Are Gamers Poised to Shape the Blockchain Tech World?

How the Gaming Industry Could Drive the Token Economy

Alison McCauley
Mar 21, 2018 · 8 min read

This week, over 25,000 members of the game developer community descended on San Francisco for their largest annual event, GDC, and CryptoKitties, an Ethereum-based collectible game by design team Axiom Zen, just spun off into its own entity, raising $12 million. This makes it a timely moment to examine this growing industry’s relationship with blockchain-based technologies.

There has been much discussion about how blockchains will change the gaming industry. But, how could the gaming industry continue to shape blockchain technology as it progresses forward?

Gaming industry developers and executives gather in San Francisco. Source: GDC

The gaming industry has long pioneered technology that seeks to push the boundaries of both human experience and imagination. And these innovations jump frequently into other parts of our lives once they’ve made their mark. Augmented reality (AR) and virtual reality (VR) technologies were essentially incubated by the gaming industry. They’re now being used by sports leagues and broadcasters to create new fan experiences, and by surgeons to perform “telesurgery” operations on patients thousands of miles away.

I believe the advent of new, token-centric business models and applications will usher in another opportunity for the gaming industry to broadly influence our world once again. There are two fronts in which I anticipate strong gaming industry influence:

First, gamers are in a strong position to be one of the early audiences to adopt decentralized applications and services.

Crypto’s most recent surge of retail investors and speculators has led to much debate about who will lead the next phase of adoption. Of course, much of this will be driven by when — and where — we see the launch of truly consumer-friendly applications. But, I believe gamers are poised to be a catalyzing force along the way. Not only are there over two billion gamers globally, but:

There have been 50 gaming-focused ICOs, with the top 10 raising $323 million. Source: Smith + Crown

Second, the gaming industry’s expertise in virtual currency will power token-fueled applications — across industries and types of businesses.

Using gaming fundamentals (gamification) to drive engagement outside of actual games is nothing new. It’s a well-worn strategy in a broad range of industries. MySugr uses it to help manage diabetes, Duolingo uses it to teach language, and even Facebook deploys gamified campaigns to help brands engage consumers. Each of these examples all give us that familiar, lovely zing of dopamine (a hormone that makes us feel good) by rewarding us for specific actions. And, they trigger serotonin (which can boost mood) when we think about past successes, such as looking at badges we’ve earned.

But game designers have an additional (and extremely effective) tool in their arsenal. It’s a mechanism that hasn’t been broadly accessible to industries like healthcare, education, and social media: virtual currency. Game designers have spent years working to shape consumer behavior with a rich range of in-game transactions — all fueled by virtual currency. They have learned how to drive engagement and revenue, no matter how good a player is or where they are in the game. They have even learned how to use virtual currency to help build communities. In short, game designers know a lot about what works and what doesn’t when it comes to creating new economies that motivate and reward user’s behaviors.

Token-centric businesses from many fields could learn much about how to drive a healthy economy from the very game designers that have invested years in perfecting this art. The applications and platforms that dominate the decentralized era may well be rooted in engagement models built atop legacy gaming and virtual currencies’ best practices.

As token economies become mainstream, they will drive even more powerful incentive models.

However, tokens are much more than in-game virtual currencies that have suddenly become a tool available to non-gaming businesses.

The combination of tokens + gaming fundamentals gives a range of businesses the potential to tug more deeply at our psychology than ever before.

Simulated, non-digital “token economies” have been used by therapists as an effective mechanism for shaping behaviors since the 1960s. Loyalty point systems have significantly influenced consumer behavior for nearly 40 years. But this era of cryptocurrency-driven economies — when integrated with game design acumen — holds the potential for much deeper influence on our behavior. This powerful combination could be used to craft near-perfect alignment between sustained action and reward, and it could extend to many areas of our lives. Three attributes work in concert to deliver this power:

How could gamers and the gaming industry influence the evolution of token economies?

eSports fans at an event in St. Petersburg, Russia

As the space evolves, we must be mindful of the flip side of token-fueled, gamified applications.

One day, we may all be interacting with multiple token economies on a daily basis. If and when this happens, we will need to be more mindful about how we humans stay in control. More effective token-driven gamification means that these applications and platforms will be plugged more directly into our chemical circuitry. They will constantly reward us for participating, becoming almost addictive in nature. And we will need to work harder to make sure the technology is serving us — versus us serving it.

We can use gamified applications to help us exercise more effectively, eat more healthfully, and connect more deeply to our communities — or we could let them alter our belief of what’s important. We’ve seen how hard it is to strike this balance with web 2.0 (think of the teen who starts to tie his sense of worth to the number of Instagram followers he/she has).

This time around, it will be even harder to ignore the allure of gamified feedback loops; especially those combined with financial rewards. How do we make sure we stay in control of how we play the game, instead of ending up the ones being played?

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Edited by: Steven McKie

Footnotes

¹ 2017 Magid Media Futures Study, which showed smartphone, PC, and console gamers far outpaced other online users in both tech activities performed and devices owned.

² Smith + Crown data

³ 2017 Magid Media Futures study

About me

Follow me on Twitter @unblockedfuture or learn more on LinkedIn. A social scientist by training, I’ve devoted my career to driving behavior change in new technology markets. I believe that blockchains and a decentralized future represent an opportunity to remake foundational systems — and with that opportunity comes great responsibility. I write to encourage thoughtful strategy and conscientious execution in these critical early days of crypto technology.

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BlockChannel

BlockChannel is a new media & educational hub focused on…

BlockChannel

BlockChannel is a new media & educational hub focused on the socio-cultural/economic issues related to blockchain technologies like BTC/ETH/& HNS. Visit BlockChannel.com for more resources; and SoundCloud.com/BlockChannelShow for our official podcast.

Alison McCauley

Written by

I'm obsessed with the intersection of new tech + social science. I advocate for the thoughtful development of a decentralized future.

BlockChannel

BlockChannel is a new media & educational hub focused on the socio-cultural/economic issues related to blockchain technologies like BTC/ETH/& HNS. Visit BlockChannel.com for more resources; and SoundCloud.com/BlockChannelShow for our official podcast.