Thinking Too Small: When Digital Scarcity Hurts The Future of Blockchain Games
Edited by Crystal Morales C.
I was recently asked by Matt Condon and the team at the NFT Summit to give a talk about, well, anything I’d like to. Since I have a background in game design and now work in cryptoeconomics, the organizers thought I had something useful to share with the hundreds of hopefuls that want to make digital scarcity in games a reality through NFTs, or non-fungible tokens.
I immediately offered to talk about my experience with playful design (boardgames, card games, LARPs), and how that has shaped my experiences at ConsenSys, where I am currently working as a Lead Designer.
Cloaked in my offering was a deep belief that digital scarcity, alone, will never be what makes blockchain games successful in any shape or form. We, as a community, are thinking too small about this problem.
I am sure many other designers have already warned the blockchain community of this, but I want to explain why, give some examples, and point towards some solutions. So let’s go down this rabbit-hole together, shall we?
What digital scarcity is
Let’s start by defining what NFTs aim to accomplish. The story goes that since the blockchain is a technology that allows for a non-modifiable record of anything you’d like, it brings forth what could be called “digital scarcity”. That is to say, you could, in theory, use a blockchain to maintain a close record of finite collections of things, in order to make them more precious.
Digital scarcity is just like physical scarcity, which can be artificial (created on purpose by a group of humans) or natural/real (think of the limited amount of water or land available in the whole world).
Though I believe we are still hard-pressed to find examples of digital scarcity that aren’t completely linked to real conditions outside of the digital world, basically all digital scarcity is artificial. That means that when creating a limited good online, you have to make sure that there is enough demand. That demand exists due to scarcity, which can exist in the following ways:
1. Whomever makes the good is considered special or exclusive.
In the digital world, this tends to reflect the same characteristics of scarcity in the analog world. That is, that if the maker can create enough fame, or has a unique enough style, whatever they make will automatically be more special. Even if some would consider the good itself to be of poor quality or in bad taste.
2. The way the good is created is unique.
The simplest example of this is Bitcoin. The whole network, and each of its tokens (Bitcoins), depends on the way Bitcoins are created: through mammoth computers that compete with one another to decipher impossible mathematical calculations. Whomever has the fastest computer gets to release a certain amount of Bitcoin into the broader network, and in turns gets a piece of it. Not only does this makes Bitcoin scarce, but it makes it special from its inception.
3. How the good is distributed is prohibitive.
There are certain goods that are more exclusive simply because finding them is harder, or because distributing them in mint condition requires specific, hard-to-achieve conditions. This can be the case with digital goods that are much too big (say, for example, the USB sticks with Internet content regularly distributed in Cuba), or goods that the user literally has to work for (mining materials in Minecraft).
4. The good cannot be easily copied or emulated.
This is nothing new. Efforts to keep people from copying or emulating online goods have existed since before anti-piracy laws and software were invented.
Similarly, it could be argued that NFTs are a way of mantaining the sacred uniqueness of a good continues the history of online anti-piracy measures.
5. Only your good can perform a very specific function.
It’s easy enough to understand: if your good is the way to perform an action or fulfill a function, you force demand for it. One example is Playstation or Xbox exclusive games, which can only be played in the console they were created for. Of course, they are not really exclusive, since sometimes they later become adapted for other consoles. But, in rare cases, the software and the hardware become so intertwined that it is practically impossible to adapt a game from one console to another, or it is at least prohibitively expensive to do so.
6. There is a limited amount of the good.
This is the weakest of all the digital scarcity rules, and yet seems to be the most used by NFT game creators. The theory goes that if a good is made in a limited amount, the demand for it will automatically go up. Nevertheless, there is probably, out there, a very, very unique photo of a cloud that looks exactly like a dragon holding a balloon. That doesn’t mean that, just because it’s unique, someone wants it.
Going back to NFTs, one could assume that all you’d need is to nail one or several of these scarcity rules to have an NFT game hit in your hands. Let’s look at the state of digital scarcity in two big blockchain games.
How digital scarcity has been used in blockchain games so far
Even though each of these two big games is approaching scarcity in its own way, demand seems to be rolling in slowly. Their daily users are at a cap of around 300 a day, which is a trivial user count compared to big PC games out there.
Of course, some of you might think, “Well, that’s unfair, none of these blockchain games have achieved mainstream fame. It makes sense that they don’t have a lot of players!” And I agree with you. In fact, that is my whole point here. Perhaps, despite how these games are framing scarcity, there is something else that is necessary to be successful in the NFT game sphere.
Two hypotheses:
1. Nothing. These games have already reached their cap for “people that are interested in an NFT product.”
2. Something deeper than just the offering of NFTs. Something primal, magical, and unique, about scarcity.
#1 is a matter of product management and market analysis. I bet someone else can write about that one better than I can. I wanna concentrate on #2.
Ultimately, there is something uniquely human about scarcity. None of the examples above could exist without a bunch of humans deciding, seemingly out of nowhere, that they will create or acquire goods based on a perception of exclusivity.
And I am worried that, when dealing with scarcity in games, all we seem to talk about is the economics of it, instead of looking at the magical parts of it.
Why digital scarcity is not enough to make a good game
Before going further, I want to suggest caution when pairing the words “NFT” and “game”. I believe that pairing these two words together implies that the digital scarcity itself is the reason players will come to a game. And that can set all of us in the wrong path if we truly want to make good games. A good game should just be a game. NFTs can be part of that, but not the main reason the game exists.
I was recently talking to the head of design of a big game studio based in LA about a game idea I had. While I was going through the economy of the game, he stopped me suddenly, and said the following: “You have to remember, at all times, that if you’re creating a game, you’re ultimately optimizing an experience for fun.”
I’ve explained what fun is before, and I bet there are many people out there that consider the mere competition for a digitally scarce good as “fun”, but the truth is that, for most humans, fun is a vastly more complex beast.
There are two lenses that have helped me learn the difference between optimizing for fun, and optimizing for an economy.
The first lens is escapism. Is my economy promoting that sense of escapism that people expect from a game?
There’s an example that perfectly illustrates the difference between optimizing an economy and optimizing a game. I really love an example that Lehdonvirta and Castronova give in their 2014 book, Virtual Economies.
I will paraphrase since it’s quite long, but, basically, in the first chapter of the book the authors talk about the optimization of EVE Online’s economy. In the game, players must mine and transport materials from one side of the galaxy to another in a spaceship in order to trade with each other. They rely on luck to come across a voyager that needs what they offer, and can pay for it.
An economist might come into the game and, for the sake of optimizing the economy, suggest a few changes:
- First, show the prices of the materials across all regions in the universe, so that market prices can go down.
- Taking it one step further, why not get rid of regions at all?! You might as well, since the game is digital, get rid of all the travel. Have some sort of teleportation tool that immediately allows all players to get to each other.
At this point, though, the economist is losing sight of the beauty of travel in space that the game offered, to begin with. Ultimately, the game is functioning as an escapist form of media, and if sheer economics had their way in an already artificially scarce economy, the game would lose all of the qualities that made its players want to be a part of its world!
The second lens is a macro one: community and fairness. Is my economy promoting a sustainable community in the long term?
Another important part of making good games is economic replayability, or the concept of an economy that makes players want to come back again and again to it.
Let’s look at an example of a board game I created, called “Power Dynamics”. In it, three players would play against each other in pursuit of scarce resources. The first few times we tested the game, we wanted players that represented the “developed world” to have an upper hand in accruing resources, in order to make a clear statement about the way power dynamics work in the world. Unfortunately, after a while, no one wanted to play our game anymore, particularly the players that didn’t belong to the “developed world”. While it was a great reflection of the world, the economics didn’t make for a compelling game.
So, we tweaked it. We gave players a more balanced set of moves, gave them different resources to strive for, and amplified the strategies they could have to win. Guess what? All players on average went from playing one round to playing three or four.
Another example: Friedemann Friese, creator of the board game Power Grid (no relation to my own game), recently gave a presentation at Practice, a conference from the Game Center at NYU. In it he described how, even though the game is meant to foster extreme competition among players, he quickly learned that the mere act of giving away a free power plant every certain number of rounds could, ironically, incentivize players to keep playing for longer and more aggressively. This was counter-intuitive to him initially, as a mathematician, but it made sense to his players, and made them happy. So much for scarcity!
What is even more mind-blowing about this community sustainability lens is that you can apply it to the metaeconomics of your game. For example, when thinking about how you will price your game in general, you could see freeplay as a way for whale players to bankroll players that simply can’t pay for games now, but keep the game community alive and interesting.
We can still do so much more with digital scarcity in blockchain games
But, even as a person jaded by digital scarcity in the blockchain, I am not simply saying “stop making NFT games.” If you are reading this, chances are we both share a passion for economics and games and can’t wait to discover new exciting things to do with both of them.
The truth is that by prioritizing digital scarcity as the main value prop of blockchain for games, we are in fact cutting down on the amazing possibilities that the technology has for rethinking games as they currently exist.
I’ve been doing a lot of work with the game design community and the art community around rethinking money and economies. I am constantly surprised by their ability to come up with new economic tools, new token universal standards, new ways to completely rethink economies through the lens of fun.
In a workshop I did a year or so ago at NYU play/ground (and later at the Flying Money Conference, sponsored by the City of Amsterdam), we explored the different ways in which tokens could exist in alternate societies. The room was full of game designers, and they all played with tokens that they tweaked in these seven dimensions:
- Material: the actual physicality of a token, if it is physical at all. Can it melt? Can it bend? Can it be fused with other tokens?
- Numerical: how much does the token hold? Think in fractions, multiplications, bend numbers!
- Ontological: what does it hold, beyond numbers? (thoughts, feelings, etc can also be put in tokens!) Think big!
- Interactive: how does it interacts with other tokens, beyond exchange? (fuzing, melting, destroying, creating, reproducing)
- Transactional: how does it evolve when/after it is exchanged? (elimination, negation, acceptance)
- (A)Temporal: what is its lifecycle? Does it last forever?
I was so blown away by the results, that I couldn’t help but ask myself: what would happen if we dared to imagine even more different ways of shaping economies in blockchain games? What if we jumped out of our assumptions of how the world works, and used blockchain as the fertile ground for new playful economies humans have never experienced?
Just off the top of my head, and specifically around the subject of NFTs, I can think of a few interesting options (and I bet some are already being researched, too):
- NFTs being owned by SEVERAL people that pool resources together.
- NFTs being created as a RESULT of coop play.
- NFTs that cost nothing but can only be gifted from one player to the next.
- NFTs that shift through time according to player action.
And so on, and so forth.
Finally, an opus against digital scarcity
I can’t help but end this article by taking ANOTHER step back.
Let’s look at the big picture. Ultimately, I think the cryptocommunity is made of explorers. And as explorers, there is still a vast economic ocean for us out there, ready for our games to learn from it and viceversa. Sure, we can make NFT games, and even make some alternative NFT games like I mentioned at the end of the last section. But what if we did more than that?
When the Internet started, its promise was that of a world without limits, where communication was free and instantaneous, where communities could grow and expand in ways we had never fathomed. It is only befitting that we think of economies and crypto economic mechanisms that live up to that process, that push the concept of what we humans can be in relation to one another.
NFTs are a mirror of economy as we’ve known it, one of scarcity and competition. It might be true, as I said before, that there will never be such a thing as complete abundance online. Ultimately, the Internet depends on servers, on electricity, and on the fiat money that powers those networks.
But, there is a chance, a small one, that we can still dream big online, and create economic mechanisms that help us rethink how humans relate to each other.
Let’s make blockchain games that accomplish that.
