This is very classic solution-in-search-of-a-problem thinking. Its prevalence in the cryptocurrency and blockchain communities is why I'm extremely bearish on both.
> Without items being registered on a blockchain, sure you can have gamers throwing down $20 bucks here and there, but you're never going to have university endowments and state pension funds allocating some of their investments into virtual items.
Why is it a problem that university endowments and state pension funds aren't allocating some of their investments into virtual items? It's not.
> I want to invest money into games, but I can't. Other people want to get paid to play games, but they can't. How exactly is that not a real problem?
You can already invest money into games and/or get paid to play games via a variety of methods. It seems like you're shoehorning the blockchain into the equation unnecessarily.
Besides, solution-in-search-of-a-problem doesn't mean you're failing to target real problems. It means you came up with your solution first before analyzing the specific problems you're now trying to apply it to. That's almost always inferior to starting with the problem and then working backwards to craft the perfect bespoke solution.
Almost all of the problems that blockchain obsessives point out are either (a) trivial problems that few people care about, or (b) are better solved without needing a blockchain.
Is it easy to convert the money back into cash? I remember PLEX (and WoW now has a similar token among many others), but I swear it was a one way conversion, though there was monetary value in playing for free.