The Trojan Horse of Blockchain “Invading” Traditional Finance for Twenty Years of Gold Game

I made a documentary about the virtual economy in online games in 2005. At that time, there were tens of thousands of young people in China making a living in World of Warcraft and other games. The virtual currency and equipment they won in the game could be exchanged for foreign players. Come to US dollars, this behavior is called gold in the gaming circle, these players are called Gold Farmers/金农.

The same thing is happening in blockchain games today, the most prominent of which is Axie Infinity, a pet game. In Southeast Asia, tens of thousands of people have used the breeding of Axie, a virtual elf, and the use of Axie to participate in martial arts as a means of earning a living.

What is intriguing is that this time because of the blockchain, the “Play-to-Earn” players have more rights than the “Golden Farmers” of the year, and they can also share their hard work. The success of the game. Yield Guild Games, the most successful game gold team, recruited more than 4,000 full-time players and issued its own token YGG.

This time, the “play while earning” model is not only changing the game world, it also allows the blockchain to quickly enter the lives of ordinary people, and at the same time it is making Defi (decentralized finance) and NFT (non-homogeneous generations) The accelerated introduction of game mechanics in the field of currency) has allowed us to see a trend: the next generation of encrypted assets will simultaneously maximize financial properties, playability and Meme characteristics.

Gold hitters from the edge to the center

I have been paying attention to blockchain games, including Decentraland, Sandbox and Axie Infinity, but I always feel that the impact of games and DeFi or Web3.0 type blockchain applications is too narrow, until 2 months ago The Filipino aunt at home told me that her family was making money by playing Axie Infinity, and I realized that the game has such a big impetus for the blockchain to reach out to ordinary people.

I did some research and found that since the beginning of 2021, Axie Infinity has spread rapidly in the Philippines. The epidemic has dealt a huge blow to the job market in the Philippines. Many people who originally had to go abroad to work cannot go out, and a large number of people involved in the tourism economy have lost their jobs. So when a small group of people first discovered that Axie Infinity could make money, this game was Spread like a virus.

There is a documentary called “Play-to-Earn” on Youtube that allows us to see how Axie Infinity has truly become the life support of some ordinary Filipinos, including single mothers, college graduates who can’t find a job, and business Elderly couple at a small convenience store.

If it were not for games, it would be hard to imagine these people becoming part of the blockchain economy. At present, Filipino players can earn more than US$300 per month on Axie, which is higher than the local average income.

The Chinese “Golden Farmers” I met 15 years ago have many similarities with these Filipino players. They would be workers or waiters, but they don’t earn less money than normal jobs in the game, and they really like to play. Game, get a lot of sense of accomplishment in the game that cannot be obtained in reality.

However, this time, the mode of making money for players in the blockchain game is fundamentally different from the previous games:

1. Before the game company was an absolute god, the assets in the game were completely created and controlled by the game company. In blockchain games, the ownership of virtual assets is recorded on the blockchain in the form of NFT, and players do not have to worry about the game company or anyone taking them away.

2. The virtual economy in traditional games is a closed market. Although there will be some exchanges to facilitate transactions between assets in different games and fiat currencies, the market has poor liquidity.

The assets in today’s blockchain games are part of the entire $2 trillion crypto asset market. For example, the tokens AXS and SLP in Axie Infinity can be traded at any time on all major crypto exchanges. Tens of millions of crypto-asset investors, not the original gaming circle, are very different in terms of liquidity and scale.

3. In traditional games, most of the time, the game company unilaterally makes the player’s money, and the player cannot influence the direction of the game world.

In blockchain games, players can share the success of the game, and the tokens accumulated in the game are similar to the equity of the game. In Axie Infinitiy, players can win the governance token AXS by completing specific tasks. AXS holders can earn interest by staking AXS. They also have the right to vote on the use of the game’s financial vault and major game upgrades.

4. In traditional games, gold making money is a gray area, which is often attacked by game companies, and “golden farmers” are often discriminated against by other players.

In 2005, I interviewed some American and South Korean players who hated “Chinese Jinnong”, and they even launched a virtual war against “Jinnong” in the game. But today “play-to-earn” is the core mechanism of blockchain games, in which players whose goal is to make money are the core users of the game.

Gold winning team gets unicorn valuation

Fifteen years ago, the boom in gold-making business gave birth to a large number of gold-making studios.

At that time, I visited more than a dozen gold trading studios of different sizes. The large number of hundreds and the small number of dozens were all providing accommodation. The team played World of Warcraft 24 hours a day in two shifts. At that time, wages in China were still very low, and the exchange rate between the renminbi and the US dollar was still 1:8. It was a good business to sell virtual currencies or help people level up for US dollars.

However, these goldsmithing studios are very unstable. I have witnessed two goldsmithing studios suddenly disappear overnight. Players who have worked in the game for several months return to the studio in the morning and find that their computers have been moved by the boss overnight. , The boss and their wages for a few months also disappeared.

Today, blockchain games are a better development soil for professional teams. Yield Guide Games, a team developed in the Philippines, has become an international organization, claiming to be an advanced DAO form of management, and has achieved “securitization” through the issuance of Tokens. .

Yield Guide Games, like the previous gold studios, organizes manpower to play games. At present, they have expanded from the Philippines to India, Indonesia, Venezuela, Brazil and other countries. They call the people who make money from their games as Scholar “scholars”. The remuneration given to them is called “scholarship”.

To enter the game of Axie, you first need to have 3 Axie pixies. With the success of Axie, the price of the 3 pixies for entry has risen to more than US$700, which is already a not low threshold for many low-income countries.

On the one hand, YGG provides training to “scholars”, on the other hand, it “rents” Axie elf and other virtual assets to “scholars” so that they can produce the most value in the game.

Compared with the original goldsmithing studio, YGG is more generous to “scholars”. According to its white paper, 70% of the money earned in the game will be distributed to “scholars”. At the same time, because the virtual assets of blockchain games are unique NFTs, YGG defines these NFTs as productive fixed assets, and its business model is to obtain income by renting or selling NFT assets.

At present, there are more than 4,000 “scholars” under YGG (YGG’s public financial report in July). It has issued 1 billion YGG tokens. As of 8/15, the price of YGG tokens is about $6, and the total market value has reached 60. One hundred million U.S. dollars.

The players under its umbrella must not have imagined that each of them supports a market value of 1.5 million US dollars, which is also a unique myth in the crypto asset industry.

The “play while earning” model of blockchain games has a common foundation with the “Golden Farmer” business 15 years ago, which is the “difference in time value”. Axie and YGG can rely on low-income countries like the Philippines to grow rapidly. Because on the demand side of virtual assets, there are a large number of high-income people in the West who would rather spend money than time to obtain virtual assets in the game, while the supply side has a large number of laborers in developing countries who are willing to spend time to win rewards in the game.

The difference is that blockchain games are an open global market with relatively low barriers to participation. It is easier than other markets for low-income people to use the “time value difference” to create income for themselves.

Many Filipinos have to leave their hometowns to work in other countries, and suffer from the pain of being separated from their families for decades to take advantage of this “difference in time value”, but a virtual economy like Axie allows some of them to stay away from their families. Can spend time in exchange for income on which to live.

The Trojan Horse of the Traditional Financial World

From the beginning of June to the present, Axie Infinity’s daily active users have increased from about 100,000 to more than 1 million. As of 8/15, Axie’s profit in the last 30 days exceeded 300 million U.S. dollars, exceeding the sum of all DeFi protocols and also exceeding Ethereum. Of 120 million U.S. dollars.

This kind of growth and profitability is a “wake-up call” for the entire DeFi world.

Kain, the founder of Synthetix, a DeFi synthetic asset platform, said on Twitter: “DeFi belongs to the financial field, and finance has a great impact on the world, but games and art NFTs will win people’s attention more than finance.”

The DeFi world has begun to introduce game mechanics to promote its own growth. The DeFi lending platform AAVE supports a pet game project Aavegotchi, which aims to create a playable NFT. Aavegotchi, a pet, can increase the NFT by adding equipment and participating in mini games. The value and scarcity of, and DeFi functions such as pledge and mining at the same time.

I believe we will see more such integrations of DeFi, games and NFT. The key to winning users of next-generation crypto assets is: easy transactions, mortgages and derivatives like financial products, fun and spread like games, and NFT The status symbol and collection value.

For my Filipino auntie, because of the blockchain game, she already has Metamask, an encrypted wallet, and is studying how to use it to send money to her home. She now has to rely on an expensive and slow intermediary to send money to her home. Relying on the game, the blockchain has entered the lives of ordinary people like her, replacing the role of traditional financial institutions.

The game may be a Trojan horse that the blockchain “invades” the traditional financial world.

The Trojan Horse of Blockchain "Invading" Traditional Finance for Twenty Years of Gold Game

China Goldsmithing Studio in 2005

The Trojan Horse of Blockchain "Invading" Traditional Finance for Twenty Years of Gold Game

Filipino gold in 2021

Documentary “Gold Farmers”

https://www.mtv.com/news/1545919/documentary-reaps-truth-about-games-controversial-gold-farming;

Attached:

“Chinese “Golden Farmers” in the Game World” , this is an article published by the author when he was studying at the University of California, San Diego in 2006.

At that time, China was still in the early stages of joining the WTO. A large amount of cheap labor poured into factories to work, earning foreign currency in US dollars by exporting light industrial products such as clothing and toys.

In the game industry chain, the same is true. A large number of young people crowded in small and dim rooms and contributed their time to play equipment and sell them to European and American players in exchange for U.S. dollars.

In the virtual game world parallel to the real world, China is still the “world factory”, and there are many sweatshops that squeeze employees.

Fifteen years later, the world has undergone earth-shaking changes. China has gradually transformed from a low-end manufacturing industry that relies on cheap labor to a mid-to-high-end manufacturing industry. In the game industry chain, China is no longer just a consumer country, it has also become a major game exporter. Games such as “Glory of the King” and “Original God” have occupied a place in the world.

Like the shifting trend of global manufacturing, Southeast Asia has now become a concentrated place for gaming gold. They are fortunate. In the era of combining blockchain and games, they have more benefits. The technological advancement of the virtual world of games has really affected the reality. People in the world, this may be the “virtual and real coexistence” often mentioned in the meta-universe concept.

Looking back at this 2006 article now, I have no experience and experience.

Chinese “Golden Farmers” in the Game World

In China, there is a new kind of factory that hires young people to play online games like “World of Warcraft” and “Paradise” around the clock. The staff of these games produce in-game currency, equipment, magic spells, and even entire characters, and then Sell ​​these to players from the United States, Europe, South Korea, and Japan who want to immediately improve their level in the game world.

In the game world, people who conduct real currency transactions by playing games are called “golden farmers”. Since gamers often refer to Chinese game workers as “Chinese Golden Farmers” and game factories as “Golden Farms”, I will use their terminology.

From August 2005 to January 2006, I conducted research on four gold-making farms in China, investigating how farmers manage the production and distribution of virtual goods across the border between virtual and reality. I also tried to understand what this combination of work and entertainment means to China’s Jinnong, and what it’s like to live at this special crossroads between virtual and reality.

China is currently a factory of virtual goods. According to some news reports, Romania, Indonesia and Tijuana all have gold farms. However, these industries have not yet reached the scope and scale of China’s gold farms.

China’s large-scale gold farms have hundreds of computers and employees, mainly located in Sichuan, Fujian and Northeast China. There are also many small farms with 3 to 10 computers. In a small city called Lishui in Zhejiang Province, I found hundreds of such small Dajin farms.

It is almost impossible for us to know when China’s first gold farm appeared. The most experienced Jinnong I have met has been working on a farm that serves Korean and Japanese players since 2001.

In 2003, the “Paradise||” company launched an American server, which was very popular in the United States. This suddenly expanded the market for virtual goods and gave birth to thousands of gold farms in China. This industry has grown to a level where the Chinese government is looking for taxation and regulatory methods.

One of the Jinjin farms I visited, “Donghua”, has been registered as a formal enterprise with the local government of small towns in Zhejiang Province and has started to pay taxes. It is difficult for the government to find a way to classify this type of business. Finally, “Donghua” belongs to the communications and information service industry.

Jinhua also has a new game service company: 5173.com. 5173.com is one of the largest virtual commodity brokers in China’s domestic market. According to an employee of 5173.com, the local government of Jinhua made a direct investment in 5173.com, hoping to boost the local economy.

The largest international brokers for virtual commodities are websites such as IGE.com and Virdaq.com. IGE is like Wal-Mart in virtual goods. People can use international credit cards to buy virtual goods from most popular online games. IGE is headquartered in Hong Kong, and according to several gold farmers, most of its virtual goods are manufactured in China.

Most gold farms cannot directly reach foreign customers, so they rely on international brokers to distribute their virtual goods. But some of them have foreign partners, and they provide them with eBay accounts, Paypal accounts, and foreign bank accounts so that they can directly transact with foreign customers.

The transaction of virtual goods is completed in the game world: after the seller receives the payment and the name and location of the seller’s avatar (virtual character), an avatar of the seller will meet the buyer’s avatar and hand over the item “in person”.

Normally, large-scale gold farms provide board and lodging, allowing Jinnong to live on the farm. Each shift is 12 hours, including short breaks. The number of golden farmers is usually twice that of computers, so the game time is 24/7. The wages of farmers range from US$40 to US$200 per month. I even discovered some special phenomena. Some Jinnong farmers are willing to work for free. As long as they have a place to live, they can play games for free.

The Trojan Horse of Blockchain "Invading" Traditional Finance for Twenty Years of Gold Game

Chinese gold diggers are sometimes referred to as “gaming sweatshops.” This term summarizes some of the characteristics of Chinese Dajin Farms.

Dajin Farm reflects China’s current role in the global economy, and it is the main source of cheap labor. Jinnong is being exploited by farmers and international brokers. They also work long hours. Sitting in front of the computer every day, killing monsters for 10 hours, this may be harmful to their health. However, “gaming sweatshop” is also an oversimplified term that conceals the complexity of this phenomenon.

Most of the gold prospectors I have spoken to like this job. At Dajin Farm, you can see that they are passionate about their work, and they get a sense of accomplishment from it, which is rare in other sweatshops. Most Jinnong I met didn’t have a better choice.

All the gold prospectors I meet are men, usually in their early 20s. They are either unemployed, or they work worse before finding the job. Many of them were already game fans before they became “pro players”.

In a sense, they make a living by their hobbies, which is an unfulfillable dream for many people. More importantly, the game world can be a space for empowerment and compensation. Compared with their impoverished real life, their virtual life makes them feel their unimaginable power, status and wealth in real life.

This is one reason why they are so obsessed with work. This is a paradox that the term “sweatshop” cannot convey: in Dajin Farm, exploitation and empowerment are entangled, productivity and happiness are entangled.

However, the virtual life of gold diggers is not perfect either. Many players are hostile to Jinnon. For many players, the game world should be a place of pure immersion and a fair game environment.

Eric Anderson, the founder of the NoGold organization, told me that the gold mining industry has led to inflation and inequality in the gaming world and created sweatshops in the real world.

The NoGold organization tries to prevent fan sites and resource sites from displaying gold-making advertisements, thereby limiting the exposure of the gold-making industry to players and reducing the possibility of purchases.

Although the NoGold organization does not attribute the blame to Jinnong, many players believe that Jinnong is a saboteur and intruder in their game world.

Nick Yee, the founder of the Dedurus project (an online survey of MMORPG players) pointed out that many players think that Jinnong are Chinese and often call them “rats”, “disease” or “communists.” There is even a group of gamers systematically harassing and massacring suspected Chinese golden farmers in the game.

Many Chinese Jinnong farmers are troubled by their conflicts with foreign players. Due to language, cultural and social barriers, they cannot really integrate into the player community on the foreign server where they work/play. They are proud of their achievements in the gaming world, but they are also sensitive to the fact that they are serving some wealthier gamers.

In the game world, they are both “masters” and servants. The power relationship does span the virtual and real relationship. In a sense, China’s Jinnong is a new type of immigrant worker who breaks away from the physical body through the Internet, and then becomes a mysterious warrior, magician or priest in a foreign country—the virtual physical body relies on the physical body in reality to earn money. Survival income.

Here I briefly introduce what I have observed in the field research. My research on how the virtual economy affects the real world is still in a very early stage. I am currently studying the following issues, which are interdisciplinary in nature:

First of all, how should we understand real currency transactions in the game world?

It is a new virtual economy. In order to protect a pure gaming world, should it be allowed to grow, or should it be banned?

Second, how should we understand Jinnong’s labor contribution? What does it mean when the workforce can be transferred to the world and function in such a perfect way?

Third, how does the intersection of life and work and games, and the intersection of virtuality and reality, affect a person’s identity formation and worldview?

Author: Ge Jin

 

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