Why use blockchain and encryption to make games? Blockchain games cannot attract game developers and gamers around the world. Many see blockchain as a complex solution to a problem they've never encountered, or a technological setback that disrupted their business model. In this article, we delve into the interesting intersection of blockchain and gaming, identify key technical issues, and propose a promising path forward through true decentralization.
At NFT Days Paris this week, I had the pleasure of touching on some of the hot topics surrounding blockchain gaming and sharing my thoughts on why full decentralization is important for gaming. Today, we're going to dig into this question in depth.
If you're a game developer, you're asking yourself why you're making games with blockchain and encryption, especially in a rich industry with plentiful venture capital and no cap on growth.
However, if you still want to pursue this idea, you need to avoid some depressing real-world examples, such as the unfortunate event of Ubisoft announcing its new game NFT platform Quartz in 2021.
There was a flood of negative feedback on YouTube, with critics condemning Ubisoft's move in various ways. Many say that NFTs are dangerous to the planet due to their ridiculously high power consumption (which is actually false). Others pointed out that there aren't many players looking to trade cosmetics, weapons, or other game assets, which Ubisoft just decided is what its users are looking for. Finally, people talked about the high fees of the blockchain, and the actual value of NFTs representing assets inside games, especially what happens when companies go out of business or shut down games.
It is necessary to distinguish signal from noise. This is not an easy task when we enter the crypto industry. The industry is fast-moving, and projects and startups are complex and diverse, ranging from simple scams to groundbreaking innovations in the field of computer science. Game developers willing to embrace blockchain must spend a lot of time educating themselves and drawing their own conclusions. However, education and thinking alone will not bring them closer to success, as blockchain technology also has challenging technical issues, such as poor user experience, expensive transaction fees, and computational limitations.
In any case, as long as we can overcome these technical shortcomings, blockchain and Web3 provide us with disruptive opportunities beyond the current NFT game and game monetization model. It's just superficial.
We will start our discussion with three well-known value propositions of blockchain games. As we will see, they often fail to deliver on their promises precisely because they fail to abide by the fundamental principles of decentralization. In discussing failure, we can learn how these decentralized principles can be repurposed to lay the foundation for a new generation of powerful games on the blockchain.
True In-Game Asset Ownership
The value of genuine game asset ownership is probably the most desired and well known. Before blockchain, players never really owned anything in the game. Assets only exist in the game world and are only assigned to the corresponding player when logging in or playing the game. With NFTs, in-game assets can somehow be transferred to a player’s encrypted wallet, thereby leaving the walled garden of the gaming platform. Owners can then keep, transfer, or sell their NFT files on secondary markets that gaming companies can't touch or censor.
The deeper problem is that even with the "magic" introduced by NFTs, there remains an almost delusional disconnect between what people think they own and what they actually do. The problem is that the in-game assets represented by NFTs are simply reference keys or hashes stored in the blockchain. There is no content or behavior on the blockchain, and the company-owned servers remain the sole controlling entity, representing the reference key and giving it life in the game. The actual NFT value is not found in the blockchain, but only in a server's centralized state or database.
Imagine a player today owning a rare magical statue with a decent market price on OpenSea due to its digital scarcity. What if the game company decides to generate hundreds of these magical statues over several years, thereby reducing the value of the player's original work? Or, what if the game company decides to censor the player and make their NFT game useless? Or , what would happen if the company shut down the portal and server forever?
Only by decentralizing the game logic itself and its state can you develop games that provide real value and ownership to players. Decentralization is fundamental to true ownership, and only then can we tap into the enormous potential value that virtual worlds can capture.
It helps us understand this statement when we think of Bitcoin as the simplest cooperative decentralized game. The rules are very simple: I provide hashing power to secure the network in exchange for a chance to be rewarded with the network's native currency; if I send you X coins, I have YX coins and you have Z+X coins; if X > Y, My transaction is restored; if you try to steal my money, your signature will be rejected by the network.
Bitcoin's market capitalization is just over $1 trillion because of the complete removal of central regulators. If Google, the US government, or any government took control of Bitcoin, the world would never consider it a truly neutral, censorship-resistant, and flawless store of value.
Comparing Bitcoin is taken with a grain of salt. Bitcoin was not created for entertainment, but it gives us good food for thought about how decentralization will bring enormous value to games, virtual worlds, and truly collectively owned metaworlds.
Truly sustainable, inclusive and reliable game economy
The value proposition of a truly sustainable, inclusive and reliable in-game economy is another exciting one. After all, monopoly concentrates too much economic power. The old model of Web2 was to maximize company profits at the expense of users, whether they spent money or attention. Starting from a more benevolent incentive principle, innovators create platforms designed to empower people and distribute decision-making power and wealth.
Game publishers rack up billions of dollars for themselves every year. If we're going to rethink old business models from a Web3 perspective, we should start by giving up most of the financial advantage and keeping it in the game and its community.
The idea might sound counterintuitive, but if you think about this new field. You can create all kinds of games and virtual worlds where real economic systems can flourish. Some players play just for fun; other players and artists will make ends meet by contributing their skills, attention, and time.
"Play for money" games allow virtual worlds to run real economies with land, artifacts, and services. As a developer, even if you give up 90% of the revenue, your portion is enough to get you a decent revenue stream. While also creating new opportunities for thousands of people to have fun and earn real money.
An easily overlooked problem here is that in most so-called blockchain games, game companies still have a monopoly on the source code and state of the game. As such, they have the unilateral power to change the rules of the economy at any time.
However, it is not enough to program the physics and economics of virtual worlds using the traditional centralized Web2 paradigm. When we think about sustainable virtual worlds that include economic systems, we don't want a single corporation like Meta to have absolute power. In the long run, it's simply not in most people's interest.
real collective building
A value proposition that is truly collectively built. Gaming DAOs (Decentralized Autonomous Organizations) are already a reality: gaming guilds, incubators, accelerators, and development communities have attracted thousands of participants and raised millions.
Decentralized development is probably the most ambitious and forward-looking application of DAOs in the game. For many industry veterans, however, the sheer thought of opening up development decisions to the community can be creepy. Aside from the worry that people don't know the best route to success for a game, allowing anonymous developers to get involved in coding carries serious risks. Upgrading decentralized applications that hold real money is an important security issue that requires a rigorous approach and thorough software auditing.
However, we can already see concrete examples of such DAOs, such as AavegotchiDAO, Dope Wars, and Star Atlas. The idea of having the community participate in the product roadmap and allowing community developers to own the code base through an open source license is consistent with the game and the economy, which will belong to a collective beyond the original creators and project founders.
decentralized future
Decentralization of code through open-source licensing, and decentralization of nations through smart contracts, are core principles upon which Web3 creatures like Bitcoin and DeFi products thrive. Only by applying the same principles to games can we realize the value proposition discussed above.
Through decentralization of code and state, we can build fundamental pillars for true community ownership. First, with open-source licensing, community developers own the codebase and its evolution; second, permissionless node runners own the game state through decentralized storage and processing. With the decentralization of state, players can finally truly own their own in-game assets through nft. At the same time, we can also create a sustainable in-game economy free from monopoly tyranny.
We cover all previously articulated value propositions of collective building, an inclusive economy, and true ownership.
Imagine that in a virtual world, strategy game or rpg, you are no longer a game studio with magical powers, but embrace the sharing of code, database and economy. You encourage your community to gradually control the code and game state while retaining most of the financial advantage for all parties involved (including yourself) in a win-win economic environment. As the founder and architect of such a world, you will keep a fair share of the tokens, nfts, or revenues from the systems you seed.
There are already some pioneering teams designing and implementing decentralized games. Today, we can see games like Dark Forest, Nine Chronicles, and Soccer Manager Elite. But we've also seen some centralized revenue-generating games and NFT games on an unprecedented scale that don't pass real ownership to people.
A common explanation is that players don't care about decentralization, an argument that may not develop with age. An early lack of interest in disruptive innovation is not a reliable basis for future predictions. You know, only a handful of geeks (no investors) were interested in Bitcoin in 2009, and back in 1997 when Nokia first implanted Snake on mobile phones, gamers were completely satisfied with PCs and game consoles.
Audiences and needs will naturally emerge from meaningful new business models and platforms. In our case, decentralization is a basic need, not a luxury, when we consider games that truly belong to the players and the community. However, the current game is only scratching the surface of blockchain’s potential, and it’s a matter of time before the industry becomes more focused on absolute distributed ownership.
The real reason for the poor decentralization in current blockchain or NFT games is that 13 years after Bitcoin, it is still technically difficult for people to decentralize game logic. Unless you want to create minimalist games, that is, games no more complicated than Tac-Toe or CryptoKitties, that's what 2022 will look like.
While Ethereum proposes a decentralized world computer and other blockchain projects attempt to deliver a more scalable system (which necessarily compromises security or decentralization), the reality remains that existing smart contracts Platforms were not designed to handle the computational loads of our daily lives. They only provide good enough computing resources for simple DeFi protocols or uncomplicated DAOs.
If you want to develop a truly decentralized game, implementing backend logic with simple Solidity smart contract programming will be difficult. Aside from these undeniable inconveniences, if you implement an indie tower defense game, no one will be able to play it. A simple gameplay would result in billions of EVM machine steps, lots of blocks, and a hefty price that no one wants to pay.
Smart contracts are not well suited for the complexity and computational demands of decentralized games. This is why blockchain games are not yet decentralized. A fundamental missing element is the infrastructure to provide decentralized servers supporting the software stack used by game developers. When such servers maintain the strong security guarantees of an underlying public chain like Ethereum, we can finally have non-trivial decentralized games as reliable as Uniswap.
Below is the actual contribution to this problem by myself and my colleagues at Cartesi. A blockchain operating system is such a decentralized server. In 2020, we designed and implemented a fully decentralized tower defense game "Crawl" to prove how to run its game logic completely off-chain while maintaining the strong security guarantees of Ethereum. Another unique achievement is that no game logic is implemented in Solidity. Instead, we use TypeScript and mainstream software libraries. Cartesi has grown a lot since then and we have expanded on these efforts to develop a fully decentralized poker game in c++ and Psycho Poker. Cartesi's technology is now finally entering production.
Finish
The main goal of this article is to present an example of a truly decentralized game. We discussed three important value propositions for games adopting encryption and blockchain technology. They basically point to the reality that the game becomes a collective structure and is owned by the community.
If blockchain games fail to realize these three basic propositions, they will not be able to tap the revolutionary potential of Web3 for games, virtual worlds, and metaworlds. An obvious consequence of this failure is that the value of in-game assets is not as high as current non-functional game developers would have us believe.
Contrary to popular belief, the cause of these shortcomings is not a lack of opportunity or interest in true decentralization, but rather the fact that game developers do not yet have the right technology and infrastructure in place. While smart contracts are good enough for simple DeFi and trivial games, they are not what game developers need when it comes to decentralizing general game logic. Instead, they will need decentralized servers that support mainstream software stacks and retain the security guarantees of a strong public blockchain. This is the only way they can achieve decentralization of the state and thus a reliable, sustainable and transparent in-game economy. This is also the necessary basis for realizing the ownership of assets in the game through NFT.
Finally, I briefly introduce the basic components that the Cartesi team is developing to change the limitations of the current Web3 infrastructure.
It would be great to hear your thoughts on this discussion (you can find me on Twitter or LinkedIn). Maybe you also want to know more about Cartesi's research and development. Join our Discord community and collaborate with our tech team! Love to hear from you.
About Cartesi
Blockchain OS is a decentralized layer 2 infrastructure supporting Linux and mainstream programming software components. Enabling developers to write scalable smart contracts for the first time on Blockchain OS using a rich set of traditional software tools, libraries and services they are accustomed to, Cartesi bridges the gap between mainstream software and blockchain.
Cartesi is leading millions of new startups and their developers onboarding and using the blockchain operating system while incorporating Linux applications. With groundbreaking Virtual Machines, Rollups and Sidechains, Cartesi paves the way for all developers to enter the blockchain world and build the next generation of blockchain applications.
Cartesi sincerely invites everyone to come to the world of blockchain operating system with us and explore the future together.
