A ‘Trilium’ reasons why games show us the future of payments

As we question the future of payments and where to even begin, gamers may hold the answers on where we should start. 

Believe it or not, video games are acting as a catalyst for broader adoption of alternative ways to store and transfer value. Gamers are becoming accustomed to earning in-game currencies or other symbols of value and being able to transfer that value between digital worlds and even into the physical world. The pressure is on. The need to facilitate the transactions of diverse metrics of value will surely be felt by financial institutions.

In the past year, we’ve seen consumer demand grow for alternative payment methods that expand beyond fiat currency. Consumers are expecting to have the ability to use crypto, loyalty points, gold, and anything else with agreed upon value for every-day purchases. This demand shows no signs of slowing. In fact, research firm IDC forecasts that by 2030, 60% of global consumers will have made a transaction using a unit of value other than a fiat currency. As we look to 2022, cash is no longer king, and payments issuers need to modernize for the next generation of paying customers. 

A driving force 

How are these gamers responsible for driving demand for digital assets and other unique units of value? So, what’s behind this newfound demand for other units of value and alternative digital assets? Believe it or not, video games may be a catalyst to financial institutions in adapting the ways they allow consumers to store and transfer value. 

Take the “Alien Worlds” game as an example. Alien Worlds is a decentralized finance (DeFi) metaverse on the Ethereum, WAX and BSC blockchains, and players compete using non-fungible tokens (NFTs). Players earn an in-game currency, Trilium, and require this currency to control competing Decentralized Autonomous Organizations, known as “Planet DAOs”. While it sounds elaborate, nearly 3.6 million people are already playing, earning, spending and trading in Alien Worlds. 

This trend is just getting started. As Facebook becomes Meta, the so-called metaverse is beginning to enter the mainstream. Crucially, the assets that gamers hold in one of these virtual worlds is portable beyond its boundaries. This is a seismic shift that will be felt far beyond video games and virtual worlds. What is possible in the metaverse is going to start influencing expectations of what is possible back in real life. 

Consumers who have experienced multiple units of value – and their extreme portability – in a new generation of virtual world games are not going to accept locked systems in the rest of their lives. Financial institutions need to pay attention – and adapt. What is happening amongst gamers is an index of what consumers will expect more broadly. Financial institutions reluctant to adapt should reconsider. 

There’s a lot at stake here: US$250 billion of payments revenue could move to non-financial institutions by 2030 if banks can’t keep up, according to IDC’s estimates.

Extreme portability

Inside the metaverse, it is possible to earn by increasing the value of an NFT as you play. This can be achieved by opening a virtual store, selling virtual sweaters or by speculating in virtual real estate. That value can then be converted into real money via cryptocurrency exchanges and spent in real stores selling real sweaters, for example. Conversely, money earned from a real-world job can be converted into crypto on an exchange and brought into these games to purchase virtual land, spaceships or ‘skins’ for players’ avatars. This is essentially the definition of extreme portability.

From a user perspective, there are no boundaries to the transfer of value between the virtual world and the real one – nor between different virtual platforms since their tokens are transferable across underlying blockchains.

If we applied and extended this same principle of extreme portability to conventional finance, it would become very unfamiliar. Consumers would be able to take loyalty reward points from one chain of stores and use them at another – or convert them into cash. They would be able to bring crypto holdings into a wallet provided by a bank or bring cash into self-custody, perhaps in the form of central bank digital currency. Consumers would be able to spend fiat currency from that wallet to purchase a nice apartment in Decentraland – and rent it out for Ether.

Regulation for cryptocurrencies, stablecoins and decentralized finance platforms is taking shape around the world, and CBDCs remain a work in progress. But the revolution in value units has already begun, and will accelerate as people and value-creation migrate to the metaverse.

Ready Player One

This revolution is already happening, especially in the gaming world. Axie Infinity has 2.23 million average monthly players, according to ActivePlayer.io. Over 1,700% more unique active wallets (UAWs) interacted with games on Binance Smart Chain (where you can play Alien Worlds, among other games) in the third quarter of this year than in the previous three months, according to DappRadar. And NFT sales in the third quarter reached nearly US$11 billion, up eightfold over the second quarter. 

As this shift gains momentum, consumer demand for greater choice in units of value will continue to grow, and not just for gamers. 

This points to an urgent need for financial institutions to adapt to a world in which people use more units of value without having them locked inside a particular system.

IDC data shows that 73% of financial institutions around the world have technology infrastructures for payments that are ill equipped to handle payments for 2021 and beyond. For many incumbents, that means existing payments infrastructure needs to be upgraded, payment workflows need to be more data-driven, and risk management needs to be more flexible to meet changing regulatory requirements for non-fiat currencies and other units of value. 

Ultimately, we believe that today’s pioneering gamers will define expectations for financial infrastructure in the future. You may or may not want to play Alien Worlds. But, if you’re in financial services, you should be getting ready for ”Trilium”.