I’ve seen a few people ‘playing’ crypto apps over lunch where they just tap on the screen in exchange for rewards.
What does the crypto company get out of it?
In: Technology
It depends. It could be a “traditional” app game, where the people who make the app get money from advertisements and in-app purchases, and that funds a (small) budget for valuable rewards given randomly to players.
Unique to crypto games, users of the app often have to make some upfront investment by buying an NFT to play with. Essentially your player character, cards, pets, etc. are purchased in some external marketplace then linked up with the game. The app makers collect money from these sales, and some of that is redistributed to players through random rewards, often of in-game items/tokens that have value insofar as they too can be resold on some crypto marketplace.
You might notice that the first model is perhaps a bit scummy but sustainable. Money is coming in from advertisers, and players/programmers split that money (usually with a strong preference given to the programmers). The second model is a closed system. If you’re making money from the app, someone else is losing money. If the programmers are also making money from the app, then most of the players are losing money. That’s not inherently a bad thing – nearly all entertainment products leave the user with less cash than they started – but one should not reasonably expect to “play to earn” with these games. You’re going to end up paying for the game, so it better at least be something you enjoy.
If I had to guess those people are earning essentially no money while being served ads and having their information sold.
Crypto is super weird. One of the ways you “make money” with crypto is “mining”.
Basically think of crypto like an immensely complicated checkbook. In order for anyone to write a check, someone has to solve a very complicated math problem. It’s so complicated, computers can’t solve it quickly. This is good for security, but bad if you want to quickly process transactions. So to deal with the amount of time it takes to find a solution, people can volunteer their computers to try doing the math. It’s a funky kind of math where you can try a lot of different ways to “solve” the problem. So all of the volunteers’ computers try different approaches, and the hope is one of their attempts finds a solution fast. In return for their computer time, that person gets paid a small amount of crypto.
That’s why it’s called “mining”. You basically throw your computer at the problems all day and hope you “hit gold” and solve a few problems. That’s why there are “farms” with thousands of computers devoted to this mining: the more computers you volunteer the more likely some of them will “hit gold”.
That is mostly what your friends are doing while playing the games. Their phones are being used to mine crypto for the game company. The game company keeps all or most of that crypto. The user with the phone usually gets their payout from playing the game, which of course doles out its prizes much more slowly than its users “hit gold”.
Meanwhile they’re also seeing ads, which generates revenue. And they probably have the option to pay for things in the game, which is another revenue stream.
In-app, purchases, ads, selling user data, and using your electricity to mine Bitcoin / other cryptocurrencies, of which they may pay out a small cut to the user. But the user is not going to come out ahead in terms of expected value.
Sticking with Bitcoin, Bitcoin mining works as a race to solve mathematical puzzles whose solutions are essentially random. Because it’s effectively random, it’s a numbers game: the more processing power you throw at the current puzzle, the higher the probability you’ll bruteforce the correct answer before everyone else on the planet trying to do the same gets there. Because of this winner-takes-all nature, individual miners striking it out on their own have very little chance of ever mining a Bitcoin, because the computational power they own is dwarfed and basically a rounding error compared to the computational power of big players who own giant farms of dedicated mining hardware which is optimized to mining Bitcoin. So people team up in pools: everyone in a pool combines their processing power towards mining the next Bitcoin, and when it’s mined the pool is structured in such a way that the proceeds and split among the participants, proportional to the amount of processing power they contributed.
So those apps that run on your devices to mine Bitcoin? They have your device join up with a pool set to pay out to the app owner, and use your device’s processing power and electricity to help them mine Bitcoin, and might pay you a small cut.
But it’s basically a scam. Even if you dedicated your device to mining Bitcoin all for yourself, you would lose a ton of money. Running compute-intensive tasks is never free. It takes electricity, and electricity costs money. When you do the math, the expected value of dollars worth of Bitcoin mined per dollar spent on electricity, it’s pretty much almost negative. It will be very negative for a tiny device like a phone. But for the companies putting out these apps, it works because they’re not the ones paying for a farm of inefficient phones and the electricity they consume; the users are.
The game serves you a ton of ads, the ads make money for the dev. The dev gives you a small amount of that ad revenue back.
They make money through ads you see while tapping, and also from data they collect about your tapping habits. It’s a tap tap win-win!
Other people have already explained the ads part, but the thing that no one mentioned yet is that using crypto allows the company to payout to far more people than it could otherwise. For example, sending a bank transaction from Lithuania to India costs about $50 regardless of amount + a percentage from the amount sent on top. Using crypto, the transaction costs are negligible, so you can payout people tiny amounts (less than 1 cent worth) which would be completely infeasible otherwise. In turn, this helps to attract *and keep* users — if someone played a game and saw that they needed to collect a significant amount to be eligible for withdrawal, they would likely quit playing it. If someone played the game for 5 minutes, and already received a withdrawal for 69420 shitcoins (even if their combined worth is less than a cent), they would be much more incentivized to continue playing.
The crypto company is mining crypto in the background of the device. The more “legit” ones will only run the crypto mining while you’re playing the game but plenty of them run the app in the background at all times. On top of that though there is plenty of opportunity for people in the crypto scene to also instal other malware along with their crypto games. Since crypto is really only useful for doing illegal things on the internet those people are already involved and wont think twice about doing stuff like that.
Latest Answers