Decentralized Applications Are Not Dead and Parallels to Traditional Online Gaming

Introduction to Blockchain Based Gaming & ERC-721

AxiomZen the company behind CryptoKitties, designed a game based on Ethereum and the ERC-721 token. The Ethereum Foundation stated that “ERC721, is an Ethereum Improvement Proposal introduced by Dieter Shirley in late 2017. It’s a proposed standard that would allow smart contracts to operate as tradeable tokens similar to ERC20. ERC721 tokens are unique in that the tokens are non-fungible” Based on this token standard, Crypto Kitties allowed individuals to breed, create, buy, and sell digital cats on the blockchain. It was one of the first online games that was built on the blockchain utilizing the ERC-721 standard. The Diar analytics showed daily trading volume peaked at $2M and is now down to $20K since December 2017. It was responsible for 12% of Ethereum transactions and created pressure on the network. Eventually, due to fad, and scalability issues, there was a dramatic drop in usage.

The sudden rise and fall showed us the potential of dApps but also highlighted its challenges.

History Tends to Rhyme

To understand where we are in the blockchain gaming world, let’s take a look at the PDP-10 Mainframe computer which was created by DEC Systems in the 70’s. It was the first mainframe computer that popularized a feature called time sharing. The time-sharing feature allowed users to share computing resources with those that are connected virtually. For the PDP-10, the maximum was about 63 users at a given time. The PDP-10 ran a proprietary OS known as TOPS-20/Tenex which was also used to build out the early ARPANET. The system used a 36-bit CPU, a typical configuration would weigh in at about 12,000 Lbs. At the time, this system was being utilized at top-tier universities such as Harvard, MIT, Essex, ETH Zurich, Stanford and Carnegie Mellon.

Now think of the PDP-10 as the Blockchain that is being used to host and run games for the “connected users”. Do you see similarities?

Creation of Multi-Unit Dungeons (First Online-Based Game)

Now that PDP-10’s time-sharing feature is deployed and utilized, what are some of the first real-world use cases?

It turns out that gaming was one of the first use cases that utilized time sharing which led to the creation of Multi-User Dungeon games. Multi-User Dungeon is an online based, multiplayer game which started as a text-only game. The first popularized MUD was created by Roy Trubshaw in 1984, he used the University of Essex’s PDP-10 Mainframe and hosted the game between 2AM-8AM weekdays. Once launched, this game became extremely popular, and started to get media attention. For a typical user to connect, they would need a dumb terminal, 1200 Baud modem, and an account with British Telecom which gave access to the packet switching system. The University would only allow 36 users on during those hours so that the system wouldn’t overload and disrupt students that are working on projects. Although his game was a success, due to scalability issues, Roy ended up releasing the code and encouraged others to host and create their own MUD. This created many networks and spin-off MUD games throughout the world.

Scalability Issues

Why did Roy end up open sourcing his code and allowed users to deploy its own MUD within their own networks?

It turns out the University can only handle 36 users at a given time and the game was becoming quite popular. They ran into technical limitations that deterred them from scaling and capturing new users.

MUD/PDP-10 was plagued with scalability issues such as:

Users having to connect through telecom providers that offered packet exchange services. (High cost & infrastructure)

2. PDP- 10’s allowed 63 users to be online at the same time and was geared towards local users due to telephone infrastructure. (Low usage)

3. The internet speed was transferring 1200 b/s and hence only text based games would work at the time. (Latency)

4. The PDP-10 Mainframe itself was expensive, over 12,000 pounds and required subject matter experts to help maintain the units. (Lack of expertise)

Roy ended up creating a MUD library and allowed others to recreate the game. To be efficient, they utilized one database, became lean with code and eventually shifted to different programming languages. Furthermore, by open sourcing, the game flourished and was eventually licensed by Compuserve. Eventually, MUD like games evolved to MMORPGs or better known as massively multiplayer online role-playing games (e.g) Warcraft (1994).

Gaming Today

World of Warcraft now generates $8B per year and has since introduced a WoW token (2015) that can be exchanged for additional game time. Games today have already cemented the idea of in-game scarcity and in game-economics that gamers are deeply familiar with. As humans, we are used to some medium of exchange when dealing with gamification. Finally, most games already provide a well-established ground for tokenization. With the creation of ERC-721, this can create the scarcity needed to add value to the gaming networks. You can check the daily price of WoW token here: http://wowtokenprices.com/

Personal Takeaways

We can draw similarities between the creation of MUD and the current state of dApps. For example, technical limitations of the infrastructure, computing resources, and a new market for developers.

MUD was launched online in 1984 but due to lack of internet connectivity, only the “hackers” were able to get access to the mainframes. This added friction and deterred an everyday user from signing up and playing. However, the gaming industry started to flourish with the general availability of the internet in 1991, the launch of Warcraft in 1994, new developers, and commercialization of a new industry. Newly formed companies such as Blizzard was able to focus on sales, marketing, and distribution of products.

I agree with Kyle Samani’s tweet, that the rate of innovation will be faster due to hardware proliferation, information dissemination and a number of developers. The reason why online gaming took ten years before it was a commercially viable option, was due to this. When looking at the current state of dApps, I believe that the rate of innovation will be faster.

https://twitter.com/kylesamani/status/1008512278268764160?s=21

Once we have the trifecta in technology, not only decentralized applications will scale, but will on board new users at an extremely high rate. We are truly in the early stages of dApps and will need to wait for the ecosystem to mature.

DECENTRALIZED APPLICATIONS ARE NOT DEAD.