Proof of Play? Bitcoin’s Dead (Again), but Fortnite’s V-Bucks are all the Rage
How blockchain gaming has evolved over the past year and what that means for crypto evangelists.
Here is Bitcoin today:
…and here is Bitcoin today:
Okay, now that we’ve gotten that out of the way, let’s get into it…
Last week, news broke of a start-up aiming to capitalize on the recent success of Fortnite and its in-game currency, V-Bucks, by adding everyone’s favorite buzzword, ‘blockchain,’ into the mix. Not to be taken lightly, the team announced it had raised $16 million in Series A funding. One of the articles explained, “In what it terms is a bid to bring ‘consumer adoption of distributed ledger technology through games,’ Mythical Games is developing PC, mobile, and console games on the EOSIO blockchain.”
It would be easy to disregard this announcement as just another attempt, by yet another start-up, to mash together all of the latest trending words to make a quick buck; however, this idea of merging blockchain tech and games in order to promote the adoption of digital assets has been widely covered over the past year, and if looked at closely, may just hold an obvious lesson for those hoping for global cryptocurrency adoption.
Five articles from the past year will help guide us chronologically to a better understanding of why Blockchain + Games = Mass Adoption:
1.) 10/4/17 Real Money Trading in Games - a Cryptocurrency Solution:
In this piece the author covers, “a few examples of Trading and Market implementations in real games.” Games discussed included Team Fortress 2, DOTA 2, Second Life, Entropia Universe, World of Warcraft and Diablo III. The article summarizes the wide variety of existing in-game economies and emphasizes the consistent user demand for the ability to trade characters and items for currencies that exist both in and out of game. Major factors covered that have complicated previous attempts to integrate virtual currencies with out-of-game economies included difficulties with balancing in-game economies, and legal issues involving titles being labeled gambling games.
In response to the current disconnect between virtual and real economies, the author pitches a mobile MMORPG game. Lordmancer II allows for the use of an ERC20 token to trade for items. A portion of the in-game token, LordCoin, is actively burned every time it is used to maintain scarcity, and another percentage of every transaction goes to the developer. In order to use LordCoin, players must either trade an item they have earned while playing using the in-game marketplace, or visit an outside website to purchase and then transfer the token into the game. Withdrawals are only allowed in LordCoin, and conversion back to fiat currencies occurs on independent exchanges. Lordmancer II is currently available on the Google Play store and has a 4-star rating with 1500 reviews.
2.) 2/23/18 Blockchain could transform in-game economies (with excerpts from 3/9/18 Unifying the In-Game Economy: Advancing the Trade of Digital Assets) :
This article expands on what we learned in the last piece, by clearly summarizing three major versions of in-game economies:
One-currency system: This approach is often found in mobile games where players will have to use a fiat currency to buy and install the game and earn in-game currency over time to access in-game rewards. Sometimes these games also come with a subscription fee and in-game auctions of digital assets (like World of Warcraft).
Multiple-currency system: In this scenario, both in-game and fiat currency can be used to purchase digital assets (like League of Legends).
Fiat-only currency system: In this in-game economic model, only fiat currency can be used to purchase digital assets or upgrades (like Dota 2). However, the reward system enticing the players to progress and unlock new content keeps the game interesting.
Next, with the growth of the free-to-play business model for modern games, the argument is made that within these digital economies, widespread fraudulent items (a ratio of 7.5:1) lead to reduced revenue for developers and the theft of player funds. The proposed solution? Blockchain tech.
If the creation and sale of items — whether via the developer or the player — is what fuels the growth and balance of in-game economies, then proving the source of ownership for those items is essential to fighting fraud. The blockchain would act as the official record of the in-game economy. It would store information about which items were created, when they were created, who created them, and any transactions that occurred involving those items. Duping would be impossible, inflation wouldn’t occur (at least not due to fraud), and gamers wouldn’t be ripped off.
DMarket is presented as an example of the, “…first blockchain-based marketplace for trading in-game items…” The FAQ states, “DMarket is a blockchain-based marketplace for turning virtual items into real assets,” and works with both items from Steam and those stored in its proprietary blockchain. The marketplace’s SDK can be integrated with any game created with Unity Technologies, the most widely used 3D development platform. Currently, the platform supports the trading and purchase of items from Heroes, CS:GO, and Dota 2.
At this point, it looks like incorporating cryptocurrencies and blockchain tech into existing games can refine mechanisms for managing in-game economies, help circumvent the ‘gambling game’ classification, and work to ensure the authenticity of in-game items, which results in proper developer compensation and the protection of player funds.
3.) 7/8/18 The Evolution of Blockchain Games and a Peek at What’s to Come:
In this Medium post, Vincent Niu contributes greatly to the blockchain gaming discussion by summarizing the most popular types of gaming dApps built on top of Ethereum:
- Collectible Item/Trading dApps: ex. CryptoKitties. The point of these games is to buy different items that are unique and tied directly to the blockchain, in hopes of acquiring rare items or using existing items to create more items you can resell. From the perspective of conventional video game players, CryptoKitties is not really a “game”, but a novelty brought by the “transaction attributes” and “unique private assets” of the blockchain. Nonetheless, this was the first blockchain game with a decent game mechanism and UI design.
- Gambling dApps: ex. Etheroll. The benefit of blockchain technology here is due to the transparency provided by smart contracts, which allows you to check the code to find out the dealer’s advantage.
- Hot Potato dApps: ex. CryptoCountries. These games revolve around the buying and selling of digital tradable assets (ERC721 tokens). In CryptoCountries, every country is an individual ERC721 token that any player can purchase. However, the next player must pay a higher price (1.2x) to buy it. The seller takes the difference in price, except for 2–5% of the transaction, which goes to the developer. Everyone except for the last person makes almost 20% profit. And, of course, everyone believes that they won’t be the last buyer, including the actual last buyer, hence the name ‘Hot Potato.’
- Ponzi Scheme dApps: ex. POWH 3D. Here players can use their ETH to purchase tokens in the contract. Each transaction, including buying and selling, charges a fixed fee. These fees are then re-distributed to other token holders based on the amount tokens they have. The more players that join the game, the more that previous players will earn as long as they stay in game.
- Idle Game dApps: ex. EtherGoo. An idle game (aka an incremental game, clicker game, or passive game) is where players collect resources by either clicking, buying units that mine resources, or a combination of the two. In EtherGoo, you can buy scientists and upgrades to increase your Goo production, and earn dividends from the pot based on your percent of global production. All scientists can be sold for 75% of their Eth or Goo buy price. You can spend your Goo in the Barracks to attack other players and there is also a raffle that allows you to win Eth by spending Goo on tickets.
- Turn-Based Battle Dapps: ex. CryptoCuddles. In these games, players can import and battle collectibles such as CryptoKitties. Here, the battle logic implemented by the developer determines who will be victorious.
Out of all of the games mentioned, only EtherGoo and CryptoCuddles appear to be interactive and complex enough to warrant prolonged interest. After reviewing the candidates, it becomes fairly clear that at this point, building games directly on top of a blockchain, instead of merely using the blockchain and associated currency to transfer and purchase items, greatly limits the in-game activities to simple turn based interactions.
The three major potential benefits for blockchain tech integration Niu lists include:
- Assets Can Be Traded, Anywhere, Anytime. Game currency and item wallets can be mobile and operate on any platform.
- Game Assets from one game can be reused in another (think Cryptokitties being used in Cryptocuddles). This could increase the amount of purchases, and work to help new games co-opt the userbase of existing games.
- Game mechanisms can be made transparent. The player can know things like the rate of getting rewards from a treasure box, the rareness of a weapon, and whether the developers are operating as promised.
The previous articles have covered numerous ways integrating blockchain tech and digital assets could refine in-game economies and improve user experience. However, we still haven’t seen how games can significantly help accelerate the adoption of digital currencies, or improve blockchain networks.
4.) 9/24/18 Games Will Be the Catalyst for Blockchain Mass Adoption:
To begin, James Martin Duffy addresses the elephant in the room: nobody is using blockchain dApps.
If you add up ALL the 100+ active DApps on dapp.review combined, it’s still less than 10,000 users in total who are interacting with an Ethereum DApp on a given day.
For context and comparison, Facebook has around 1.4 billion DAU, and Twitter 157 million. PUBG Mobile, just one mobile game out of thousands, has 10 million DAU.
According to StateoftheDapps and Tron stats, if you incorporate other blockchains like EOS and Tron (2300 DAU), the figure climbs to between 40 and 50 thousand users. Better, but still tiny in the grande scheme of things.
As a solution, the author recommends reducing friction and building more appealing dApps. Making blockchain applications as easy to use as centralized applications involves improving scalability and enhancing application UI/UX. Developing dApps that appeal to hundreds of thousands, or millions, of users is a more complex problem to solve. Games are suggested as an interim solution until blockchain’s ‘killer app’ is discovered due to the lower threshold required to attract a decent number of users.
A game doesn’t need to be 10x better than any game that came before it. As long as the game is marketed well and looks somewhat fun, there’s a huge user base (2.2 billion gamers worldwide) willing to give it a try, even paying money to do so (1.0 billion paying users).
According to one survey there’s an audience of 96 million hyper-active gamers who are downloading and trying 300+ games every single year.
Here is where things get interesting, Duffy floats the idea of using games to quietly hook users on the idea of cryptocurrencies.
A user downloads a game because it looks fun. They start playing, they get hooked, and 10 hours into the game, BOOM, a monster drops a super rare item. The flow in the game informs them, “Hey, did you know you can sell your rare items to other players on our massive P2P marketplace?” The player heads to the marketplace and puts their item up for sale. Another player pays for it using a cryptocurrency of their choice. Now the seller has acquired their first cryptocurrency simply by playing a game — without needing to do KYC or even needing to have a bank account.
The concept that ‘blockchain’ and ‘cryptocurrency’ shouldn’t be plastered on top of every application homepage, or used in an attempt to create buzz for an otherwise unimpressive product is exactly where the industry should be heading.
The key to cryptocurrency adoption is integrating the technology into the backend of a wildly popular product. A product whose popularity stems from ingenuity, enjoyment, and the benefit of the service it provides. Getting someone to utilize an emerging piece of technology on the basis of its ideological merit is too high of a threshold for any product. Yes, decentralizing applications hands back control of personal data to users, insures against spontaneous shutdowns, and enables new interactions; however, after decades of applications that have been developed with only ease-of-use in mind, without seamless interactions the majority of users will remain uninterested.
Fortunately, if this bear market has done anything, it has taken away some of the appeal from the words ‘blockchain’ and ‘cryptocurrency.’ No longer can a company rely on hype to raise ludicrous amounts for non-existent or boring products. Today, anyone who remains in the space, understands the key to success will be slipping digital assets into the realm of the average person through wildly appealing and exciting applications.
With these points in mind, Duffy pitches the Loom Network. Loom Network “…allows developers to run large-scale applications, and is the first Ethereum scaling solution to be live in production…you can think of Loom Network as EOS on top of Ethereum.”
The Loom Network consists of several components:
- The Loom SDK: This allows developers to quickly build their own blockchains without having to understand blockchain infrastructure. Think of it like a “build your own blockchain” generator.
- DAppChains: The Loom SDK generates what’s called a DAppChain — a Layer 2 blockchain that uses Ethereum as its base layer. Running each DApp on its own sidechain to Ethereum allows the use of alternative consensus rulesets (like DPoS) that optimize for high scalability. Also, using Ethereum as a base layer means DAppChain-based assets (like ERC20 and ERC721 tokens) can have the security guarantees of Ethereum.
- Security provided by Plasma: Plasma allows users to securely transfer their digital assets onto sidechains from Ethereum mainnet without the need to trust the sidechain’s consensus algorithm. DAppChains use Plasma-based relays to transfer assets back and forth from Ethereum, which allows digital assets (like ERC20 and ERC721 tokens) to be used on the DAppChain while still being secured by Ethereum.
Based on these descriptions, it looks like Loom Network allows for the deployment of sidechains with refined consensus algorithms designed to facilitate lightning fast transactions and real-time applications, on an established and trusted blockchain like Ethereum. In my previous article, I reviewed 12 leading projects in the blockchain space and consistently complained about the lack of decentralization in every project designed to facilitate dApps. The security, scalability, and decentralization trillema prevents most platforms from being both decentralized (maintained by a large number of distributed verifier nodes) and scalable (capable of handling thousands of tps). Building a product that allows for the development of sidechains with consensus mechanisms (like DPOS) that are detrimental to decentralization and censorship resistance, while maintaining security through the reliance on an established parent chain, is an innovative solution to the scalability trillema that has so far prevented other projects from perfecting dApps.
A number of projects have been built using the Loom SDK, the first being a web application, DelegateCall.com, which looks and feels like a traditional website. Most recently, the announcement of a fantasy multiplayer role-playing game, Coins & Steel, promises to usher in the era of games built entirely on the blockchain that allow for real-time gameplay.
Coins & Steel is a multiplayer role-playing game where you can:
Use an ERC20 token called STEEL (STL) to hold everything of value in the game.
Buy, sell, and trade your game assets with anyone for any reason — without being confined to the Coins & Steel marketplace.
Earn STEEL (STL) tokens just by playing the game — which can be converted to ETH or fiat later.
Transfer your digital assets from other games (like CryptoKitties) that run on a different blockchain to Coins & Steel with inter-blockchain operability.
We have now seen that blockchain tech can bring certain benefits by integrating with traditional games and replacing in-game currency and asset management. We have also seen the negatives of building gaming dApps on Ethereum; namely, their limitation to turn-based interactions. Next, we discovered how the limitations of Ethereum can be overcome to enable real-time gameplay in games built directly on the blockchain by using side-chains. Finally, we learned that gaming can provide the perfect medium for hooking unsuspecting users on digital assets and accelerating cryptocurrency adoption.
5.) 11/16/18 A New ‘Fortnite’ Awaits In Blockchain Gaming:
The latest article in the series brings us to the launch of Mythical Games and a conversation about Fortnite.
Since launch, Fortnite has brought in $1.2 billion in revenue, with $318 million earned in the month of May alone. In less than a year, the title has attracted 125 million players. Due to its runaway success, the creators of Fortnite, Epic Games, just raised $1.25 billion in a new round of financing. The free to play game accrues revenue through the purchase of new skins, accessories, and event passes.
With the astounding growth of the free-to-play but pay-to-personalize business model, developers and players have started asking for more.
(In Fortnite) Players don’t own their accounts, they can’t sell or purchase accounts (legally) outside the game’s framework, and they have to start over from scratch when a new blockbuster game is released as they cannot transfer anything from the previous game. Players are missing out here big.
A study by Worldwide Asset eXchange (WAX) on 1,000 gamers and 500 developers discovered three notable trends:
- 62% of gamers feel having the flexibility to transfer virtual items from game to game would make spending money on those items more worth it. In fact, close to 75% of gamers said they would purchase virtual items if they could use them in multiple games.
- 84% of developers surveyed would create in-game items if they were compatible with multiple, different games.
- 66% of game developers said virtual items are a pivotal component of their game’s monetization strategy and item value is being suppressed by unnecessary publisher control.
The combination of the explosive popularity of personalized accessories and in-game assets, with the growing demand for greater control over purchases by players and virtual items by developers, has coincided perfectly with the recent advancement of blockchain technology and the evolution of blockchain gaming.
Within this context and an environment ripe for disruption, Mythical Games announced it intends to develop PC, mobile, and console games on the EOSIO blockchain. The Mythical platform will also be open to other developers to build games with “player-owned economies.”
According to their website:
We are Mythical Games, a next-generation game technology studio. We believe that true ownership of digital assets, verifiable scarcity, and integrated secondary markets will spawn a new generation of games. These new economies, based on digital ownership, will bring players, developers, and content creators closer to the games they love.
What sets Mythical Games apart from the rest and why have they garnered so much press lately? The answer boils down to two factors: the large amount of funding raised and their high-profile team members.
TechCruch reported:
Mythical is led by a group of gaming industry veterans. Its chief executive officer is John Linden, a former studio head at Activision and president of the Niantic-acquired Seismic Games. The rest of its C-suite includes chief creative officer Jamie Jackson, another former studio head at Activision; chief product officer Stephan Cunningham, a former director of product management at Yahoo; and head of blockchain Rudy Koch, a former senior producer at Blizzard — the Activision subsidiary known for World of Warcraft. Together, the team has worked on games including Call of Duty, Guitar Hero, Marvel Strike Force and Skylanders.
Whether or not Mythical Games succeeds and is wildly popular is not the primary concern here. What recent events reflect, and is important to note, is a convergence of gaming trends, player preferences, and blockchain technology, which creates an environment ripe for the advancement of cryptocurrency adoption.
Concluding Thoughts
Throughout this past year, we have seen blockchain gaming evolve from turn-based and collector focused to easily accessible and real-time. There are blockchain based marketplaces for virtual items from traditional games, and mobile games that allow for the use of cryptocurrencies. Two paths exist for the combination of blockchain and gaming. One path relies on building entire games on Ethereum using sidechains, or pseudo-decentralized blockchains like EOS. The other path allows for the continued use of traditional game development techniques, but adds the option to earn cryptocurrencies and trade virtual items within marketplaces. Each path offers unique benefits and downsides; however, I believe allowing virtual items to exist on a blockchain and trade freely is an easier option for major game studios. The tokenization of in-game items is something any existing game can implement and I believe will lead to a greater number of purchases and a better experience for users. Making items provably scarce, tradeable, and transferable, is the next logical step in the free-to-play but pay-to-personalize business model.
Once virtual items are tokenized and cryptocurrencies take the place of existing in-game currencies, everyday users will have access to digital cash whose underlying value is tied to the games they spend hours and days playing. I imagine consoles having an easy to setup application that functions as a blockchain node and wallet. Within this wallet, users will keep their skins, accessories, weapon upgrades, and gaming currency for all of their favorite games. This network of console wallets and nodes has the potential to grow into the most decentralized, widely used blockchain in existence.
Crypto evangelists need to learn that in the context of a generation born into an endless array of entertainment options, any new technology must be enjoyable to use and uncomplicated. Worldwide adoption won’t happen because of a global political movement towards decentralization and the embrace of libertarian ideals. Most likely, it will happen because digital assets allow you to do cool things while you play games, and help you accrue and transfer value in places you previously could not. Let’s stop writing ‘blockchain’ and ‘crypto’ on everything, and let’s build systems that create users out of unknowing entertainment seekers.
Leave a comment below with your thoughts and let me know if I missed something :)
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