Recent developments in Blockchain Technology has introduced a unique opportunity to re-shape the highly fractured eSports industry and serve as the first successful use case that is desperately needed in the the Blockchain space. Thanks to new innovations in Blockchain Crowdfunding, fans, players and other industry participants, have the opportunity to take part in revolutionizing an industry they created while sharing in its success.

The article below written by Fred Ehrsam called “Blockchain Tokens and the dawn of the Decentralized Business Model” is a great source that explains this new opportunity.

Blockchain Startups and Communities are starting to raise money by creating and selling digital tokens (cryptocurrency), where the money raised is used for project developments and token holders get early access, incentives and shared ownership in the projects.

But not every startup should use this approach to raise funds. This model is still very new and has not received much regulation, so to prevent being fined, or even shut down in the future, it’s recommended that only projects capable of creating a Network Effect use this approach. Nick Tomaino does a great job explaining Network Ownership Effect, that occurs when a company, platform, or application, embeds economic incentives into a product that becomes more valuable as more people use it. Another simple logic is, can a project be built around loyalty or rewards based systems (like many games or gaming platforms), where Blockchain tokens can simply replace those traditional protocols?

These new opportunities have unlocked a variety of powerful benefits for users and project creators! Blockchain tokens can easily be traded on cryptocurrency exchanges just like Bitcoin and can also be converted to local currency. Another significant benefit is, when projects are successful the demand for the tokens increase which raise their value, similar to public shares on a stock exchange, but using this new model anyone can participate at the beginning instead of waiting years for new companies to go public.

This has the potential to turn traditional startup fundraising and crowdfunding on its head and many top VC’s like Marc Andreessen are starting to get more involved. Anyone can invest in their favorite projects at the ground level via tokens, with the ability to sell or trade those tokens at anytime (assuming there are buyers). Traditionally, when startups raise money using crowdfunding platforms like Kickstarter, anyone can donate money in exchange for discounted products or services, but not equity or shares (The Jobs Act may change this but restrictions will likely still apply). Alternatively, when startups raise money for equity, only Accredited Investors (wealthy individuals) are able to invest and most startups place restrictions on the investors ability to sell their shares.

Hundreds of Blockchain focused startups have already raised millions of dollars and typically offer significant discounts on tokens at the beginning of their crowdsales. This has become very attractive to cryptocurrency investors because they can purchase large quantities of tokens and make a quick profit by selling them at a premium shortly after the crowdsales, but the lack of successful projects are starting to introduce concerns.

Teams with Blockchain experience have been able to reach multi-million dollar fundraising goals in a matter of minutes, with nothing more than concepts (whitepapers) that could take years to get to market.

Meanwhile, many projects currently on the market are struggling with growth because they don’t provide services where the Blockchain actually solves major problems in ways the general public can understand or appreciate.

A great article titled “Why scientists make bad entrepreneurs” may relate to the growth problems in the Blockchain space. The industry is lead by brilliant programmers, engineers, mathematicians and data scientists, but “just because you’re the smartest person in the building does not make you capable to run a company”.

The Ethereum community has lead many of the latest innovations by creating tools that make it easier for startups and companies to build on top of the Ethereum Blockchain, but the space is in desperate needs for successful projects and use cases in order to penetrate consumer markets.

The Future of eSports

eSports presents a very unique opportunity to demonstrate the power and capabilities of the Blockchain and decentralization, because the industry is made up of tech savvy individuals who are most likely to understand, appreciate and adopt the technology. Also, the industry is ripe for disruption because it’s controlled by numerous, centralized middle men due to its fractured infrastructure (makes it very difficult to create associations like the NBA, or the NFL who regulate fair standards that benefit teams and the association as a whole).

This has allowed private companies to own and operate their own eSports leagues and tournaments, which include their own rules and regulations that don’t necessarily benefit the teams and players who are directly responsible for the industry’s massive growth. For example: Riot’s co-founder Marc Merrill was quoted saying that “it is not Riot’s obligation to determine market pricing for players” and their rules don’t allow players to use their own sponsors equipment or display their logos in front of millions of viewers.

Game publishers can use eSports as a means to promote their own brands (Activision Blizzard generated $6.6 billion in 2016) and don’t need to rely on sponsors to fund their events, but this makes it very difficult to determine fair prize structures for events. In turn, large independent eSports operators like ESL, who rely heavily on sponsors and other revenues, can use the under valued prize pools from game publisher events as “the market standard” and offer very little transparency with teams and players about profits and revenue sharing.

These types of problems have led to many conflicts and unethical business practices related to revenue sharing, broadcasting rights, players rights, and exclusivity (most recent example is the PEA-CSGO Scandal). These are also perfect examples of broken, centralized business models, where money and power is often used as leverage to increase profits.

The three primary economic drivers of eSports are Money (sponsors), Players, and Fans, but powerful intermediaries are slowing growth and limiting potential by making it difficult for brands to get more involved in an industry that’s approaching the size and scale of traditional sports. Many of the top players don’t even have salaries and need to rely on eSports prize money (which can takes months and sometimes not paid at all) or direct sponsorship’s (lots of affiliate and promo commission deals) and fans are constantly being stripped of their choices in an industry they built.

Conclusion

These new Blockchain capabilities are making it easier to create individual, decentralized projects within eSports that focus on specific areas like FirstBlood, but in order to disrupt the entire space, a community owned concept capable of influencing the entire industry needs to be introduced.

At TruCast, we’re building a platform that combines the latest innovations in livestream technology, digital media, and Peer to Peer distribution, that’s capable of disrupting the entire eSports ecosystem while collaborating with existing companies, but our decentralized approach allows the eSports community have a voice and share in our success!

Our software will be open sourced and community driven, to encourage collaboration among top talent to build quality software that can scale quickly, while getting compensated programmatically for their work via smart contracts. We’ll be announcing a crowdsale in the near future that will include our complete vision, technical overview and roadmap and the funds raised will go towards building a core team, project development, marketing and our bounty program (rewards influencers and publishers who generate the most traffic and awareness for the crowdsale launch).

Follow us on Twitter for future updates @trucastgaming or add me on Discord Joey-TruCast#0184