Experimental Game Dev Interviews — The First Game Dev Podcast Ever
RSS icon Home icon
  • Why game developers did not come up with crypto currency…

    Posted on September 4th, 2021 IndieGamePod No comments

    Well…

    I look at the entire crypto currency industry and I do wonder…why game developers or indie game developers did not come up with CryptoCurrency….of course…it might be that a game developer did…

    But I am more amazed that game developers were using the virtual currency before cryptocurrency finally got things right.

    But there were some things…missing things or concepts…that I think game developers/designers missed…that prevented them from developing cryptocurrency. I think it would be nice to explore the concepts missed.

    This post focuses on that.

    First, it is important to note that there were games in the early to mid 2000s that were using virtual currency in games. Games like EVE Online even hired economists to help balance their in-game economies.

    Other game companies were happy to use the two-tier premium/common currency model. Players would buy premium currency with cash but be able to earn common currency within the game itself.

    Then there was the idea that inflation in a game economy adds to the fun of things.

    So I see there were a few missing concepts in the mid-2000s incarnations of virtual currency.

    First…the idea game developers considered was to use currency to help control in-game economy. The in-game interactions.

    There was no concept that the currency could be an asset. Even when players would try to use the currency as assets…something that could be sold outside the game. Game companies would sometimes try to limit the use. They might even prevent the sale itself.

    One missing concept was the idea that the currency should be or could be an asset that should be able to be sold in the open market. By not considering this…there were benefits…namely, one did not need to worry as much about in-game economy balance or security.

    Which brings up another thing that game developers missed…the idea that these “assets” needed to be protected. They should have been protected in a way that would make them portable or moveable outside the game.

    Games kind of allowed in-game trading…but once again…the game or the game company itself needed to be a mediator for these transactions…and as was seen…some of these companies would not allow trades or transactions to happen outside the game.

    So the missing concept was an open source distributed ledger…something where the game company did not own…but would participate in…by adding to the ledger to confirm certain transactions.

    This ledger…as we’ve seen in the case of cryptocurrency…would need to be run by distributed nodes and they would need to be paid or receive some reward. Because the game economies were mainly closed systems where folks could not easily benefit from in-game rewards they could get for hosting…since there was no easy way to sell things on open markets.

    So this was another mistake.

    The other thing was the idea of cheating or safety of the game currency. Because there was not attention paid to concepts or ideas that would make the game currency feel like real currency…people would not get behind it. These concepts would include things like portability of the money, ability to use money for goods and services outside the game, etc.

    One other issue was the goods/services the in-game currency represented. You could only do playful or entertainment things. So it was limited. It was a good start…but the game design was not set up to allow other types of activities that could be considered work-related or useful for other things.

    The game developer or designer needed to realize that the currency had to be used or redeemed for things outside the game itself. The game would be one users of the currency, but there could be other services that could also use it. Those uses needed to be beneficial to people in other ways.

    One could say … of course one should not take in-game currency seriously … since you could not use it to buy food or shelter. Sure, that is one things…but as we’ve seen…there are so many digital goods and services…that could benefit from a currency…and could have been used to purchase those things…like a network effect.

    I think that is one other thing to consider…is that it should have been where game companies made it easy for other companies or people to accept the currency for out-of-game services that supported in-game things. Provided code base or source to have this happen. It would have added more value to the currency itself.

    Then there is the issue of the design of the game itself…that would not really benefit or build on the concept of atomic elements of currency. Most of the design was used to make a more profitable business model. But where there games where the gameplay itself built off the properties or effects of tokens?

    Inflation management in games. This was not always taken seriously and hurt any real consideration of the currency use itself. Maybe the concept of a limited amount of overall currency…as we’ve seen done with cryptocurrency…might have helped.

    Finally…game developers were just looking to provide entertainment…in a way that made the money to focus on the game itself…and in that case…the virtual currency did work.

    It really made many game companies more viable…but it was mainly because the opportunity of a virtual currency was so huge…that hundreds of millions or billions made is nothing compared to the size of the market.

    So I suppose…thinking of this list…and I know there are more…there were many reasons as multiple levels of the game design that prevented game developers to pioneer cryptocurrency.

    So now let’s consider game currency 2.0…this would be game currency that would work with CryptoCurrency in its current state…to make game economies and business models that might work better for this era of cryptocurrency.

    1) The in-game currency should be tied to one of the cryptocurrencies. So that folks could cash out the currency for an cryptocurrency asset. This needs to be set up so that miners could come in and host the game itself and get paid to provide compute services.

    2) Inflation considerations taken into consideration up front…with a clear and open way to address inflation or a limited number of coins through lifetime of the game.

    3) The game would need some kind of block chain variation that would help to clarify token generation and exchanges … so that the currency could be taken seriously.

    4) Game developers would need to be able to let folks use the currency outside the game itself. This could be set up by the game developers … where they exchange in-game currency for the cryptocurrency…and put it in a players wallet.

    5) The game itself would need to make use of game currency to do unique things not doable or emotions in-accessible with other game designs. We saw semblances of potential with some social and multiplayer games in the mid-2000s…like games where you could buy and sell people for in-game currency. Folks would buy the game currency to do this fun thing. The mechanic was built on the virtual economy…but there was no easy way to be able to sell the game currency earned in the game.

    There was also other things missing to make the currency an asset class.

    Ultimately, it seems like game developers … to be able to develop and make the most use of potential new business models that would help games generate revenue…would need to be able to create a new token/currency that is tied to cryptocurrency and offers some unique goods or services or transactions or interactivity…aside from just entertainment…to provide utility to players. So that their investment in the currency would provide unique utility that might also have some fun use cases.

    an example could be a game that lets folks interact with their smart contracts…or smart contracts that control other people…are managed…or created in this game. Now this might not be the best example…but it does show how games could be built on tokens to do new forms of gameplay or interactions.

    These could be the new “Player vs. Player” games…

    Yet there would be other things like “Player vs. Environment” games…where folks might interact with real-world tokenized concepts to do things or new interactions. The game would profit from providing unique services or interactions around these concepts.

    The game’s business model could then be to take a percentage of a sale…but everything else around the game…including the game itself would be open source and free?

    Games would need to be more than an interaction system…but a token generation system…where the tokens themselves could have different roles and properties that allow folks to interact and benefit from the game token ecosystem. Some of these tokens generated could also feed into certain gameplay itself.

    I wrote a book on “game utilities” a while back…and it was kind of interesting…I do wonder how this is different than the data mechanics mentioned in that book. I think one thing is the tokens…might have properties outside the data itself. These properties then help it to be used in new ways or other ways.

    With the advent of metaverses…I see that the in-game economies that adhere to some of these principles and help to then treat metaverses as virtual nations that would then give the metaverse new effects that would make it more attractive than other metaverses.