Key Challenges to Blockchain Gaming

Hey Blockchain gaming, meet the bear!

Actually, in this case, the bear I’m talking about is one of the most insightful and smartest people in gaming I know: Lars Doucet. Even further, unlike your typical douche bag executive fast talker, Lars is conversely a deep thinking technologist with a really solid understanding of the technology and theory behind blockchain and gaming.

In this deep conversation with Lars, we were able to speak to the key challenges that remain behind blockchain and crypto in gaming.

Just as a summary, I highlight 3 issues below Lars discusses around blockchain in games today:

1. The Degraded Blockchain Problem

One of the most important concepts to take away is Lars’ concept of the Degraded Blockchain:

  • The key promises of blockchain include being: 1. Trustless, 2. Immutable, and 3. Decentralized
  • A blockchain stores a record and it fulfills within the boundaries of the blockchain its key promises
  • However, an application that needs to interface with a blockchain is itself generally not trustless, nor immutable, nor decentralized
  • Hence, whenever a blockchain needs to talk to the outside world the promises of blockchain gets degraded due to the weak link between the application and the blockchain

Link: Degraded Blockchains (Fortress of Doors Blog by Lars)

2. The Problem with Play to Earn

  • If you’re making a true Play to Earn game you need to create real value
  • One of the problems Lars sees in the implementation of Play to Earn models in many games is the focus on building the economy more or less as a Ponzi scheme (to some degree)
  • Value exchanged for earn needs to have productive value like Roblox, therefore, the money in the system just can’t come from other investors, otherwise, the system isn’t sustainable only when the system is growing
  • You can’t have a carnival with 100% carnies and no attendees
  • Many Play to Earn models right now is predicated on more people buying into the system

3. The Problem with Land Sales

  • Digital rent-seeking is a problem
  • Doing sales of fixed land sales is great to make initial money but creates an economic dilemma for the game because the land is scarce
  • If you look at the 30-year history of MMOs every game that has had a land feature has had a digital land crisis
  • It’s because you’re incentivizing to hold scarce productive assets out of use. Economists have written about this for centuries
  • Eve Online had a digital land recession in 2003 right when it launched and they implemented a digital land tax that fixed the problem
  • You don’t want a class of aristocrats that own the land and they have an incentive to hold the productive assets but new people are priced out of those productive assets

Link: Land speculators will kill your game’s growth (Game Developer)

In Summary

  • Lars is excited by a lot of the new experiments occurring with blockchain technology in games today and he feels people shouldn’t get too hung up on delivering on all of the promises (trustless-ness, immutability, & decentralization) of blockchain
  • Lars recommends focusing more on the problems in gaming rather than just trying to apply blockchain to everything

I think the obsession with getting rich and the obsession with deflation and HODLing and immutability are some of the things that limit what we can do with blockchain. I think the velocity of trust is more important than ironclad trust, like the ability for me to change who I trust is a little more important than pretending that no one can ever screw me. I think we need to ultimately grapple with the fact that we’re just trying to align incentives and every time we do something we’re having to trust somebody.

Stay tuned, next week for the bull case on blockchain in gaming and a deep discussion on the future potential!

Also check out the original, full interview with Lars that has a wider ranged discussion on Bitcoin and cryptocurrency: HERE (Super Stonk Bros).

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