Video games are more than a game. They are, at different times for different people, a challenge, a business, a lifestyle, or all the above. While professional gamers fight for titles, and the money that goes with them, millions of others are buying, selling, gathering, grouping, chatting, and organizing. While not everyone has realized it, humanity has long passed the point of projecting real value only on tangible objects. Virtual goods can command staggering sums.

This article is part of our series “Blockchain beyond Bitcoin“. Bitcoin is the beginning, but it’s far from the end. To help you wrap your head around why, we’re taking a deep dive into the world of blockchain. In this series, we’ll go beyond cryptocurrency and hone in on blockchain applications that could reshape medical records, voting machines, video games, and more

Many games, like Fortnite and League of Legends, have built themselves on top of paid transactions for characters, items, and currency. Yet the details of how these purchases interact are often unclear. What should players own? How should goods be traded? Who should dictate pricing? The answers depend on the game you play and can vary wildly from one game to the next, sowing distrust and confusion. Players want consistency, flexibility, transparency, and privacy. They’re not getting it.

Blockchain might be the answer – and more. The promise of ownership may be what lures gamers towards it, but they’ll get more than they bargained for.

Virtual items, real ownership

Seeing the potential for profit, companies soon appeared to ‘farm’ in-game gold and items. By the mid-2000s, gold farming was in full swing, complete with digital sweatshops that saw workers spend 12-hour days grinding away in games. Free-to-play games turned that reality into a business model, selling official virtual goods for real cash. Today, gamers find themselves hurdling down the rabbit hole. Star Citizen has raked in millions of dollars selling virtual goods for a game that’s not even complete.

Despite that, the rules surrounding these transactions, and the items themselves, are nebulous. Most games prohibit selling or purchasing in-game items, pushing transactions to the black market. Middle-man businesses like PlayerAuctions have risen in response, promising a risk-free transaction between buyer and seller.

Players often take advantage of these, feeling that they own the items they’ve earned. Scams are common – these are black market transactions, after all. Even purchases that seem to go smoothly aren’t guaranteed safe. Game developers often intervene, issuing temporary suspensions, or outright bans, to anyone discovered. Most people aren’t discovered, though, so some players are willing to take the risk. In fact, it’s not uncommon for players to feel cheated when caught. They’ve spent real money, or many hours, to earn what they’ve acquired. Why shouldn’t they feel a sense of ownership?

While players take pride in the in-game wealth they’ve gathered, they rarely have legal ownership.

That cuts to the core problem. While players take pride in the in-game wealth they’ve gathered, they rarely have legal ownership of virtual goods, no matter how they’re acquired. Blizzard Entertainment’s End User License Agreement makes that clear, declaring itself “the owner and license of all right, title, and interest […]” That includes all currency, virtual goods, even entire player accounts. Pay Blizzard $25 for a mount, or spend that same money on black market gold through ZamGold – either way, your don’t own a thing.

Blockchain turns that on its head. It’s effectively a digital ledger without a master copy. Transactions aren’t stored on any on computer, but instead stored on a network of computers, and they’re verified the same way. Transactions are recorded across the entire network through a shared record that no single computer holds. Transactions remain valid even when a PC goes offline – called ‘cold storage’ in the world of Bitcoin – making always-online game clients obsolete.

Strangely, it’s decentralization that makes true ownership possible. The database exists independent of any single person or organization, which makes its records objective, fair, and true. In blockchain circles, this is counter-intuitively labelled as “trust-less.” The implication isn’t that the blockchain can’t be trusted but, instead, that blockchain makes trust unnecessary. It doesn’t matter if you trust everyone else one the blockchain, because fraud is impossible – on the blockchain itself, at least. It’s a clever, and realistic, implementation.

Vlad Panchenko, CEO and Founder of blockchain-based item exchange DMarket, explained the advantage, saying “all the transactions will be secured by blockchain technologies, eliminating any possibility of fraud. With DMarket’s blockchain all gamers’ virtual items become real. It’s like Bitcoins or Ethereum in your wallet.”

Decentralization also gives developers a chance to put responsibility at arm’s length. A crash in value, or sudden surge, can be blamed on the whims of the market. Scams would still be possible but, because the blockchain itself is secure, attacks would focus on things well outside the developer’s control, like a player’s social media accounts or email. Today, when a weak password leads to a compromised account, players can ask the game’s developer to help restore it. Blockchain would make that difficult, if not impossible. Players would have all the responsibility that comes with ownership.

A different kind of game

The obvious implications of owning virtual goods are sure to put dollar signs in the eyes of gamers. If gamers truly own in-game items, they should also be able to sell them. It’s the Diablo 3 auction house on a whole new scale. It’s easy to envision a hardcore player defeating an enemy, walking away with a legendary weapon, and immediately selling it to the highest bidder.

“If you think about a traditional video game […] there are no inherent protections to the user.”

This could become a career on its own, and would be particularly lucrative for celebrity gamers. “Information about each item’s owner and history will be secured on the blockchain,” Panchenko explained. “This will create an additional demand for these items from rare asset collectors or celebrity gamers.” Eve Online has proven the concept with rare ships awarded only to tournament victors, and blockchain could apply that rarity to any game.

Yet profit is only the tip of the iceberg. Blockchain not only holds the power to change ownership, but also to alter how games are designed – a fact that Bryce Bladon, co-founder of viral crypto-game CryptoKitties, has experienced first-hand.

Most modern games are entirely centralized. Everything, from the graphics, to game design, to virtual goods, are owned and controlled by the developer. “If you think about a traditional video game, there’s next to nothing to stop a developer from just diving in and tweaking things, copying things, and adding other things. There are no inherent protections to the user,” Bladon told Digital Trends. He’s right. Automatic updates are frequently forced on games, and players can’t opt out. Open Steam, or boot your game console, and you’re sure to see new patches arrive. You can delay them manually, but that means can’t play online or enjoy any feature updates. Sooner or later, you’ll have to accept the patch.

That’s created tension between developers and gamers, player communities have sometimes rebelled, attempting to re-create the earlier version of a game whether the developer approves it or not. In most cases, these player projects have sputtered due to uneven support or, in many cases, legal action from a game’s original creator. Control of the game is entirely out of player’s hands, both legally and technically.

Blockchain destroys that status quo because it can’t be altered. “We don’t get to just change the block chain, as it were,” Bladon explained. “That is sort of the nature of it, it’s immutable.” CryptoKitties simply doesn’t have the power to alter the game whenever it’d like, and that immediately changes the relationship between those who make the game, and those who play it. Developers become shepards instead of gods. They can attempt to nudge the game in whatever direction they want it to go, but they can’t change the rules, or alter in-game items once awarded.

Mitchell Opatowsky, Project Manager at CryptoPets, affirmed what Bladon said, using the revolutionary aspects of cryptocurrency as a template. “If a Bitcoin’s theoretical potential value is that of a decentralized world currency,” Opatowsky told Digital Trends, “the same logic can apply to the game space, where currently individual production houses control the asset sales in a centralized way.” Whether a developer feels a moral or legal right to alter a game becomes irrelevant, because the blockchain makes altering a game technically impossible. Ownership is irrevocably shared from the moment the game goes live.

That is – pardon the pun – a game changer. Its impact is so meteoric that the consequences become difficult to imagine. Perhaps it would pave the way for the virtual worlds imagined in sci-fi novels, worlds that aren’t games but instead their own entities with rules, currency, and societies that exist only virtually, yet impact the real world. At the least, it could lead to shared social games that evolve for as long as there’s enough people to play them, and which can’t be shut down, even if the original developer desires it.

The new wild west

Blockchain’s potential is huge, in gaming and elsewhere. Yet, as Bitcoin and cryptocurrencies have already proven, its revolutionary nature makes its impact hard to predict. Five years ago, Bitcoin was a novelty. Since then, it’s surged in value, completely upset video card pricing, sent regulators scrambling, and consumed the savings of those who bought at the wrong time.

The disarming cuteness of virtual cats disguises the fact they can be worth tens of thousands of dollars.

The consequences are no less for gaming. Virtual goods are already testing the limits of state laws against online gambling, though the items bought or earned have no tangible value. Blockchain, by allowing ownership and the exchange of items for currency, would erase a legal buffer game companies have used to contend online gambling laws don’t apply.

We asked both Bladon and Opatowsky about this issue, and neither seemed concerned. Bladon told Digital Trends that CryptoKitties “strongly believe[s] in consumer protections and making sure the user is protected wherever possible. Gambling, and anything related to gambling, is something we are hyper aware of.” Still, it’s not hard to see the risk. The disarming cuteness of virtual cats disguises the fact they’re in some cases worth tens of thousands of dollars. That could make blockchain games an easy target for lawmakers who might accuse them of cashing on their appeal to children.

Whatever the future of crypto-games, it’s sure to go in directions unexpected. Like the internet, blockchain is revolutionary because the specifics of its design allow incredible flexibility. The world is already struggling to keep up with crypto-currency, but its narrow focus on currency compromises its scope. Not everyone wants to deal with playing market trends. Trading cartoon cats, though? That’s something we can all understand.

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