Ask ten people what web3 gaming is and you will get ten answers, from “the future of how we own games” to “a crypto scheme wearing a game costume.” Both camps have a point. This guide explains what web3 gaming actually is, how the pieces fit together, what went wrong in the first wave, and how to try a web3 game without putting more at risk than you mean to.
Risk note: web3 games use cryptocurrencies and NFTs whose prices can drop to near zero. Nothing here is financial advice. Only spend money you can afford to lose, never share your wallet’s seed phrase, and check the rules on crypto in your country before you play.
Web3 gaming in one paragraph
Web3 gaming means video games that use a public blockchain to record some of what players hold, usually in-game items, characters or currency. Instead of those items living only in the studio’s private database, they are also recorded as tokens in a crypto wallet the player controls. Because the records are public and the tokens follow shared standards, players can often sell or trade them outside the game, on open marketplaces, without asking the developer. That is the whole idea. Everything else, from play-to-earn to “metaverse” worlds, is built on top of it.
How a web3 game actually works
Most web3 games look and play like normal games. The blockchain part sits in the background and handles a small number of jobs:
- The wallet is your account (or part of it). You connect a crypto wallet, and the game reads which tokens that wallet holds. Newer games often create a wallet for you behind an email login, so you may not notice it at first.
- Items are NFTs. A unique sword, skin or character is usually a non-fungible token, most often following a standard like ERC-721. The token says “this wallet owns item #4512”; the game decides what item #4512 does.
- Currencies are fungible tokens. Gold, gems or energy may be a token that can be swapped on an exchange. Many games run two: one earned in play, one used for governance or premium purchases.
- Most of the game is still off-chain. Combat, movement, matchmaking and graphics run on regular servers. Writing every action to a blockchain would be slow and expensive, so only ownership and trades usually go on-chain.
- Every on-chain action can cost a fee. Moving or trading a token needs a transaction, and transactions pay gas fees. That is why most games run on cheaper sidechains or layer-2 networks rather than directly on Ethereum.
Web2 vs web3 gaming at a glance
| Traditional (web2) game | Web3 game | |
|---|---|---|
| Where your items are recorded | Only in the publisher’s database | Publisher’s servers plus a public blockchain |
| Selling items | Usually against the terms of service, or only in an official store | Often allowed on open marketplaces, with a royalty to the studio |
| Login | Username and password | Crypto wallet, sometimes hidden behind an email login |
| Extra costs | Game price, microtransactions | Same, plus network fees and exchange fees |
| Price risk | None: a skin is worth what you paid in fun | Item and token prices move with the crypto market |
| If the game shuts down | Items disappear | Tokens stay in your wallet, but usually lose their use and most of their value |
What “ownership” means here, and what it doesn’t
The pitch you will hear most is “you truly own your items.” It is partly true, and the gap between the pitch and reality is where most disappointment comes from.
What you do own is a token in your wallet. No one can take it without your keys, and you can sell it to anyone who wants it. That is a real difference from a game account that a publisher can ban or close.
What you don’t own is the game. The studio still decides what your item does, can rebalance it, and can shut the servers down. The artwork and stats behind an NFT are often stored on the studio’s servers, not on the blockchain. And the idea that you can carry a sword from one game into a completely different game is, so far, mostly a slide in a pitch deck. Two games would have to agree to build support for each other’s items, and that has rarely happened at any meaningful scale.
The honest version: web3 gaming gives you a transferable receipt for an item whose usefulness still depends on one company.
A short history: from CryptoKitties to the play-to-earn crash
The first blockchain game most people heard of was CryptoKitties, a collect-and-breed game on Ethereum. In December 2017 it became so popular that it congested the Ethereum network and slowed transactions for everyone, an early sign of why games later moved to cheaper chains.
The big wave came with Axie Infinity in 2021. Players bought NFT creatures to battle and earned a token they could sell for real money. In the Philippines, during the pandemic, some people treated it as a full-time income, and “scholarship” schemes grew in which asset owners lent teams to players in exchange for a cut of their earnings. According to reporting summarised on Wikipedia and by The Verge, those commissions could be as high as 75%.
Then it unravelled. The game’s reward token lost more than 99% of its peak value during the 2022 crypto crash. In March 2022, attackers stole roughly $620 million from the Ronin bridge that the game relied on, a theft US authorities linked to North Korea’s Lazarus Group. Reuters reported in April 2023 that average daily players had fallen from a high of 2.7 million to about 250,000. We look at why that economic model broke in our play-to-earn games guide.
Why so many gamers push back
If you spend time on gaming forums, you will notice that “web3” is often a dirty word. The reasons are worth understanding before you spend anything:
- It can feel like monetisation first, game second. When Ubisoft announced its Quartz NFT programme in December 2021, the announcement video drew a dislike ratio of around 96% on YouTube, as noted in Ubisoft’s Wikipedia entry.
- Speculation changes who shows up. When items are worth money, bots, farmers and flippers arrive, and the game’s balance starts to serve the market rather than the players.
- Platforms are divided. Steam’s rules list “applications built on blockchain technology that issue or allow exchange of cryptocurrencies or NFTs” among the things it won’t publish (Steamworks onboarding rules). Epic Games took the opposite stance and said it would allow such games on its store, as The Verge reported in 2021.
- Security is the player’s job. Lose your seed phrase or sign a malicious transaction and there is no support ticket that brings your items back.
What has changed in newer web3 games
After the crash, the studios still building in this space changed their approach. You will see a few patterns in newer titles:
- Wallets you don’t have to think about. Email or social logins that create a wallet in the background, and techniques like account abstraction that let the game pay network fees for you.
- “Play-and-own” instead of “play-to-earn”. The pitch moved away from income and toward owning and trading what you unlock.
- Blockchain as an option. Some games let you play entirely without a wallet and only touch the chain if you want to trade.
- Game first. Bigger budgets and genres people already like, such as shooters, card games and strategy, instead of simple click-to-earn loops. Gods Unchained, a trading card game where cards are tradable NFTs, is an early example of this “normal genre, tradable items” approach.
None of this removes the price risk. It just makes the experience feel less like opening a brokerage account.
How to try a web3 game without getting burned
- Play the free part first. If a game isn’t fun before any token is involved, it won’t become fun because of one.
- Use a separate wallet. Keep a small “gaming” wallet apart from any crypto savings, so one bad signature can’t drain everything.
- Never type your seed phrase anywhere. No real game, support agent or Discord moderator will ask for it.
- Only use links from the official site. Fake mint pages and copycat marketplaces are the most common way players lose assets.
- Read what you sign. A wallet pop-up asking for permission to “spend all” of a token is a red flag unless you know exactly why.
- Treat purchases as spending, not investing. Budget the same way you would for skins or a battle pass, and assume resale value could go to zero.
- Be wary of promised earnings. “Guaranteed daily returns” and referral bonuses for recruiting friends are signs of an economy that needs new money to survive.
- Keep records for tax. In many countries, tokens you earn or sell can be taxable. In the US, the IRS explains its approach on its digital assets page.
If you decide to buy a gaming token to get started, our comparison of the best exchanges for gaming tokens covers where the main ones trade, and the gaming crypto coins guide explains what the biggest tokens are used for.
So, is web3 gaming worth it?
As a way to make money, for most people, no. The first wave showed that games paying players more than they take in only work while new money keeps arriving.
As a way to play, it depends on the game. If you already enjoy a genre, and a web3 title in that genre is good on its own merits, being able to sell an item you no longer want is a genuine extra. Go in as a player, spend what you’d spend on any game, keep your wallet safe, and you’ll get the upside without betting the rent on it. If you want to see which titles people are actually playing, start with our NFT games guide.
Web3 gaming FAQ
Do I need crypto to play a web3 game?
Not always. Many newer web3 games are free to start and create a wallet for you in the background. You usually only need crypto if you want to buy items, pay network fees yourself or cash out.
Is web3 gaming the same as play-to-earn?
No. Play-to-earn is one business model inside web3 gaming, where players are rewarded in tokens with market value. Plenty of web3 games have no earning mechanic at all and only use the blockchain for item ownership and trading.
What happens to my NFTs if the game shuts down?
The tokens stay in your wallet, because the blockchain record doesn’t depend on the studio. In practice, though, an item from a closed game has little use, and its market value usually falls close to zero.
Are web3 games safe?
The game itself may be fine, but you carry more of the security risk than in a normal game. Phishing links, fake marketplaces and malicious wallet approvals are the main threats. Use a separate wallet, only follow official links and never share your seed phrase.