How Blockchain Gaming Is Changing the Industry
One of the most promising use cases for blockchain technology is gaming. From non-fungible tokens to decentralized in-game economies, the possibilities are endless. Join us for an exploration into the future of blockchain gaming led by Paul Gadi, CTO and co-founder of blockchain gaming companies Alto.io and Altitude Games.
How good of a match is blockchain for the gaming industry?
Blockchain and gaming are actually a perfect fit for each other. There are so many ways that blockchains can help the gaming industry grow. I think one of the best ways to understand this is to examine how blockchain initially evolved. The initial use case of blockchain was Bitcoin, which is a virtual currency. Games have been using virtual currencies in their economies for more than 15 years.
We’ve seen how the Bitcoin blockchain has been able to disrupt financial systems. We see other blockchains doing the same thing to virtual economies. For example decentralization, governance, and open economies. We can discuss more about other components that will be disrupted by blockchains once it starts integrating into the games that we play now.
As an IT expert and business owner, why did you choose gaming out of many options?
Out of college, I knew that I wanted to make games. So I specifically got a computer science degree because I wanted to make games. That was around 2002 and during that time, there weren’t really a lot of game development companies. So I started working at a telco company which had a mobile games division. That was my intro into the game industry. During the course of my career there, I got to meet a few other game developers in the Philippines, and some of them are actually my co-founders at Altitude and Alto. So my gaming companies were initially seeded at the telco company.
What does it take to develop an elegant game like Battle Racers?
Making a game is fun, but it’s actually quite hard. There are a lot of components that go into it, and it’s very multidisciplinary. To create a game you will need a team of developers, artists, game designers, and community managers. Since we’re including an in-game economy, we also need blockchain experts, economists, and psychologists.
When you’re making a game like Battle Racers which has a free-to-play component but also a blockchain component where people pay to play, it’s a new dynamic. There are a lot of things that you need to learn as you go. However, at the same time, there are many things you can learn from working in mobile game development and computer game development. So it’s fun, it’s hard, and it’s really exciting.
Exchanging in-game items is a lucrative industry (est. $50 billion). How much fraud is happening there?
The gaming industry is pretty big. There’s a lot of people making money, and fraud is a concern. Especially when people want to trade these items which have actual value. For example, there’s this game that pioneered virtual economies called Team Fortress 2, and in that game, people can trade their items for real money. So what happened there is, these people would find brokers or third party handlers that would be the ones taking care of transferring fiat money into the ecosystem. So it’s a grey market, and there’s a real chance of fraud happening because of that.
However with blockchain, with these systems that are secured by math, by nodes, by networks, and we’ll be able to transfer value in a trust minimized way without adding a lot of barriers. Once blockchain goes into these virtual economies, and in-game trading happens, I think there will be a bigger boom in virtual item trading. There will be also the possibility of cross-game item trading, as well, where people can trade their items and use them in other games. We’ve seen that happen already in blockchain games.
How can you make money as a player and what are the challenges?
As a player, people can now make money playing games, doing the thing that they love. Most of it right now is trough Esports. If you’re good enough at the game, you’ll be able to win tournaments, and earn money. Another is streaming, as you play the game, people watch, and you earn from the ads. Right now, actually playing a game, and earning money from it — through in-game items, for example — isn’t as clear-cut, because I mentioned before that these grey markets aren’t very secure.
However as blockchain starts getting more integrated into trading in-game items, I expect we will see players making money in the form of either crypto or these in-game items. Some of these crypto networks provide value to their participants by giving them tokens, for example, and so we will see more value going from these crypto economies into the game industry.
Are Esports having the same challenges with monetizing wins?
If you’re an Esports player, most of the time you will earn fiat money in the form of a salary or by winning tournaments. That’s interesting because what if we could use the blockchain to keep track of these wins on a ledger, and then you can earn cryptocurrency as you win. That’s easily done using smart contrasts and tokens. If you take that further, there are a lot of other things that we can do once we start integrating how the game systems work on blockchain.
Should we expect a boom of services for legacy engines such as Unity, Unreal, and Godot providing smart contracts?
Yeah, I see that happening. For example, our company Alto.io, enables people to create smart contracts and build technology that allows them to use them. As game developers, you want to focus on making games instead of dealing with the complexity of these crypto networks. So there will be a market for that.
I imagine there will be middleware providers that will do the smart contract development for these companies. And there will be gaming specific ecosystems that will do these for them. We see that happening already with some of the partners that we work with like Loom and Enjin that have their tokens and SDKs.
What are some other issues with using blockchain technology in the gaming industry?
A big challenge with games is UX. All these wallets have different UX. There are no standards. You need to know a lot about how wallets or crypto works to be able to use them. So if we want the critical mass market of game players to be using crypto, we would need to take care of that UX problem.
Another challenge is the walled gardens. I mentioned before that virtual economies usually aren’t open. The game developers don’t really know yet how to create open economies. So once the technology matures enough and we know how to make games on these technologies and markets, then I think that will be the catalyst for that.
It looks like a current scope of games that can be created on the blockchain network is somewhat limited. Do scalability limitations cause it?
If we look at the scope of games on blockchain right now, we’re at a very early stage. You see a lot of games that aren’t really completed yet, and you see a lot of them that are mostly just you interacting with a smart contract. Blockchain is the limiting factor right now because it’s a new technology.
For example, you mentioned engines earlier like Unity and Godot, and these engines have been in development for years. People know how to use them. There is a lot of infrastructure behind it. But with blockchain, a lot of this is still being built up. So in turn, the games that you see being made aren’t that mature yet. But I think the challenge is rather that we don’t know yet how to design games around this new limitation. For example, we see a lot of developers trying to put their databases or their CDNs (content delivery networks) on blockchains, when blockchains really aren’t the technology for that.
Blockchain is more like a technology for governance, technology for a ledger of truth, a source of truth, a source of provenance, and if you design your game or your system knowing the limitations of the technology, then I think we’ll see successful games that we haven’t seen before.
Are hybrid games the way to perform a transition to blockchain gaming?
Yes, I believe so. We see a lot of the games being made now that are aimed specifically for people that already have blockchain experience. Instead we could create hybrid games that give users the option to play the game with OR without the blockchain component. This would be a great way to introduce people to blockchain economies.
Which hybrid games would you recommend?
The hybrid approach of being aimed at free-to-play players first and then getting them into the blockchain is a great approach. Games in this category include Relentless by Loom Studios and our game Battle Racers. It’s also a good idea to look at some of the games that are running on Engine. Because some of them are free-to-play games that once you get to understand how crypto works, that’s when you go dive into the crypto economies.
DappRadar picked your game. How many active users do you have?
So in terms of active users, our game Battle Racers has around 200 active wallets. Battle Racers is still in development. The initial entry point was players taking part in our pre-sale of chests wherein they buy car parts that they use in the game. For now, we envision it being played first by our initial users. But as we opened the game to beta users, we see it being played by more free-to-play players and possibly go into the same numbers as our mobile games which go from the thousands to millions of downloads.
What is the concept of the Battle Racers game?
The basic idea is modeled after remote-controlled cars that people collect and tune themselves. Battle Racers is very similar to that. People buy these car parts, and then they put them together, do the customizations that they like, and then they race against other people. During the game, you have the option to use several weapons to counter your competition, and you can use other equipment in your car to make it go faster, for example, or to defend itself. Battle Racers is like a remote-controlled car racing game, but it’s built and played on a web browser on the central LAN which is a VR platform.
What is your bigger vision for your gaming studio?
We’ve been making games for more than five years at Altitude Games. We started making them on mobile. As we’ve made these games throughout the years, we realized that we need to move with the technologies, and we really see that blockchain is one of the great disruptors that will change games both how we play, and we create games.
We want Altitude Games to be the pioneer in making blockchain games. We want to innovate in the genres that you see, but also still leverage the best practices that we’ve learned from mobile to be able to make games that are accessible and fun for the normal players.
The total value of Esports is more than $138 billion with 380 million users. How will the blockchain technology change this industry?
Esports would be one of the first industries related to gaming that will be affected by the blockchain. We talked earlier about monetizing wins that would possibly change how rewards are given out to Esports, and I think at least in that very near term that’s what’s gonna happen. We will see a lot of value going from these crypto networks into Esports because I think that’s the easiest integration. We already have the systems for transferring value over on these chains, and it would be simple to integrate them into Esports.
Long term, what’s more interesting is how blockchain affects not just value transfer but also governance. You see a lot of these chains right now or these companies on the blockchain doing things called decentralized autonomous organizations or DAO, which is essentially empowering your users to create governance around the ecosystem. If we extrapolate that to Esports then we can have tournaments defined by just the developer or the publisher. What if we allow the players some sort of governance as well. So blockchain will really affect Esports.
Not just Esports, other gaming genres as well. We should look past the value transfer, and what that technology can actually do deep in the infrastructure.
How do you envision blockchain gaming as a mature industry in a few years?
I think right now we’re at a crossroads in blockchain. I see maybe two camps or two extremes. Some people see the blockchain as the initial use case, which is a disruptive change to financial systems. And there are people who look at blockchain and see that it’s a new technology. It decentralizes infrastructures, and it changes how the power structures are in current systems. So I think it will be like somewhere between the two.
Personally as a developer and a game player myself, I want blockchain to empower developers and players more to get value from the industry that they love. I you’re playing games, you earn more from it. If you’re creating games, then it’s not the app stores, or it’s not the publishers that make most of the value but the developers and creators themselves. With the help of companies like us, Alto, and Blockchain Zoo, I envision building stuff on the blockchain that helps developers. We would create more valuable ecosystems for the people that are creating and playing the games rather than those who are controlling the stores and ad networks.
How do you envision blockchain changing the world?
I think blockchain already has changed the world. Firstly, bitcoin has decentralized finance. In our field specifically, we see some developers starting to realize that there is a new way of getting value into their games. There’s a new way of building these games as well.
I think in the future, once the blockchain becomes more understood by developers and players, we will really see how the gaming industry will change. Now, if you look at games, and if you look at how people make money from it, for example, a lot of it is through ad networks, in-app purchases, and it’s really about monetizing attention.
Blockchain incentives us to take a deeper look at monetary systems, where value is created, how it flows, and where power lies. I would personally love to see blockchain drive value towards the creators and the players so they can earn more doing the things they love.
How do you think the market for the blockchain-based solutions will evolve?
I think right now it a really good opportunity for people building on blockchain. The technical barrier is still pretty high. So as I mentioned, game developers really want to make games rather than make these kinds of systems. And right now, if you’re someone who knows how to do these things, then it’s very valuable for both these developers and the ecosystem as a whole.
BBH Guest: Paul Gadi, CTO and co-founder of Alto.io, Technical Director and co-founder of Altitude Games
Paul has more than 14 years of experience in games and applications development. He is a co-founder and CTO of a blockchain game platform, Alto.io and a co-founder of a mobile game development studio moving into the blockchain game space, Altitude Games. His game developments projects won several awards including Best Mobile Multiplayer Game in the International Mobile Gaming Awards (IMGA) and handset manufacturer awards from Nokia and Sony Ericsson. One of his recent successes is the car racing game Battle Racers, which was featured in Dapp Radar in June 2019.