Summary. The current approach to building defensible games on blockchain is too optimistic and wrong. In particular, the recent drop in CryptoKitties DAU numbers is not proof that blockchain games won’t work. I lay out a vision for blockchain virtual worlds and use that to derive alternative criteria for defensible blockchain games.
The current narrative about blockchain based gaming
There is a growing narrative about problems with blockchain based games based on the failure of CryptoKitties to retain user activity.
Even though non-fungible tokens hold great promise in tokenizing real world assets, we have not yet figured out how to create fully virtual valuables with lasting value. Some think virtual non-fungibles are simply not valuable enough to be described in blockchains.
I want to argue the opposite — that blockchains bring several additional benefits to gaming and not just the creation of provably scarce digital assets. I will also describe how truly valuable non-fungible virtual assets could be created in games.
Before that, it is helpful to study the emerging challenge of building relevant virtual worlds.
Our quest to build relevant virtual worlds
Today, we are on an accelerated path to create realistic virtual worlds. But realism is not what makes a virtual world relevant.
Computer graphics are more powerful than ever. With tools like Improbable, game developers can also add persistence and scale. Using artificial intelligence, we can populate entire virtual planets with intelligent and believable life.
While chasing realism, we are hoping to build a compelling replacement to everyday life. Today, most of us would see any long-term departure from the real world as unsustainable. Take the number of people embarking on 6-month holidays as one measure of this. Realism won’t fix that.
My favorite virtual world growing up was Project Entropia (now called Entropia Universe). It did not have the best computer graphics, nor the best artificial life. It was certainly vast and somewhat persistent, but the real selling point was the fixed exchange rate of the in-game digital currency to the dollar. Successful individuals could spend their day playing Project Entropia, making money and using that money to pay for rent and food. A true dream for a teenager.
That’s what a sustainable virtual world can achieve — when the actions and decisions you make in the game have real world consequences, the virtual world can start to replace the real.
Blockchains are virtual worlds
Blockchains have many of the properties we would expect in a virtual world. They are deterministic, persistent and (eventually) synchronized to the same state for different users.
Sustainability is built in. Not only can we develop and sell in-game currency, we can trade individual items and even enter into smart contracts based on our in-game collaboration. There are real means of providing and accumulating value that can be exchanged for currency in the real world.
The final, and most important aspect is composability. Composability manifests in one smart contract being able to call any other smart contract or address. In the same way that a tornado can wipe out the most elaborate inventions of architecture in the real world, smart contracts all exist on the same playing field.
This virtual world boundary does not extend just to individual games like Decentraland, it extends to the whole blockchain. The most successful blockchain games will acknowledge and embrace this fact.
Defensible blockchain non-fungibles for games
Now that we have our vision, how do we realize it?
Building non-fungible digital assets with the hopes of sustaining value based solely on exchange won’t work. If there is nothing else people can do with a collectable other than to trade it, alternative collectables will drive the price down to zero over time. How valuable is it to hold a CryptoKitty, when there are CryptoDogs, CryptoBunnies, CryptoCountries, ForkedCryptoKitties, etc.?
Creating a game you can play with CryptoKitties is better and less easy to copy. A great user experience and an engaged community will certainly drive up asset value.
A third and even stronger approach is to ensure that other parts of the virtual world will use and rely upon your scarce assets. If you built CryptoFood that CryptoKitties start depending on, because it is a useful API for describing different types of food and their nutrient properties, now you have a moat. The resulting asset is a combination of a non-fungible with a domain-specific game engine built in — a novel model.
I expect to see more games that meaningfully incorporate outcomes from other games as a mini-game and vice versa. For lack of a better name, I call these new entities massively composable decentralized games.
People dream about one day building a single, dominant virtual world like Oasis from Ready Player One. I think we already have that and it’s called Ethereum.