It probably is, but it's a Ponzi scheme with a potentially addictive lower layer in the form of a game, which is going to make previous ponzi scheme architects jealous.
Me giving money to Bernie Madoff via wire transfer hoping for gains isn't really addictive. The graphics and gameplay of a game might be. If you happen to build a ponzi scheme into that game, you benefit from its addictive qualities.
Keeping a healthy population of the lower levels of a ponzi scheme is key to keeping it going.
The claim seems to be that the game will attract people who don't view the game as an income stream, but rather just as a game. They pay the entry fee, and then may also buy assets from other players, thus funding the play-to-earners.
I think there's a slim chance this could be a viable business plan, but probably not in any socially-good way. The mobile games industry reaps a good chunk of its profits from "whales", customers who spend crazy-seeming amounts of money on games. Blockchain-based games may also be especially dangerous to young gamers who get access to a parent's credit card and rack up huge charges. This already happens in games like Fortnite, but whereas Epic Games can be pressured into giving refunds to parents when this happens, a blockchain offers no protection if the rules of the game don't allow for it.
We're probably better off if it _is_ a Ponzi scheme.
I agree. To me its a Ponzi scheme in a gold farming disguise. Gold farming only works when the game is fun enough that people will buy gold to play with in it. In this game, everyone playing it is buying in for hundreds of dollars and most likely that is the only source of the payments that are going out.
* You then claim that you are making money from some legitimate business
* You return money to earlier investors by just feeding them the money later investors put in
So who are the early investors here, what's the legitimate business, and how are we taking money from later investors to give to early investors?
EDIT: Guys, it's not a zero-sum game. You can breed new axies, etc. By the logic espoused by everyone in the responses, the stock market is a ponzi scheme because later participants buy stock from earlier participants. This may be my fault with the defn lacking some things, but clearly the stock market isn't a ponzi scheme, so something is wrong.
"Gameplay requires the purchase of three Axies, which currently cost in the hundreds of US dollars each."
> what's the legitimate business
"By blurring the line between “player” and “worker”, the game has effectively built a Ponzi scheme with built-in deniability. Sure, some users will be net gainers and other users will be net losers, but who am I to say the net losers aren’t in it for the joy of the game?"
So I guess the "legitimate business" is making the game interesting for people who.. enjoy it?
> and how are we taking money from later investors to give to early investors
I don't know how the in-game mechanics work but later investors also purchase Axies and somehow that money ends up in the hands of the former investors. Maybe not automatically, I guess it depends on what in-game actions you take, but given that you first have to invest before you can play...
Early investors: people who “invested” hundreds of dollars to play. Legitimate business: “we’re a game studio.” Later investors: newer players who see the earlier ones making money.
The economy is zero sum. The early investors are the people that bought in early and they cash out by selling to the later investors. The “legitimate business” claim is Axie itself and the claim that it can both reward investors who hold and rent Axies as well as pay people to play the game. An idea that only works if more people keep putting money in. To further this claim Axies developers make an awful lot of noise about how they are going to introduce new mechanics which will supposedly fix this.
I'm not sure about this, but I think the correct term might be "negative sum." The winners gain less than the losers lost for the reasons you mentioned.
It probably is, but it's a Ponzi scheme with a potentially addictive lower layer in the form of a game, which is going to make previous ponzi scheme architects jealous.
Me giving money to Bernie Madoff via wire transfer hoping for gains isn't really addictive. The graphics and gameplay of a game might be. If you happen to build a ponzi scheme into that game, you benefit from its addictive qualities.
Keeping a healthy population of the lower levels of a ponzi scheme is key to keeping it going.
The claim seems to be that the game will attract people who don't view the game as an income stream, but rather just as a game. They pay the entry fee, and then may also buy assets from other players, thus funding the play-to-earners.
I think there's a slim chance this could be a viable business plan, but probably not in any socially-good way. The mobile games industry reaps a good chunk of its profits from "whales", customers who spend crazy-seeming amounts of money on games. Blockchain-based games may also be especially dangerous to young gamers who get access to a parent's credit card and rack up huge charges. This already happens in games like Fortnite, but whereas Epic Games can be pressured into giving refunds to parents when this happens, a blockchain offers no protection if the rules of the game don't allow for it.
We're probably better off if it _is_ a Ponzi scheme.
I love it.
No one plays the game because it's fun now. But in the future, the game will be fun, and people will pay to play it.
Right now, it's just crypto where you can spend your time AND money to get a return instead of just your money.
Got it.
I agree. To me its a Ponzi scheme in a gold farming disguise. Gold farming only works when the game is fun enough that people will buy gold to play with in it. In this game, everyone playing it is buying in for hundreds of dollars and most likely that is the only source of the payments that are going out.
So a Ponzi scheme works like this:
* You take money from investors
* You then claim that you are making money from some legitimate business
* You return money to earlier investors by just feeding them the money later investors put in
So who are the early investors here, what's the legitimate business, and how are we taking money from later investors to give to early investors?
EDIT: Guys, it's not a zero-sum game. You can breed new axies, etc. By the logic espoused by everyone in the responses, the stock market is a ponzi scheme because later participants buy stock from earlier participants. This may be my fault with the defn lacking some things, but clearly the stock market isn't a ponzi scheme, so something is wrong.
> So who are the early investors here
"Gameplay requires the purchase of three Axies, which currently cost in the hundreds of US dollars each."
> what's the legitimate business
"By blurring the line between “player” and “worker”, the game has effectively built a Ponzi scheme with built-in deniability. Sure, some users will be net gainers and other users will be net losers, but who am I to say the net losers aren’t in it for the joy of the game?"
So I guess the "legitimate business" is making the game interesting for people who.. enjoy it?
> and how are we taking money from later investors to give to early investors
I don't know how the in-game mechanics work but later investors also purchase Axies and somehow that money ends up in the hands of the former investors. Maybe not automatically, I guess it depends on what in-game actions you take, but given that you first have to invest before you can play...
The investors are the players hoping to make money from the game. The players have to buy Axies to play the game.
The "legitimate business" is playing the game to get more Axies that you can then sell.
The later investors then buy Axies that the early investors earned by playing the game.
As soon as exponential growth stops the system collapses.
Early investors: people who “invested” hundreds of dollars to play. Legitimate business: “we’re a game studio.” Later investors: newer players who see the earlier ones making money.
The economy is zero sum. The early investors are the people that bought in early and they cash out by selling to the later investors. The “legitimate business” claim is Axie itself and the claim that it can both reward investors who hold and rent Axies as well as pay people to play the game. An idea that only works if more people keep putting money in. To further this claim Axies developers make an awful lot of noise about how they are going to introduce new mechanics which will supposedly fix this.
I'm not sure about this, but I think the correct term might be "negative sum." The winners gain less than the losers lost for the reasons you mentioned.
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Read TFA. Your questions are all answered in it.