A revolution is coming – one which may change the nature of videogames and the way we play them. It may even change our lives forever
The blockchain is boring. Yes, it’s the tech industry’s latest obsession, a buzzword whose mere mention will send investors the globe over scurrying for their wallets. (A struggling drinks company saw its stock price almost triple after it changed its name from Long Island Iced Tea to Long Blockchain). But it’s ultimately about databases on the internet, a deeply technical infrastructure which only engineers truly understand. Those that do get it will tell you that it’s incredibly powerful. The blockchain is a complete revision of how databases work – and, since databases drive almost everything, it has the promise of changing how the world works in many ways.
The result is that blockchain is both difficult to understand, and feels a little dangerous. It’s behind the rise of cryptocurrencies such as Bitcoin and Ethereum, which have risen in value so suddenly that their bubbles look as if they’ll pop any day. It’s behind the currently stratospheric prices of GPUs, as blockchain miners have rushed to cash in, building rigs with multiple graphics cards to extract money from the gold rush, consuming entire countriesworth of electricity as they go. It’s behind fundraising campaigns which at best award investors with valueless currencies on the promise they will be worth something in the future if enough people believe in them, and at worst disappear with all their cash.
To outsiders, then, blockchain is a world in which nothing seems real, a Wild West of regulation-busting prospecting for fortunes by speculators, chancers and fraudsters. But to insiders, blockchain is so much more. It’s a catalyst for a revolution, the bringer of a new world.
And now it’s beginning to sweep videogames up with it.
“Blockchain is going to be transformative to the game industry,” says David Lau-Kee, an investor at London Venture Partners, a VC firm which has previously backed the likes of Supercell, NaturalMotion and Unity. “I’m extremely bullish on what it can bring to the game sector as a whole.” Lau-Kee has watched the rate at which blockchain-based business pitches come to him speed up from a trickle two years ago to a torrent today. He’s had nearly 30 over the past couple of months, and while he can immediately dismiss most of them for being bad business ideas or simply scams, he feels that many have specific identifiable and measurable benefits to both players and the industry in general.
But there are already many block chainpowered start ups already running. Unikrn, which has high-profile backing from Hollywood actor Ashton Kutcher and celebrity investor Mark Cuban, offers its users the chance to bet on professional games of Counter-Strike: Global Offensive, League Of Legends, Dota 2 and Rocket League. Firstblood is another betting platform which allows any player to enter tournaments in the hope of winning real prizes. Playkey uses blockchain to manage
peer-to-peer game streaming while also building a network of blockchain miners on gaming PCs. Many startups are founding new cryptocurrencies to raise funds, creating value out of pure business ideas. Jon ‘Neverdie’ Jacobs, the Entropia Universe player who sold a virtual asteroid for $635,000 in 2010, has integrated the Neverdie Coin into the Entropia
Universe so it can be earned and traded. “The blockchain’s advantages are unlimited. Like the internet in the early days, we see unlimited potential,” Brian Fargo tells us. Previously founder of developer/publishers Interplay and inXile, Fargo is now throwing his weight behind Robot Cache, a digital-game marketplace based on the blockchain. “We are only scratching the surface with Robot Cache. I love technology and finding ways to connect the dots to create something new, and the blockchain reminded me of the feelings I had when I first became knowledgeable of the Internet.”
For Hilmar Pétursson, CEO of Eve Online maker CCP, the blockchain is entirely complementary to the values that Eve is built upon: empowering players, and building a universe that’s defined by their actions. “I believe an economy built on the blockchain is a more valuable economy than one implemented on a proprietary database, and it also opens up the idea that people can truly own their assets,” he says. For Pétursson, the blockchain could bring about a revolution in the relationship players have with in-game items and assets, breaking down the boundary between the nature of physical and digital objects.
THE FLEXIBILITY THAT BLOCKCHAIN AFFORDS IS ENABLED BY THE FACT THAT IT’S TRANSPARENT
In January 2018, in Lyon, France, a young company named B2Expand moved into a new office to accommodate its rapidly growing staff. It had released its first game, Beyond The Void, in Steam Early Access the previous September. A one-on-one RTS set in space, Beyond The Void incorporates an economy and player account system that’s run on an Ethereum-based blockchain. Two years ago, however, the whole company was just a one-man indie project made by concept artist Maxence Burgel. But then his brother, Eric, heard about a new game built on the Bitcoin blockchain, Spells Of Genesis. This mobile trading-card game, developed by Switzerlandbased EverdreamSoft, uses a blockchain to manage its trading economy. If you own a card in the game, you own it, rather than EverdreamSoft. You’re free to trade it for other cards and for real money, completely outside EverdreamSoft’s control.
Excited by the concept, Eric encouraged Maxence to incorporate the blockchain into his game, and needing someone to develop an Ethereum-based blockchain infrastructure, they brought in Eric’s son, Rémi. “It was a really new idea, a new concept that we really liked,” says Manon Burgel, Eric’s daughter and sister to Rémi, who joined to work on
marketing and communications. Their concept was to make a series of different games, all to be built with the blockchain providing the backbone for their economies, with Beyond The Void being the first.
As in Spells Of Genesis, B2Expand’s blockchain stores players’ inventories, such as avatars and ship skins, whether earned through play or bought from B2Expand’s official shop using its own cryptocurrency, Nexium. “We can offer players true ownership of what they’re buying,” Manon says. “It’s not controlled by us. They can trade it back and forth without commission and they have complete control.” That’s true whether players use B2Expand’s storefront, or if they’ve been enterprising enough to build their own store to interface with B2Expand’s blockchain. And since Nexium can be converted into other currencies, these items have real monetary value.
The flexibility that blockchain affords is enabled by the fact that it’s transparent, which is to say that it allows everyone to see transactions made on it. This means
B2Expand’s item market can be read by other games. Internally, this means that owning a specific ship skin in Beyond The Void can be reflected in any of B2Expand’s future games. But it can also appear in completely separate titles made by other companies. Not the actual skin, mind you; that’s still subject to the fact that B2Expand owns its IP. But if Spells Of Genesis detects that a player has in their wallet a crystal ship skin from Beyond The Void, it unlocks a corresponding crystal-based card. This interplay doesn’t require a deal between the two developers, or any special functionality, other than the ability to read the blockchain.
This concept of real ownership and transparency is extremely powerful. Through it, in-game items become transportable, lending them a permanence that transcends the game in which they originated. Imagine if the skins, emotes, items and achievements that you’ve earned or bought in Overwatch and World Of
Warcraft could have applications beyond Battlenet. Blizzard has given limited access to these inventories, but if it closes a game or goes out of business, no player can guarantee they can hold on to them. “Owning, in an undisputed way, an item on a blockchain – this has never been done before,” CCP’s Pétursson says. “It’s never been possible to ascribe ownership in such a strong way before, not even with physical ownership.”
It has a formative name, ‘cryptoproperty’. The term was coined by game developer Alex Amsel, whose company, Ownage, aims to provide an open marketplace for in-game items. He defines cryptoproperty as “Digital property in which cryptographic techniques are used to control issuance, ownership and transfer, independent of any centralised registry.” Ownage is designed to plug into common platforms and engines such as Unity and Unreal, and to give developers a place where they can monetise their in-game assets and take advantage of cross-game marketing – all without any cost, because Ownage makes its money from transaction fees.
“This is what I think will be transformative for games,” Lau-Kee says. “It’s ownership of in-game digital assets, giving them tangibility – and therefore real-world value and provenance. It’s hugely interesting. Game publishers worry about what happens with their assets being traded, but it happens anyway, right? But in a way that’s outside the game.” Trading knives from Counter-Strike:
Global Offensive is big business, especially considering the game’s niche status and the limited access Valve gives its users to buy and sell digital goods and to convert them into real money.
It’s difficult to know when to stop when projecting where cryptoproperty can take games. One place is the Metaverse, the idea of a shared and persistent virtual space which functions as a fully alternative world with a
viable economy of its own. “If you read [Neal Stephenson’s sci-fi bestseller] Snow Crash, what kind of tools would you use to implement that? It screams at you that you’d use a blockchain,” says Pétursson. “It’s hard to imagine fitting current staple game genres to it, which have evolved around current limitations of modern-day technology and culture. I can envisage a world a few decades from now where no one would want to work in a game economy to accumulate game assets that don’t really belong to you. In a way you’re playing a game not only for your own enjoyment and to escape reality, but you’re also feeding your family, because the assets of the virtual world are no different to those of today’s economy.”
Contemplating what this would mean for our relationship with games is dizzying. Would we still play, or would play become work? What is a game if its gameplay is entirely commoditised? Will we look back to the first 40-odd years of videogames as an age of innocence? Or would this transformation be empowering? Might it make everything games have achieved so far seem trifling? Will playing to make a living be a solution for automation eliminating swathes of the job market? However things develop, it’s important to remember that this notion isn’t entirely unprecedented, having already started to be sketched out by gold farming in World Of
Warcraft, real-estate trading in Second Life, the depth and dynamism of Eve’s economy, and Valve’s exploratory forays into free-market economics on Steam.
Brian Fargo’s vision for Robot Cache is perhaps more grounded, but in looking beyond items and at the market for games themselves, it could also be transformational. Its decentralised game-distribution platform will sell games that can later be resold. Pricing is set by the publisher; a resold game has the same price as a ‘new’ one. For new sales, the publisher gets 95 per cent of a sale, much higher than the 70 per
WILL WE LOOK BACK TO THE FIRST 40-ODD YEARS OF VIDEOGAMES AS AN AGE OF INNOCENCE?
cent they get with platforms such as Steam or the App Store. For resold games, the publisher gets 70 per cent and the seller gets 25 per cent. Whether new or resold, Robot Cache takes just five per cent of a sale, because, as CEO Lee Jacobsen says, “First, it doesn’t take a 30 per cent cut to operate a digital delivery platform; and second, we are getting a benefit from using a decentralised and distributed backbone like the blockchain. This relieves us from the burden of extra infrastructure, which centralised systems require.”
This business simply isn’t possible without blockchain. “The reason we can allow the reselling of games is because we can get the unbiased truth as to who the real owner is,” Fargo says. Because the blockchain tracks ownership of any given item, it can’t be sold to two people, despite being digital and therefore inherently copyable. This means the market is limited to a finite stock of games, and so an economy can be established. “We’re letting the genie out of the bottle for the resale of digital games,” Fargo continues. “I absolutely believe this is a win-win for gamer and developer. The knowledge of knowing one can resell, the social dynamics of gamers striking bargains to sell each other games and the ability to get money that never existed before, will all serve to create a bigger ecosystem for games.”
There are questions yet to be answered, however. If the company goes out of business, users’ games will still function because their provenance is stored on the open blockchain, but Robot Cache hasn’t yet figured out if they’d still be able to sell them on. And sellers are paid in Iron, Robot Cache’s cryptocurrency. Though the plan is that it can be exchanged for ‘various currencies’, its value will fluctuate; indeed, Robot Cache is expecting that money from resold games will stay within the Robot Cache economy, used to buy new ones.
Moreover, it’s extremely early days. Robot Cache was only announced in January as part of a push for funding, and no publisher partnerships have been disclosed. Traditionally, publishers haven’t liked second-hand game sales, and there’s little reason why they’d prefer the 70 per cent cut of a sold-on game sale to 95 per cent of a new one. But for Fargo, it’s all about market dynamics: the difference in revenue won’t add up to much unless there’s a thriving economy, and if the economy is thriving, everyone wins. “We believe that allowing gamers to resell their games will be a driving force for them to want to purchase games on Robot Cache, and almost every publisher and developer we’ve spoken to agrees. It’s compelling for them in that they will get 95 per cent from the bulk of those early sales, and the worst case is that they get the same 70 per cent today.”
It’s hard to say what established game publishers make of cryptoproperty. There certainly seems to be a disparity in the way blockchain converts look at the concept of cryptoproperty and how large and established companies might. “Right now as an indie game company, we like the idea of giving back control of digital assets to players,” Manon Burgel says. “Players are already trading knives and weapons on the black market, because they like the possibility of trading what they’ve earned in a game. Big companies try to discourage that, but as a small indie company we want to bring it back to players. When we were kids we had physical cards that we could give or exchange with a friend, and nobody had any say in it. But it’s not possible in games, because you only buy the right to use items and you never see your money back.”
“It’s really interesting to see if blockchain can bring convergence between digital and physical ownership,” says Jas Purewal of Purewal & Partners, a legal firm specialising in digital entertainment. “But I don’t see that it necessarily answers business, legal and policy factors which are at play. There has been, for a long time, an unanswered legal-policy debate about ownership of digital goods – whether it’s possible to own them, and in what capacity. In the past, it often broke down because we couldn’t be clear about what we meant by digital ownership. Does it mean you can deprive someone else of ownership? Does it mean you can take it into other games? Can you destroy it permanently? These are all possible with a physical item. Maybe, from a technical perspective, blockchain narrows the distinction between digital and physical goods, but it doesn’t fundamentally answer what should be possible to do with digital items. And even if you can answer all those questions, what business need does it address?”
For Purewal, there isn’t necessarily a demand in the industry for ownership. From Supercell to King, Blizzard to Valve, publishers and developers have established fortunes and huge player bases on the basis of the existing understanding of digital ownership. Why would they want to cede control? For the average Candy Crush or Overwatch player, do they want ownership, or do they simply want to play the game?
Still, in November, Ubisoft’s incubator division, Station F, specifically called for entrepreneurs and startups to pitch it with ideas for blockchain businesses. Successful candidates would receive mentorship and office space to develop their ideas, and B2Expand were part of a previous round. Station F declined to explain to us what it’s looking for and why, because the project is too early in development, but it’s indicative of a general awareness among the biggest companies of the potential for blockchain in videogames.
And it poses a vital question: what will happen to the earliest adopters if and when the likes of Google, Microsoft, Sony, Ubisoft, Electronic Arts or Valve jump into this new space? “The risk is that big companies can easily crush small startups,” Burgel concedes. But she argues that these companies are limited by their size. At the scale at which they operate, they have to make services and products that are perfect from their first launch. Startups can be nimble and develop more organically. And besides, working with
“I THINK BITCOIN WILL BE ADAPTED AND SYSTEMS WILL ACCOMMODATE IT”
something as new as blockchain is very difficult. B2Expand’s marketplace took five iterations and a year of development before it was ready to launch, and through it all, the studio had to muddle through, since its core technology, Ethereum, had little documentation and was continually evolving.
Still, if blockchain does prove to be as transformative as so many believe it will, large companies will be compelled to join in. ”If Google or Apple steps in and says it will help provide some part of blockchain infrastructure, then that would give blockchain a level of credence and credibility which would expand its overall value,” says Lau-Kee. “But there will always be purists who would say that would lose one of the central benefits of blockchain. Both perspectives hold some truth.” Ultimately, though, he doesn’t see it bringing about the establishment of a new world order. “I think Bitcoin will be adopted and systems will accommodate it, rather than be replaced by it. New giants will emerge, but the existing giants entrenched in the current ways of doing things will adopt these new ways of thinking.”
Indeed, Pétursson can see the blockchain becoming an indelible part of commerce and culture in general, whether or not it brings about the Metaverse. “It will take decades for people to truly understand, but I believe that owning digital things in a proprietary company database will be frowned upon because it’s not true ownership.”
However things develop in the future, for now, blockchain is a world of startups, dreams and new philosophies. Nothing is certain, and value is in the eye of the beholder. All we can know at present is that the market, in all its shifting complexities, will decide.
Jas Purewal, founder, Purewal & Partners
Brian Fargo, co-founder, Robot Cache
Manon Burgel, head of communications and marketing, B2Expand
Hilmar Pétursson CEO, CCP
David Lau-Kee, general partner, London Venture Partners