Rewards, tokens, point systems etc. to motivate learning?

Gamification: taking game elements and applying them in something that is not actually a game in order to increase motivation and engagement.
This is actually a strategy I use quite often in my teaching, mainly because I am quite the person who enjoys a good challenge or two, especially if it involves a bit of FUN! However, how effective is gamification really?
Without doubt, point systems, rewards etc. motivate students to achieve their goals and that is clearly proven in the amount of time children spend playing games on iPads, and even adults playing Candy Crush on the train home from work! It is the sense of satisfaction that we all seek from winning or achieving something, whether that is winning a bag of lollies, a badge to move on to the next level, or even a promotion. Although proven to be effective and getting students keen to attend music class and win their next token, there are some downfalls.
Students' attention span will decrease the more we use gamification in everyday learning. If they cannot achieve something within a certain amount of time, they will lose interest and easily become frustrated. Furthermore, research proves that gamification is not the most effective in transferring new knowledge into the long-term memory. The focus is directed more on the goal and rewards that are to be achieved, rather than the knowledge that is actually being learnt; remembering and sustaining the knowledge becomes a tool to achieve the end reward. Also, does "unlocking a new level" actually mean that the student understood and processed all the knowledge that has supposedly been learnt? Is it the most accurate way of assessing students and tracking their learning progress?
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