As the market heats up, I’m getting a growing number of gaming contacts asking me more questions about this ‘blockchain games’ thing.
So I thought it would be good to attempt to write as simple as possible a post about why I think blockchain is going to be so disruptive for games.
The first is that once they understand the concept, players are going to want to own their in-game assets.
The confusion here is players currently think they do own their in-game assets, so the disruption only starts to happen when games enable - in fact encourage - players to resell the in-game assets they’ve bought.
Of course, developers could do this without using the blockchain. To some degree, Roblox already does.
But in the long term, blockchain is the simplest and most elegant way to handle this.
When players have full control over their in-game assets and have the potential to sell them - whether for more or less money than they originally paid - the amount of value flowing into these first-mover games will be immense.
(Indeed, these marketplaces will - and already are - unlocking global flows of value as millions of players in low value economies start spending their time creating additional value to sell to players in high value economies. At this point I believe games will become a prime mover in a rebalancing of the world economy.)
Point two; Once they understand the concept, developers will want to own their own banks.
There are many aspects of blockchain, but fundamentally, using a blockchain enables developers to create their own currencies and fully control how their in-game economies work.
The confusion here is developers currently think they do create their own currencies and in-game economies. The disruption happens when developers realise the power of having an open value currency that is compatible with real-world fiat currencies, and can be cashed out for such.
The analogy would be a player taking the in-game currency they earn or grind from a game like Clash of Clans or Honor of Kings, and cash it out directly into their bank account.
This is the default option for every true blockchain game.
Now, certainly this appears to be a very scary thing for developers compared to the no-strings-attached monopoly money they currently use.
But for developers who can meet the intellectual rigor required to create a true functioning cryptocurrency for their games, the opportunity is they will create products generating trillion of dollars of life time transaction value.
So, putting these two elements together, players will own in-game assets and be able to trade them for in-game currencies, and cash that out for their local currency, meanwhile developers will be running real-world digital economies, also potentially earning a margin - say 5% - on every transaction that happens using their assets.
Now, it’s important to say that using a blockchain enables this but using a blockchain is not sufficient.
If the past three years have taught us anything it’s that making a successful blockchain game is exponentially more complex than making a successful game.
But this is the trajectory I believe we’re now on.
It won’t be a case of if; the advantages are just too great, both for players and developers.
It’s just a question of when.