What is Enjin & How Does it Work? - ENJ for Beginners
The Enjin coin had a history before its existence. Enjin was a gaming community platform set up by Maxim Blagov (CEO) and Witek Radomski (CTO) in 2009. Radomski was exposed to Bitcoin in 2012 and initially wanted it to be an acceptable payment option on the platform. As his exposure grew, he learned about Ethereum smart contracts and decided to integrate blockchain and a custom token for the Enjin platform.
Primarily for the gaming industry, ENJ is an ERC-20 standard token that powers a variety of software products that allow people to create and monetise through the ERC-1155 token standard (which Radomski authored himself). The standard has many benefits over the ERC-721 standard that is normally used for non-fungible tokens (NFTs).
Why Was Enjin Invented?
The ENJ token powers the Enjin network and was invented to help people and brands to gamify and monetise their digital assets. In traditional gaming, collectable items are contained within the game’s ecosystem and after they are no longer needed, they have no use.
With the use of blockchain-based NFTs to represent collectables, the Enjin platform allows anyone to have their in-game items minted as unique tokens and used across games and platforms, and even be bought and sold on marketplaces.
To give these NFTs an intrinsic value, each NFT is created by locking up required ENJ tokens. Developers can therefore claim the price when sold to players, who can then further use it in compatible games or sell for a profit in the marketplace.
How Does Enjin Work and What Technology is Behind It?
Hosted on the Ethereum blockchain, ENJ tokens are built using the most common ERC-20 token standard. Acting as a medium of exchange, Enjin tokens are used by developers to mint their NFTs. Using blockchain and Ethereum’s smart contract ability, ENJ are locked in digital code. This gives any NFT created a base value as the ENJ themselves have one.
The items can even be destroyed and the locked ENJ released, providing instant liquidity to the collectables.
Based on blockchain, the ENJ tokens can be bought and sold or transferred on the open market. The peer-to-peer nature of ENJ means that unlike the traditional exchange of assets, there is no need for a middleman. Since Enjin uses the Ethereum network, a small fee is all that is required to be paid to the miners who validate the transaction and record it on the blockchain.
Is Enjin Real Money?
The ENJ token is used as a medium of exchange within the Enjin platform and its connected platforms and serves as the local token or currency. Outside of the larger ecosystem, ENJ’s status as “real money” is debatable. Like all cryptocurrencies, the status of ENJ as a currency is more of a subjective interpretation, specifically by regulatory authorities and governments.
The use of ENJ in the gaming environment requires it to be bought, giving it value. As a blockchain asset, ENJ is also bought and sold on secondary markets against its fiat value. The use of blockchain also gives it the associated security, speed and efficiency in transfers that fiats lack. Like any other token or coin, ENJ can be used to exchange value between two or more parties directly (e.g. being used to pay for services or products). Essentially, it acts just like any traditional money does. The only difference is the philosophical debate of whether it is one in the real world or not.
Apart from the medium of exchange comparison, ENJ also acts as a store of value. Unlike fiat currencies which can be issued without limits, ENJ is scarce. With only 1 billion created, the lack of new tokens being created drives their value upwards as demand increases, while fiat is devalued by inflation over time. The supply is also restricted as the creation of NFTs needs ENJ to be locked up, further reducing the circulating supply. This could make the Enjin token a far better option for wealth preservation than holding fiat.
Fees and Expenses of Enjin
ENJ tokens are ERC-20 and that means that they run on the Ethereum network. All transactions done with Enjin, whether transfers to wallets or using them to mint NFTs, need Ethereum miners to validate them on the ledger.
As a Proof of Work network, Ethereum miners need to spend computational energy to be able to validate transactions and add blocks to the chain. The miners are compensated with a fee for each block. In January 2022, Ethereum transactions cost around $14.50.
The transfer fee can rise or fall based on the overall network load. Ethereum currently has limited transaction capabilities and in periods of high activity, people are willing to pay more to prioritise their transactions, which results in higher fees.
While this is the only fee charged when you transact on the blockchain, you will face other charges if you want to interact on marketplaces such as crypto exchanges and brokerages. Normally there will be no deposit fee associated, but if you buy and sell ENJ, you will be charged either a maker or a taker fee. Withdrawing your ENJ from the platforms will also be charged. It is best to look up the fee structure of your preferred platform to know what you will end up paying.
What Are the Benefits of Enjin?
ENJ tokens are the only medium of exchange at the moment on the Enjin platform if you are looking to mint or buy NFT-based collectable items. So that is one benefit of ENJ.
Apart from this, the ability to send value to any part of the world in a few minutes for a variety of payment methods that is cheap, faster and much easier than any fiat is a tremendous benefit. The scarce nature of the tokens could also make it an excellent store of value. With only 1 billion ENJ, the more the Enjin ecosystem grows and the demand for ENJ increases, the more its price rises. This sets ENJ apart from fiat currencies, which are devalued over time through inflation.
Can Enjin Be Used Anonymously?
One of the founding principles of Satoshi Nakamoto’s creation of Bitcoin was the simultaneous transparency and anonymity of the ledger. ENJ tokens also enjoy the same characteristics. Any transaction done on the blockchain is noted down on the ledger, but with four primary data, namely the sending wallet address, receiver’s address, the fee paid and the amount transferred. The only identifiers are the wallet addresses which themselves are just alphanumeric codes. As such, it is difficult to know the identity of the persons or parties who used ENJ.
The use of centralised marketplaces such as exchanges breaks down the anonymous nature though. Reliable platforms tend to follow KYC and AML laws and as such, ask for private and financial information from their users to combat illegal activities (name, address, government ID and even proof of income). This means that if you use your exchange wallet or even trade within the exchange platform, the platform team will have information about your activities which can be shared with authorities on request.
How Safe is Enjin?
Based on blockchain and piggybacking on the Ethereum network, ENJ tokens enjoy the same security that Etheruem offers to its native ETH and all other Ethereum-based coins and tokens. With the Proof of Work mechanism, the security relies on the committed computing power. Currently, at 646 TeraHash per second, this technology makes it impossible to hijack the network. Even if a miner were to make a fraudulent transaction, others would identify it as invalid and preserve your assets.
ENJ smart contracts are also inspected by the third party Callisto Network, ensuring there are no points in the code that can be exploited.
What Teams Are Working On Enjin Development?
Enjin development is headed by the platform itself. Founders Maxim Blagov and Witek Radomski lead the team as the CEO and CTO respectively. All development related to the ENJ token and Enjin platform products and services is the core responsibility of the Enjin team.
Game developers, both corporations and independent ones, are free to integrate their games and collectable items with the platform. This helps them to create NFT items and allow other developers' creations to be used in their products.
Which Financial Institutions are Invested in Enjin?
Enjin represents an established system for the gaming and game developers community. As such, it has been able to attract large financial institutions to fund its development efforts. A few of these include:
Created specifically to find game-changing blockchain projects, the venture arm of Blockchain.com invested in Enjin's Series A round.
The venture capital side of Crypto.com is on a mission to accelerate the growth of startups and other projects in their early days. Crypto.com Capital invested in ENJ in its planned venture round.
The largest South Korean crypto asset fund and technology promoter, Hashed also has an office in the USA to support and grow blockchain projects from all over the world.
Digital Finance Group
With a keen eye to identify the most impactful blockchain and crypto projects to grace the industry, DFG has dabbled in blockchain ecosystems, regulated exchanges and other top projects that include Brave browser and Ledger X.
With all ENJ tokens minted and more than 934 million of the 1 billion in circulation, ENJ cannot be mined.
The only way to get your hands on Enjin coin is to buy the ENJ tokens. ENJ is available on a variety of regulated crypto platforms. The official Enjin Wallet also allows people to buy the token using its in-built swap services.
Since ENJ tokens are ERC-20 standard, they can be stored in any wallet that supports the standard. However, we have compiled a small list of the most preferred ENJ wallets for your ease:
The official wallet by Enjin, it can not only store ENJ, but the ecosystem NFTs and other non-Ethereum assets such as Bitcoin and even swap the coins for ENJ within it.
With both mobile and web-based interfaces, MyEtherWallet (MEW) is one of the most used open-source ERC-20 wallets. It provides an easy interface and with its web-based services, is accessible from any part of the world through any online device.
Designed for simplicity, Exodus is a multi-asset wallet that anyone with a minimal knowledge of crypto can use. It even has an in-built exchange for easy swapping of assets without the need to connect to a decentralised exchange (DEX) or transfer tokens to a centralised platform.
Ledger Nano S
Hardware wallets such as the Ledger Nano S give an unprecedented level of security to ENJ tokens. Nano S users can simply disconnect the device from their computer when not in use. This means that the device is inaccessible even if the password is compromised.
Is Enjin Worth the Investment?
Connecting players and game developers, Enjin represents the move from a simple community to a platform that allows gamers and developers to unlock the potential of digital collectable items.
As such, the popularity of ENJ tokens has risen over the years and ENJ is now considered one of the most successful tokens of its type. The large-scale acceptance by people and game developers along with its limited supply has resulted in an overall upward movement of the token’s price, potentially making it a good investment vehicle.
A note of caution though: ENJ is susceptible to extreme price fluctuations and if your estimates and predictions are not correct, it can result in significant losses. It is therefore important to always do your own research before investing in ENJ or any other crypto asset and not invest anything you can’t afford to lose.
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Frequently Asked Questions
Enjin is at a price of $1.48 at the time of writing, reflecting a 6,000% return on investment.
You can sell it on the Enjin Marketplace or melt it, converting it to the ENJ backing it which will be released to you.
Yes. Currently, only ENJ tokens can be used.
You can always use Enjin’s JumpNet, an Ethereum scaling solution that allows for free ENJ transactions.
Unfortunately, you can only earn ETH as a GAS fee. To acquire ENJ you must buy them on an exchange or broker site.
While there are no farming pools set up by Enjin, different decentralised finance (DeFi) platforms do offer liquidity pools. You can use these.
No. ENJ tokens are not burned, but they are locked up when NFTs are created from them.
If you have set a lower fee or the network congestion is high, it can take time for your transaction to be finalised.