General Concept
For those new to crypto currency and blockchain developments this chapter is a must read.
What is blockchain?
A blockchain is a chain consisting of consecutive data blocks. Each block stores a certain amount of information, and they are connected into a chain according to the time sequence of their generation. Due to its principle, the blockchain naturally has the characteristics that data is difficult to tamper with and decentralized.
What is DeFi?
DeFi, also known as Decentralized Finance, is a financial application built on top of the blockchain.
In traditional finance, institutions make money by lending and investing their capital and make interest payouts to their capital providers.
In DeFi (decentralized finance), financial institutions and their behaviors are replaced by smart contracts on the blockchain.
The advantages are:
The operating costs of banking institutions are minimized thus more profits can be paid out to capital providers;
The contract is transparent. All operations can be verified publicly and independently therefore reducing risks associated with centralized financal operations.
What is NFT?
NFT, short for non-fungible token, is indivisible, irreplaceable and unique. Due to its non-homogeneous and inseparable characteristics, NFTs can be bound to commodities in the real world, such as game props, digital artwork, tickets, etc.
With its collectability and ease of trading, NFTs can be used in games to make virtual props that have longer lifespans, higher appreciation head space, better playability, and wider circulation.
For NFTs used as game props, let's see how they differs from traditional game props:
In traditional games, the items you purchased may be lost due to account suspension, server outage, etc.; the price may also be reduced as the game publisher lowers the acquisition threshold.
In blockchain games, each NFT is permanent and unique. No one can change its properties and ownership. Its price is more affected by the market rather than the game publisher or game operator.
What is GameFi?
GameFi — a portmanteau of “game” and “finance” — involves blockchain games that offer economic incentives to play them, otherwise known as play-to-earn games.
From a financial point of view - In traditional finance, there is a steep learning curve on understanding different terminologies and practices. On the other hand, they need a certain amount of upfront investment and the process is cumbersome. Their perception of risks and benefits is easily induced and influenced by financial institutions. The advantage of GameFi is that it integrates financial attributes into blockchain and games, and uses blockchain games as a medium. On the one hand, it can effectively reduce users' learning costs and improve users' willingness to participate. On the other hand, characteristics of blockchain make the risks and benefits that are otherwise difficult to assess become open and transparent
From games point of view - Using NFT's own features in GameFi can enhance the interconnection between games and prolong the life expectancy of games.
Traditionally in games, players spend big dollars buying up in-game items. As the shelf lives of these game come to an end, these items will become next to worthless. Once a game is out of operation, the player would eventually lose the ownership of the item. In GameFi, NFTs (game items) purchased by players can be used in all games at the same time, such as a skin in MOBA games, or a mining machine in farm games. When an item has value in hundreds of games and may be used at the same time, its value propsition would have been greatly improved
What is BSC?
Binance Smart Chain (BSC) is a blockchain network built for running smart contract-based applications. BSC runs in parallel with Binance's native Binance Chain (BC), which allows users to get the best of both worlds: the high transaction capacity of BC and the smart contract functionality of BSC.
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