'Web 3.0 will transform how game assets are sold and moved in the metaverse'

The confluence of play-to-earn games and the Metaverse in Web 3.0 will transform how assets get traded, noted Nischal Shetty, Co-founder and CEO of WazirX, a bitcoin and cryptocurrency exchange.

"In the traditional gaming system, gaming companies sell assets to everyone that are unlimited in number, and it is a revenue mechanism for the gaming companies," Nischal said on Friday.

"In Web 3.0, the assets are limited, created by gamers, and sold to other gamers," he explained, referring to how blockchain games are primed for growth. "This is how gaming and Web 3.0 are going to come together, where ‘earning’ becomes one of the first use-cases, apart from leisure.

"Look at the number of people who are into online games — that is 2.3 billon. It is a huge market, and Web 3.0 is all about interactivity," Nischal asserted.

In Web 2.0, game assets are limited to the universe of a game. But in Web 3.0, blockchain and crypto will make it possible for gamers to interact with other gamers, buy assets within a game, and sell or move those assets from one game to another.

"It is like recreating the offline world, where if I was to change my city, I can carry all my assets with me — and move," said Nischal.

"Traditionally, we think ‘play to earn’ games are fantasy sports. But any game can be made ‘play to earn’. The way to do that is to look at every game as a real-world economy."

The WazirX CEO also said stablecoins can become a window for innovation in India, before the launch of a CBDC (Central Bank Digital Currency). "As of today, we don’t have a stablecoin from India, and we won’t be able to unless laws are changed," he added.

Stablecoins are cryptocurrencies that attempt to peg their market value to some external reference. · Stablecoins may be pegged to a currency like the US.

N Nappinai, a Supreme Court of India Senior Advocate, said, stablecoins pose a problem to banking systems, apart from its legitimacy as a legal tender.

A stablecoin is a class of cryptocurrencies that attempt to offer price stability and are backed by a reserve asset. They promise the best of both worlds—the instant processing and security or privacy of payments of cryptocurrencies, and the volatility-free stable valuations of fiat currencies.

"Stablecoin makes the assumption that — because it uses fiat currencies or legal tender as its base — it creates a sense of stability, and has a better footing than other crypto assets," Nappinai said.

"But if any crypto asset does the function of a legal tender or payment system, it comes under a regulatory framework," she added.

While stablecoin may claim it is creating stability, as opposed to volatility of cryptocurrencies, it is still taking all other transactions beyond that basic value generation away from general banking or financial systems," Nappinai emphasised.

While CBDC gets its legal basis because it is issued by the central bank of a nation, stablecoin — by its very nature — is of a private entity, she added.

"Stablecoin still needs to wait for affirmation of its existence, and in what form or manner they can exist," said the Supreme Court Senior Advocate.

"We need laws specific to the field of crypto, including whether it is going to be permissible or not, to what extent and in what manner it will be permissible," Nappinai said in context of the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 being listed for introduction during the ongoing winter session of the parliament.

Nappinai and Nischal were panelists in a discussion on 'CBDC, Stablecoin, and tokenisation: Future of money' at the Nasscom Product Conclave 2021.