Crypto gaming earns users tokens but also exposes them to risks of trading and speculation
Beatriz Martins-Costa and Thalita Moreira work at Aavegotchi. (ABC News: John Gunn)
Gone are the days when crypto was an exclusive bubble for tech enthusiasts.
Now, there seems to be a digital currency for everyone, including children.
The most recent example of this was the turnout at Aus Crypto Con — lauded as the largest crypto event in the southern hemisphere.
The two-day event attracted thousands of people, including young families, children and university students.
One speaker, Ignacio Aguirre Franco, the chief marketing officer of crypto trading platform Bitget, used his time on stage at the conference to make predictions about how crypto could soon be used by kids.
"We do feel that a lot of the people of these new generations maybe are going to have a crypto exchange account before they even have a bank."
Playing the crypto game
The appeal of crypto to the younger conference attendees extended to entertainment — the Aavegotchi cryptocurrency was present, marketing itself to the general punters who attended.
It is known as a gamified cryptocurrency, where you dress up digital ghosts — known as gotchis — with accessories, to trade as non-fungible tokens (NFTs).
The website says "trapped on the blockchain for eternity, [the gotchis] find solace from their existential dread by engaging in a multitude of enjoyable games".
The price of an Aavegotchi token, trading under the code "GHST" was 44 cents as of Friday afternoon, but prices fluctuate depending on game play.
Thalita Moreira and Beatriz Martins-Costa, who work at Aavegotchi and attended the conference, said it made gaming purposeful.
"Today you see so many kids addicted to games … they stay on a computer for hours and hours, but they are just playing," Ms Moreira said.
"At least with Aavegotchi you're not just playing, you're understanding the future … you can get your NFTs, you can get your tokens and then you learn how to use the tokens.
"Every time that you play, you get the token and with the token, you get your NFTs — that is, our gotchis," she said.
As Ms Martins-Costa put it, "you're having fun, while you're making money".
There is no age restriction for Aavegotchi, however a spokesperson for the company told the ABC, "We strongly recommend that users be at least 18 years old to fully participate in token-winning activities."
"Trading tokens requires a cryptocurrency wallet and blockchain transactions, which we do not support or allow for users under 18."
It is not the first digital currency to take a gamification approach.
Peter O'Neill from UNSW's School of Banking and Finance said gamified crypto had been around for almost a decade, but it was not always obvious.
Peter O'Neill says some cryptocurrencies are used as a vehicle of speculation. (Supplied: Peter O'Neill)
He cited an example of one popular brand that users might not even realise involves crypto, Pudgy Penguins.
"Kids or young people might play the game and be exposed to crypto as part of that, they might receive the free tokens in the background and then, as they become addicted to the game, they start purchasing the cryptos and becoming more involved."
Oversight and regulation of cryptocurrencies is still developing in Australia.
This week, the Albanese government introduced new legislation to parliament, covering investment in digital assets.
The bill introduces two new types of financial products — digital asset platforms and tokenised custody platforms — which will now need to hold an Australian Financial Services Licence.
In a statement posted on Wednesday, Financial Services Minister Daniel Mulino said: "Currently, businesses can hold unlimited client digital assets without financial law safeguards. Recent collapses overseas have shown the consequences of inadequate oversight."
"The [bill] introduces clear, enforceable rules for businesses that hold digital assets on behalf of consumers,"Mr Mulino said.
Across the past four weeks, Bitcoin has shed about a quarter of its value — the most for a single month since June 2022, according to Bloomberg — underscoring the volatility in cryptocurrencies, like other financial markets.
Gambling on meme coins?
Dr O'Neill said the popularity of crypto meant new coins were created every day, with very few actually succeeding.
While he said many digital currencies were focused on making "the finance system more efficient", there were just as many with no value or purpose at all.
"There's also a lot of cryptocurrencies that are focused on memes, speculation games and this is sort of a different world," he said.
So-called "meme coins" are cryptocurrencies without financial or technological purposes, which Dr O'Neill said were used purely as a vehicle of speculation.
"There's even a website that gamifies speculation … which is pretty shocking," he said.
"I wouldn't be happy if I was just speculating on meme coins, because it's essentially just a form of gambling."
A spokesperson for Aavegtochi told the ABC that "unlike gambling, where outcomes rely primarily on chance and the house always has an edge, Aavegotchi rewards strategic decision-making, creativity, and community collaboration".
"That said, we acknowledge the risks of over-reliance on play-to-earn dynamics and actively promote responsible engagement."
Dining out on appetite for crypto
Aside from gaming, there are other novel ways crypto tokens are being deployed.
Jason Krishnan founded Shiba Wings in 2022 — Australia's first crypto diner where you can pay for food and drinks with digital currencies, and offers its own token.
"We built the framework for businesses to be tokenised,"Mr Krishnan said.
He described it as a "community-owned franchise model", with a reward system that gave people a stake in the business.
Jason Krishnan founded Australia's first crypto diner. (ABC News: John Gunn)
Currently, he said he had 1.5 million holders of his token and was in the process of building his next restaurant in Melbourne.
Making trading easy comes with risks
At the conference, Bitget's Ignacio Aguirre Franco said the lack of "friction" in the crypto space made it accessible for many people.
In some cases, individuals do not need to complete a trade themselves on the Bitget exchange — they can use the platform's AI assistant GetAgent that provides "personalised strategies" and execute trades on their behalf.
"The future of crypto [is] having platforms that can help you with advanced tools," Mr Franco said.
"I see it more as tools that bring in education, while being able to transact."
Ignacio Aguirre Franco believes future generations may have a crypto account before a bank account. (ABC News: John Gunn)
ASIC rang the alarm on Bitget earlier this year, warning investors about its unlicensed crypto asset futures product.
"These products can be significantly leveraged, meaning a small amount of capital is required from investors to hold a sizeable position in the underlying asset, magnifying both potential gains and losses," the corporate regulator said in July.
"Bitget's unlicensed products are available at up to 125:1 leverage, for every dollar invested at this leverage rate, there is potential for 125 times magnified gains or losses for investors."
In a statement to the ABC, a Bitget spokesperson said: "We are currently pursuing licenses in more than 15 markets. Our focus is on working constructively with regulators so users can access digital assets through a secure and trusted platform".
Dr O'Neill said the lack of oversight in the crypto space meant "less sophisticated investors can get hurt".
"Crypto investors may speculate on new cryptocurrencies being marketed hoping they appreciate in value. Similarly, investors may invest in IPOs of new stocks or existing shares.
"There are, at least, IPO regulations and documents, auditors, market disclosure requirements. There are no such regulations in crypto."
Dr O'Neill said ebbs and flows were normal in any market, pointing to the recent movement with tech stock Nvidia. The difference with crypto, he said, is how you made sense of it.
"The problem with Bitcoin is we can't really explain why it's suddenly worth $US120,000 one month to $US85,000 the next.
"Largely it's just a function of it seems the enthusiasm for it and the inflows that are happening … whereas at least with Nvidia, I can look at their profit and loss, I can value the company, that's sort of a more tangible way."