How Blockchain Can Solve Problems in Exchanging Virtual Goods
There are a number of major problems in the market for virtual goods that need to be solved. With centralized virtual goods exchanges, it’s extremely expensive to set up a virtual asset exchange, requiring millions of dollars in software capital expenditure, so most parties never have the opportunity to set one up. Second, there is no “safety net” for virtual goods transactions on a centralized exchange, and it is the duty of a third party intermediary to ensure that fraud does not occur in transactions. Additionally, there is a “store of value” problem in virtual goods markets, in the sense that when a gamer purchases a virtual good, the virtual good is often trapped within a game itself, unable to be immediately and seamlessly exchanged for real money.
WAX (short for Worldwide Asset eXchange™) is a decentralized platform that will augment trust in the virtual goods market, is solving these problems. WAX will allow all virtual item market participants to exchange goods, settle transactions, and efficiently administer fees. In economic substance, WAX enables virtual asset owners to create their own asset exchanges with the use of a simple widget that allows all virtual asset owners to securely exchange virtual assets without ever leaving their gaming screen, facilitating the most efficient virtual goods market experience ever put online.
All of this is made possible via WAX’s distributed ledger and smart contract technology, and without the blockchain, these problems would be “unsolvable.” However, WAX is pioneering the application of blockchain technology to the virtual goods space, and millions of virtual goods traders, collectors, and speculators will see their goods have additional security and value as a direct result of WAX’s blockchain.
WAX Drastically Lowers the Cost in Setting Up a Virtual Asset Exchange…to Zero
The technology underlying centralized virtual goods markets costs millions of dollars to develop, and this inserts a massive barrier to entry in the virtual asset exchange space. Unable to set up their own market, users are forced to list their gaming skins on a centralized exchange, and transaction costs such as hefty payment processing fees or commission fees for the centralized platform cut into the value of the virtual asset being sold. With the use of a simple widget that any gamer or virtual asset owner can seamlessly share with other gamers, they can, in economic substance, make their own virtual asset exchange, enabling virtual asset transactions without the frictions involved in centralized exchanges.
With centralized exchanges, a seller must send their asset to the centralized exchange, which then sends it to the purchaser, purchaser sends money to centralized exchange, and then centralized exchange sends money to seller, so a centralized intermediary and a third party payment processor have always been necessary in virtual goods market making. With WAX, this “consignment model” for virtual goods is being made obsolete, and virtual good owners will be able to own their own virtual asset exchange that does not require an intermediary or a payment processor, giving users heightened agency over their goods transactions with drastically cheaper payment processing, while also heightening the level of certainty that they will receive goods for a specified amount of cryptocurrency they specify with their counterparty. For this reason, WAX will transform the virtual good market for the better.
WAX Creates a “Safety Net” for Virtual Asset Transactions
With centralized virtual goods exchanges that lack a smart contract ledger, there are no built-in fraud prevention tools that act as a safety net for ensuring that transactions run smoothly. However, with a decentralized platform like WAX, virtual asset transactions are all logged onto an encrypted public ledger, creating a solid, immutable record of everything that has been transacted. Thus, the incidence of fraud will be significantly lower on WAX than on traditional centralized exchanges that require a third party intermediary to ensure that the virtual assets were delivered, that money was exchanged properly in return for the virtual goods, and that both parties fulfilled their side of the bargain.
Smart contracts have the power to enable trust in online transactions in an unprecedented fashion, and WAX, as a platform, will transform the virtual goods market into a safer market. Distributed ledger technology has the power to provide a “safety net” for all transactions that require the exchange of money for goods that can be electronically delivered. In WAX’s case, money being the WAX Token, and the good might be something like a gaming skin. This will transform the online market for gaming skins and other virtual video game assets and facilitate a new wave of transactional volume, since users will finally know that they can put trust in these transactions and know that they will not be taken advantage of.
WAX Solves the “Store of Value” Problem for Virtual Goods
With centralized exchanges, there is a “store of value” problem for virtual goods, given how long virtual goods transactions take with the use of intermediaries and clunky, antiquated payment processors. It’s a real problem…since these issues result in price frictions that reduce confidence in the value of virtual goods. In this sense, centralized virtual goods marketplaces reduce the total value of all virtual goods, because of the uncertainty involved in the value of assets, stemming from economic frictions like transaction costs.
With the use of blockchain, WAX Token allows all virtual goods to be “tokenized” and exchanged for cryptocurrency with great ease. It’s as simple as using WAX’s widget. No intermediaries, no payment processors, just a buyer and a seller transacting, with the smart contract underlying the transaction acting as the tool that ensures trust between the two transactors. And the best part? WAX Token itself is traded, so there could be potential upside for early adopters of the WAX Token platform who sell their virtual goods for Wax Tokens.
Blockchain has the power to vastly improve the virtual goods space, and WAX is the early mover with a team with the best domain expertise in the space. WAX was founded by the team behind OPSkins, the world’s most popular digital item trading market, with both technical and operational expertise. Gamers will adopt WAX as their blockchain tech of choice since WAX platform and WAX tokens assuage the most irksome pain points, including the conversion of fiat currency into gaming skins and issues surrounding the discovery of the best assets for the best prices.
And beyond this, it’s likely that more users will want to trade virtual assets once WAX’s blockchain has become ubiquitous in the virtual goods space, since they’ll be able to transact securely without the use of an intermediary or payment processor. WAX is transforming the gaming space, and millions of gamers globally will benefit as a result.