If Blockchain Can’t Serve Gamers, It is Truly Useless

Estimates indicate that by the end of 2021, 2.7 billion people will be regular players of video games. Stated another way, in the near future, gamers will make up more than one-third of humanity.

When it comes to ripeness for blockchain technology, gamers are almost comically well-suited. They’re already accustomed to in-game currencies, for starters, having an implicit understanding that digital tokens/credits are useful for buying and selling things online.

Additionally, they spend large swaths of time creating real economic value during gameplay — that is, a value that other players are willing to pay real money for, like purchase-able custom characters, weapons, and territories.

And gamers are also the most hurt in the event of corporate or technical disruptions of a given game, standing to lose potentially years’ worth of their in-game earnings that can’t travel with them outside the game (imagine moving to Paris but being unable to trade in any of your existing money for euros?)

These unique characteristics mean that one-third of the world’s population is already primed for blockchain, a technology that (at least allegedly) can track, verify, store, and make globally transferable any and all in-game assets — complete with an instant settlement, and for a fraction of a penny.

An Embarrassing Track Record

The gaming industry has not ignored blockchain. In fact, some of their biggest players have already adopted the technology, going out on a limb before their peers. And they got burned.

First, there was Steam, an ultra-popular online distributor of over 34,000 games with 95 million active monthly users. In April 2016, Steam added blockchain payments (via Bitcoin) to its suite of accepted payment options, but then in December 2017, that option was abruptly removed.

Then there was Twitch, a livestream service where 15 million daily users broadcast themselves while gaming. Twitch was accepting blockchain payments via both Bitcoin and Bitcoin Cash until early 2019, when they, too, abruptly dropped the payment option.

And let’s not forget hardware — there’d be no video games without desktop computers, mobile devices, and gaming consoles. Mega-manufacturers Dell and Microsoft both dappled in blockchain payment acceptance, but (seeing a pattern?) dropped their support in 2017 and 2018, respectively.

What Gives?

If the successful enterprises mentioned here have anything in common, it’s that they know how to scale. And it’s the ability to scale — or lack thereof — that likely led them to pull the plug on blockchain payments.

Steam explained their reasoning in a press release stating “fees that are charged to the customer by the Bitcoin network have skyrocketed this year, topping out at close to $20 a transaction last week (compared to roughly $0.20 when we initially enabled Bitcoin).” That’s a 10,000% percent increase in fees.

For more insight, we can look to other companies not mentioned above, like travel giant Expedia and payment favorite Stripe, both of which also stopped accepting blockchain payments in recent years. Stripe COO Claire Hughes Johnson went so far as to say that blockchain-based payment services are slow, impractical, and over-hyped.

And given the specific blockchain networks, these companies were working with, these sentiments aren’t surprising; they’re downright sensible. Networks operating on first-wave blockchain technology — including Bitcoin Core/Cash/SV, Ethereum, and Litecoin — all utilize the same rudimentary governance model that so often leads to network slowdowns and wildly fluctuating fees that scared away these companies in the first place.

Add to this the fact that none of these first-wave blockchains can securely settle a transaction any faster than about six minutes (imagine waiting at a checkout counter for six minutes?), and it becomes pretty clear that they’re non-starters for payments in online gaming.

A Second Wave

Thankfully, there’s more than just the first wave.

Equipped with what’s referred to as “on-chain” governance, alternative networks like Bitshares, Dash, Tezos, Decred, and EOS are the second-wave in blockchain. These kinds of networks have inbuilt decision-making mechanisms that can and do thwart so many of the usability problems experienced by first-wave networks.

But on-chain governance alone isn’t enough. To offer a good blockchain product — one that enterprises might actually want to keep using in the long-term (gasp!) — it also takes a ripe market segment and an optimized experience for the end-user.

If gamers are the ripe market segment (they are) and on-chain blockchain governance is nothing new (it isn’t), then do any second-wave blockchain networks complete this trifecta by offering an optimized experience for the end-user?

Gaming + (The Optimized) Blockchain Experience: A Match Made in Heaven

In 2015 the founder of Dash, Evan Duffield, did something radical: he asked his mom to send him a blockchain payment.

“What are these addresses?”

“How do they work?”

“Is this dangerous?”

Duffield reports that she peppered him with questions like these for the next half hour. “People inherently think there’s something wrong with interacting with Bitcoin, because it just isn’t intuitive,” he concluded. But far from giving up on the technology as a plaything for technogeeks, Duffield decided that something could be done about it.

Fast forward to today, nearly five years later, and the Dash network is soon to become the first blockchain payment system that checks the third box: optimization for the end user. This means cryptographic addresses (i.e. XfMzzPdbJKAQcs9jF6Asx926yHeoxa42eR) will be replaced with human-readable usernames (i.e. babygiraffe — see video below), which is perfectly suited for identity-creation and even identity-crossover within games.

[youtube https://www.youtube.com/watch?v=GtTaezpxQOs?feature=oembed&w=960&h=540]

This also means the availability of the world’s first decentralized API (application programming interface), able to serve up network-stored and verified data about players’ in-game assets, earnings, and statistics in real-time — all without the need for a central third-party server.

Instant settlement of payments means it becomes attractive for gaming enterprises to tokenize their players’ in-game earnings via the Dash cryptocurrency. Such a move would further enable players to spend their in-game earnings at any of the thousands of real-world merchants that already accept Dash, giving much greater use-value to playing the game itself.

After all, if one-third of the world’s population is willing to play games when their earnings aren’t spendable on outside goods, imagine how many more would be willing if they were?

First-Movers Proving the Use Case

Large enterprises are rarely the first to try anything new. It’s often smaller entities that can afford to take risks who first establish the use case for everyone else to come, and using the Dash blockchain for gaming is no exception.

Even prior to the release of usernames and the decentralized API, smaller gaming companies are already integrating Dash for blockchain payments. Game Companion and eSports host ReadyRaider recently integrated Dash as its exclusive form of payment, founder Jacob Ballou saying “ReadyRaider is an eSports gaming tournament platform and we required payment functionality for certain match types. The only viable cryptocurrency payment solution would be one that has instant settlements. I really do love Bitcoin very much, but for this purpose, it didn’t make sense because of the higher fees and long wait times for transactions to complete. For pay to play gaming matches, when a player challenges another player, I need that transfer to be instant and secure with minimal fees. Players will not wait long periods of time for transactions to clear in order to play games with other players. It just didn’t make sense for us to incorporate any other form of cryptocurrency payment, as Dash had everything we needed.”

And in Europe, customers of Whow Games, a social platform with 9 million registered users, can pay their subscription fees with Dash. Add to this the service 1UpCoin, a tipping service for gamers who stream on Twitch and YouTube, which also supports Dash among its blockchain payment options.

If all goes according to plan, the gaming companies above (and those who follow their lead) will keep utilizing Dash and other second-wave blockchain networks, and we’ll never have to see a headline about a gaming (or any other) enterprise dropping blockchain payments again.