International interest in blockchain games is growing keener by the day. After the launch of CryptoKitties in late 2017, which brought the Ethereum network to its knees at one point, many other blockchain game developers have appeared on the scene. Several of these projects have managed to raise millions of dollars from investors without a finished product. Mythical Games, based in the US, raised over 16 million dollars last November. Ripple, of the third most highly valued cryptocurrency XRP, joined the scene this May. It joined forces with Forte, a blockchain game developer headed by Kevin Chu, chairperson of esports club GenG and cofounder of mobile game company Kabam, to start a $100 million blockchain fund. Blockchain investor Hashed has launched accelerator program Hashed Labs early this year, as well as investing aggressively in blockchain game projects.
In this post, I will be elaborating on what draws so much attention to blockchain games, and the obstacles that blockchain games will have to overcome to achieve commercial success.
Blockchain Games: Permanence and Scalability
Because blockchain games are not yet organized completely as a category, one “blockchain game” may differ vastly in architecture from another. But if we look blockchain games, we can guess at what kind of features will be essential to gaming — the two that stand out as most likely to differentiate blockchain games from traditional games are permanence and scalability.
Bitcoin and Facebook’s Libra both leverage blockchain as a financial asset infrastructure. Blockchain is suited to dealing with financial assets mostly because of its permanence. If my bank’s database could be erased or altered, or if the company whose stock I owned issued stocks to anyone they pleased, I would not be able to put my trust or my money in such agents or infrastructure. The same goes for games. If the game items that people won or bought could be manipulated, deleted, or replicated freely, they would hesitate to invest time or money in gaming.
You may wonder who is actually willing to invest much time or money in games. But in the gaming world, it is a truth universally acknowledged that a minority of high-spending users contribute the most to revenue. Users that spend tens, hundreds of thousands of dollars in gaming are prone to the fear that their gaming assets may be lost forever, if their permanence isn’t guaranteed. Many users who have lost all their gaming assets when games shut down attest to this in online communities. Just as blockchain in finance uses its permanent and neutral distributed information database to protect financial assets, blockchain games promise that the players’ gaming assets will be safeguarded. Theoretically, if blockchain games were operated solely on a blockchain protocol, a game would be impossible to shut down. Even if the developer were to shut down its services, the gaming assets would remain, and could be used in other ways. Permanence is currently the one feature that blockchain games tout the most.
The second most important blockchain feature in gaming is scalability. The non-fungible token feature of blockchain records the provenance of all gaming assets. In other words, it is possible to track exactly what a certain item has gone through since its issuing. This could change the way an asset is valued, depending on what is owners have done, extending what games and its assets could signify. For example, an item may be more valuable than another with the same function if the former were used by international esports star Faker. This is easily explained by the difference between an autographed baseball and a regular baseball. Although the same effect may be achieved through existing game servers, without the aforementioned permanence, this won’t be easy to implement.
Smart contracts, another integral feature of blockchain, may further extend the possibility of gaming. An example may be the third-party developers who made Kitty hats, races, and battle games on top of the actual CryptoKitties game in 2017.
While CryptoKitties simply allows for the collecting and breeding of tokenized cats, Axie Infinity brings rearing, battles, and virtual reality to its game. Intriguingly this game extends its world through partnerships with various other blockchains. Recently, Axie Infinity formed a partnership with MakerDao, the most influential cryptocurrency lending and stablecoin project on the Ethereum network. This partnership gave users who put their ETH in MakerDao a unique Axie.
For existing non-blockchain companies to join in this kind of partnership, they must figure out how to properly build API. It is also important to standardize communication between a single API and various other services. But on blockchain, which is a kind of open database, this kind of interaction between services is relatively easy. If the smart contract is well-built, it is easy to see how each service is made, and what kind of data it has accumulated. And if they are on the same blockchain, one smart contract may reference another smart contract for a function or to access information. Furthermore, although interchain technology is still in its early stages, it may allow for different blockchains to communicate on a trustless basis.
Blockchain Games: A Speculative, Poorly Crafted Gamble?
Although I have only listed its benefits, it is true that there are many who have reservations about the blockchain game as well. We need to examine these reservations in more detail.
Currently, the dapp category most popular on public blockchains is gambling. Gambling dapps are hugely popular on EOS and Tron, and top the charts on stats sites such as Dapp.com. This has led to the emergence of several games with a highly speculative aspect. Moreover, blockchain games usually allow for the exchange of items for the sake of complete ownership of assets. The problem is that this exchange is conducted via cryptocurrency, and although cryptocurrency isn’t recognized by most countries as currency, it is easily convertible into legal tender through crypto exchanges. If a random draw game could yield items that could be turned into liquid assets, how is it different from a lottery ticket or gambling? We cannot deny the fact that this leads to the intensifying of gambling aspects in games.
From a strictly liberalist point of view, one may argue that gambling and speculation aren’t fundamentally wrong and that individuals should be free to do what they want. But if blockchain games are played mainly for financial gain rather than entertainment through storytelling, problem-solving, and achieving goals, extrinsic rewards may destroy intrinsic motivations to play. No one will pay money for a game that doesn’t offer intrinsic entertainment. If no one will pay, the rewards that players reap will fail to be sustainable.
Aside from the criticism concerning the fundamental principles and architecture of blockchain games, many complain that the blockchain games currently on the market are simply too lacking in usability. Blockchain infrastructure is currently clogged with elements that may seem cumbersome to the user, including creating accounts, installing wallets, managing private keys, backing up keys, and paying gas fees.
For example, Ethereum’s has a complicated 42-number hexadecimal address format. It also requires the user to pay a gas fee for every transaction, and the user must hold ETH beforehand to pay. The gas fee determines how long the transaction takes, which is a minimum of 15 seconds, and may take up to a few minutes to guarantee that the results won’t be flipped. The network slows down if the volume increases by even a little bit because it cannot process more than 15 transactions per second. To explain this in terms of games, you must pay a fee every time you take an action, and whoever pays more gets to act faster.
EOS, which set out as a platform that would resolve Ethereum’s issues, doesn’t offer as good a UX as expected. On EOS, another user must create an account for you, and you must pay this user a certain amount of EOS. Furthermore, although there are no gas fees for transactions, you are entitled to transactions in proportion to the amount of EOS in your account. If your EOS isn’t deposited in the right amounts in CPU, NET, and RAM, your transactions may not be processed. To put this in the context of games, a game may ask for payments from the moment you create an account, and you cannot play the game until you’ve deposited a large amount of money in your account, which must be distributed into several accounts according to a set of complicated rules, or else your play may shut down in the middle.
In this context, blockchain games must offer more value than regular server-based games if it wants to attract users. But in reality, the opposite is the case. There are many games that simply have cryptocurrency payment features without actually understanding blockchain, while many have creatively added blockchain features to games but do not actually offer a fun playing experience. Many game developers have jumped into blockchain game development after the success of CryptoKitties and various other gambling dapps, but even the most popular ones of these games currently boast a mere 2000 daily active user count.
Blockchain Games remain an experiment until commercial success
Despite its critics, I still believe that blockchain games, with their permanence and scalability, could provide a different dimension to the traditional game. Existing server-based games may be characterized as an ephemeral, restrictively scalable virtual alternative reality. The new blockchain game, however, could become an actual alternative reality.
But as I have stated above, blockchain games still have a long way to go. It will be a long time before we can see commercial results, and one may conclude after a long bout of experiments that blockchain games simply have no commercial value as a concept. But blockchain games, after the advent of CryptoKitties, have been around for less than two years, and I still think it is too early to deliver a judgment on their potential. Entrepreneurs participating in this experiment must think about why they need to make games on blockchain rather than concentrate on short-term profits, and to make creating a truly entertaining game a top priority. They must also find a way to take advantage of blockchain’s strengths while also overcoming its handicaps.
There are efforts to compensate for or hide blockchain features that might be difficult or inconvenient for gamers. For example, Ethereum has introduced Meta Transactions, which allows for new users to conduct transactions without owning ETH, and EOS recently adopted a system that allows dapp developers to pay for resources instead of the users with the EOSIO 1.8 update. As you can see, many infrastructure and dapp developers in blockchain ecosystems are working to improve, and have succeeded in improving the usability of the network. If the blockchain game industry comes to fruition amidst these active trials and efforts, we might see the birth of a company like Unity 3D or Supercell.