Distributed ledgers, in the form of blockchain technology, are jostling their way into financial markets, healthcare systems and the global supply chain, but perhaps the most significant disruption has yet to come. In recent months, nonfungible tokens (NFTs) have taken the spotlight as a stamp of legitimacy for digital goods, ranging from art to worn-out internet fads. However, the gaming industry is uniquely suited for the integration of NFTs, something already recognized by several notable entities in the gaming industry, particularly Sony, Ubisoft, GameStop and even Sega.
If you find this hard to conceive, the analogy of the livable arcade depicted in Ready Player One presents a functional way of elucidating what shape a blockchain-based gaming industry could take. The film, based on the Ernest Cline novel of the same name and directed by Steven Spielberg, tells the story of a teenager on a quest to find the keys to a hidden fortune within the virtual world of the OASIS — the Ontologically Anthropocentric Sensory Immersive Simulation. Interestingly, the connection to blockchain technology was made even prior to the film’s release.
Without it being majorly obvious at first glance, blockchain technology, beyond NFTs, could certainly provide the operational base layer for the vast majority of the weird and wonderful concepts portrayed in the film. From the Pizza Hut delivery drones (see this academic report) to facial recognition technology, you’ll find that these types of technologies are no longer reserved for the big screen — they’re already making their way into the real world.
Let’s start with the basics
Having to pay only $0.25 to boot up the game, everyone enters the OASIS at the same level. Pretty much everything else incurs additional in-game fees — a relatively common concept in gaming. In this way, currency in the OASIS is used as fuel for the network, much like the SAND token in The Sandbox, which exists on the Ethereum blockchain. Similar to the OASIS, albeit on a much more rudimentary level, this allows players to purchase in-game services, trade and vote on decisions that affect the gaming network.
Beyond this, players use familiar gaming tools to navigate through the realm of the OASIS, such as a heads-up display (HUD) and a user interface (UI) inventory. Of course, these concepts exist in blockchain-based games too, in titles such as Neon District (a role playing game) and Dissolution (a first-person shooter). Unlike traditional gaming networks, these games have been developed with blockchain technology, which allows players to truly own their acquired assets. Further development will see future gamers offloading excess in-game items to reclaim real-world value.
Traditional gaming, as it stands today, is not conducive to how the OASIS operates. Value is largely siloed to the respective game as it exists on the particular platform. In this way, an individual playing Call of Duty would not be able to exchange value with another playing FIFA or Fortnite. More significantly, interoperability doesn’t exist between the gaming networks of the likes of Microsoft and Sony, further isolating the enormous potential exchange of value between these worlds.
On the contrary, blockchain-enabled gaming grants players the ability to bring their assets to decentralized exchanges and conduct value swaps much like those seen on automated market makers like SushiSwap and Uniswap. These platforms operate a little differently from centralized crypto exchanges such as Binance or Coinbase in that there is no central authority approving the transactions. Instead, the authority of funds and trades is distributed among users, thus removing any single point of failure.
While there certainly are a few extra steps when compared with the seamless transactional flow visible in the OASIS, this infrastructure allows players to interchange value between games and, indeed, gaming networks. It also allows players to truly own their in-game collectibles, setting up a future where previously intangible digital assets can become legitimate commodities.
Building tokenized economies
The amount of time and money spent on gaming, particularly during the 2020 COVID-19 lockdowns, is staggering. The gaming ecosystem is projected to exceed $300 billion in valuation by 2026, outshining other major entertainment industries such as film and music. Moreover, the global tokenization market is expected to reach $4 billion by 2027. Many avid gamers yearn for the chance to earn a slice from this pie, although that is a privilege reserved for “elite” gamers.
Similarly, in Ready Player One, players champ at the bit in the OASIS, using methods to earn a living not unlike those used by gamers in our universe. Envisioning the intersection of the remote working (gig) economy and gaming industry, a digital economy running on a blockchain network seems like a natural progression. A crypto-powered gig economy has obvious advantages, and gaming industry ideals overlap with the primary features of blockchain technology, with a significant number of crypto entrepreneurs capitalizing on the esports market.
More significantly, marketplaces selling crypto game NFTs experienced explosive growth during 2020, and even more so during 2021. In fact, NFT sales topped $2 billion in the first quarter, excluding sales associated with NBA Top Shot, which recently exceeded 1 million users.
In the broader economy of the OASIS, players are incentivised to level up by competing for “artifacts” — rare, powerful items that are typically obtained by completing challenges. Aligning perfectly with the way NFTs are already working, like in the Gala Games world of Mirandus, NFTs grant players competitive advantages and are indisputably owned by the players that acquired them. On a similar note, the virtual fashion revolution has already begun in gaming, and we may see a metaverse populated with luxury fashion brands sooner than you think.
Like any conventional role playing game, within the OASIS there are non-playable characters (NPCs) who populate the environment and with whom players can interact. Naturally, such an immersive virtual experience would require a for-now inconceivably high level of responsiveness and adaptability built into its fabric. You might know where this is headed: the world of artificial intelligence, or AI.
Another concept that pops up in Ready Player One is the Halliday Journals, which is a library of all the memories of the creator of the OASIS. It is used by players to find clues to the keys and is described as being rendered through CCTV footage and written diary entries. On that point, I couldn’t help but think of Neuralink and its proximity to the gaming industry. A project developed by Elon Musk, Neuralink is a neural implant that will allow users to control their computer or smart device.
Perhaps in the future, we may see a gamified brain-machine interface secured with and operating on blockchain technology to deliver an immersive experience such as the OASIS. Can you imagine such an experience integrated with Todd Morley’s “blockchain tower,” replicating the Halliday Journals, where memories are stored and represented by NFTs in a completely interactive environment?
A decentralized utopia
Ultimately, Ready Player One presents a cautionary tale, inspiring viewers to remain tethered to the real world. In the same vein, we must remain grounded in our ambitions for blockchain technologies. This paradisial vision of crypto-based gaming still has some maturing to do before it leaves its indelible mark on mainstream gaming networks.
With that said, blockchain-based games are steadily gaining momentum, and the features of blockchain gaming have the potential to enhance traditional gaming business models — the most familiar being free-to-play with in-game cosmetic purchases (Fortnite), physical copies or digital downloads with added content purchases (Xbox, Playstation or Nintendo games), and freemium games (Eve Online or World of Warcraft).
The value of these games and their respective networks usually accumulate in the pockets of gaming publishers, with players often having little pull in gaming networks where they generate astronomical value. This model is not aging well and is proving unreasonable for games that have network effects. A particularly recent example is that of the backlash against Call Of Duty: Warzone for facilitating a pay-to-win advantage.
Blockchain-based games have chosen to differentiate themselves on two major qualities: the first being digital ownership — permitting players true, immutable possession of their in-game assets — and the second being a free market, within which players can exchange their accrued value among themselves. With the sheer amount of funding flooding into the blockchain gaming space, the combination of digital ownership and free-market participation could result in the gaming industry becoming the industry most thoroughly enhanced by blockchain technology.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Eric Kapfhammer is the chief operating officer of Polyient Capital, where he oversees strategies and network investments and specializes in legitimizing the role of NFTs in global digital economies. Eric is also the founder of LogosBlock. Prior to launching LogosBlock, he led a data science team at Microsoft focused on applying statistical and machine learning methods to computer and network security. Eric is a member of the board of directors of Ibis Security, a blockchain-focused payments and security firm. He earned a BA in business and international relations from the University of Puget Sound and an MSc in finance from Seattle University.