They built a Minecraft crypto empire. Then it all came crashing down

One day in February, Wiktor Daniec stood in a medieval town of his own creation. Daniec, who lives in Warsaw, Poland, owned the land, on which he’d built a terrace of houses. He used the pastures behind them to farm commodities like wool, which he sold to invest in new plots of land and increase the scale of his medieval-themed kingdom, which had earned him more than $1,000 in just over a month. Daniec’s property is part of a virtual gaming world known as Critterz, and exists within Minecraft, the blocky sandbox game popular with children and adults worldwide.

Created in late 2021, Critterz incorporates nonfungible tokens (NFTs) and cryptocurrency into the Minecraft universe, bringing a “play to earn” model to the best-selling video game of all time. Players need to own an NFT to enter the Critterz server; once inside, they can earn an in-game cryptocurrency that can be traded for real money. They can buy plots of land in the Critterz world, also represented as NFTs, and sell the constructions they build on them, like Daniec’s medieval houses, to other players.

It was a new experiment in play-to-earn gaming, hot on the heels of Axie Infinity, the figurehead Web3 game from developer Sky Mavis that had attracted thousands of players, especially from low-income countries such as the Philippines. After interest in Axie Infinity collapsed, following a plummeting in-game economy and a $620 million hack, many players moved to other play-to-earn games, including Critterz. 

Critterz hoped to address one of the primary criticisms Axie Infinity faced: that players were motivated much more by profit than by a desire to play the game itself, as the game alone simply wasn’t compelling enough. “We just had an idea, what if you can make an existing game play-to-earn?” Emerson Hsieh, a co-founder of Critterz, told Rest of World. “Minecraft is an established game that we know people want to play.” 

For a while, it worked. Some Critterz players told Rest of World that, at one point, they were earning more than $100 a day playing the game. At its peak, it had around 2,000 daily players, some of whom enlisted other players to help build their in-game empires for a cut of the crypto they earned. One U.S. player, who goes by “Big Chief,” described how his team, composed largely of young people in the Philippines, gathered building materials for him. He then paid professional Minecraft builders around $10,000 in crypto to turn those materials into a lavish casino.

“I have a lot of kids that play for me, and they play because they want to make extra money in a country that’s really just locking them down,” he said.

But, as with Axie Infinity, once the game became more popular, the value of its crypto token began to drop. Worth 85 cents at its peak in January, it had decreased to around 3 cents by May. But the depreciation was gradual, and many players continued playing and building.

Then, on July 20, 2022,…