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Problems in the Market
Existing cryptocurrency e- wallets are very inconvenient from the signup process due to the UI based on the decentralized method of blockchain. UI, without user experience considered, often caused remittances to unwanted locations, or misleading account management made customers' valuable assets unrecoverable. Due to these problems, users unfamiliar with the cryptocurrency environment experienced a bad user experience and quickly left the market.
Compared to the size of the market, virtual assets are less transparent and the regulatory system is insufficient to protect consumers and investors, thus it can be used for illegal transactions such as money laundering and tax evasion. In 2019, the Internatianal Anti-money laundering Organization (FATF) recommended the application of Travel Rule, a system that obliges virtual asset operators to provide information related to the remittance along with the transfer of virtual assets at the request of customers. Since 2020, major foreign countries such as the EU and the U.S. have been trying to secure consumer protection and the soundness of the financial system so that cryptocurrency can be used as an efficient means of payment. In addition, regulatory measures are being prepared for financial stability, and consultations are underway for supervisory and management systems between countries.
The existing M2E services could only be started by purchasing expensive NFT equipments with unstable value. As the overall value of virtual assets plummeted, the value of mined rewards also plummeted, forcing users to give up their investment and leave M2E services. In addition, concerns about the long-term operation of the project are high due to a simple business model that relies solely on the purchase of new users or minting fees.
Although domestic P2E games have been successful worldwide, P2E games are on the decline not only in Korea but also in the global market. Currently, P2E games are difficult to enter the market itself except for Southeast Asia. There are 2 reasons for this. The first is the absence of gameability. As the concept of P2E was emphasized, games became more like work than games. On top of that, as the P2E games that do not update additional conten increase, users are more likely to get bored playing the same game repeatly only to make money. The second is the decline in token value. Token follows the law of demand and supply rules. As the amount of tokens on the market increases, the value of tokens decreases. P2E games which failed to take this into account, issued unlimited tokens, which led to a drop in the price of P2E game tokens.
When the understanding of the new industry is insufficient, the high possibility of various incidents and accidents is a problem shared by most new technologies and new industries. In particular, in the case of NFT, the public's understanding is lower than that of other new technologies and new industries, as it is a conceptual industry in which elements of various new technologies and new industries are combined, like blockchain, metabus, virtual currency. In the case of services or games using NFTs, issues related to intellectual property rights also arise frequently. For example, the image files disclosed during production are stolen and the service or game is released first to steal profits, or the stolen NFTs are sold at a much lower price than the original, damaging the value of the original NFTs.