. Naturally, they had no intention of creating a finished product but they only must prove in court they tried.
I don’t want to tell you how to invest your money. It’s your decision. I get the idea if one of these games actually comes to fruition you might make a lot of money. You won’t, even though you believe differently. Only people in on the scheme from the start or the early days will make money. Everyone else, that’s you, will lose.
I understand it’s only a few thousand dollars that you can afford to lose. Still, don’t you want to spend that money on something you’ll enjoy? A good whisky? A nice meal? A cute girl or guy? Even a long-term, low-risk investment?