Alexander Wolodarsky: Indie Developers Will Define the Future of Blockchain Games

Alexander Wolodarsky: Indie Developers Will Define the Future of Blockchain Games

In April, we wrote that the well-known game publisher Ubisoft has become a corporate baker for Tezos. The company’s spokesperson stated that their innovations department will be researching the potential of blockchain.

This is an article by the blogger and indie developer Alexander Wolodarsky. Herein, he talks about the way NFTs can change the gaming industry, the path of new technology, the prices of in-game items, and how we can improve online games with NFTs.

Four phases of tech evolution

Any technology has two sides: practical and speculative. Users employ technology for their own profit while speculators make money from selling tech-based products. The inventor of the steam engine created a way to turn the energy of coal-burning into useful work. Industrialists have designed their own engine schemes, and speculators started selling steam machines as a solution for every problem. As a result, regular people could travel on trains and steamboats.

New technology always undergoes four evolutionary phases:

  1. Invention
  2. Experimenting
  3. Speculations
  4. Usage

In cryptocurrency, this is exemplified by non-fungible tokens (NFTs). They are digital entities existing on a blockchain simultaneously with the main currency. The token’s developer states its mission, issuance rules, and use cases within the project.

Experiments with tokens ended up with ICOs (initial coin offerings). A team of developers offered investors to buy tokens to finance their future project. Most investors participated in that not to help develop the project but to make a profit from the token’s price growth. Scammers were quick to understand how to make money on that. They created fake projects, sold tokens, and skedaddled. This made investors grow suspicious about cryptocurrency and left many great ideas unfunded.

Eventually, dummy projects died out, and only the practical tokens remained in the ecosystem: stablecoins, utility tokens, governance tokens, etc.

NFT speculations

The year 2021 saw NFT speculations booming. Unlike fungible tokens, issuers could record unique identifiers onto non-fungible ones. The difference is therefore like that between a hand-made figurine and a plastic Budda with a “made in China” stamp on the forehead.

Until then, NFTs were mostly used by the devs of collection-based blockchain games. Thus, CryptoKitties was about collecting kittens. Tokens stored genotypes determining the kitten’s exterior. Speculators loved CryptoKitties. The most expensive token was sold for $172,000. NFT marketplaces bloomed in 2021 as well. They allowed users to link images, music, and even tweets to tokens. In February, the trading volume of NFTs on Ethereum peaked at $200m in a week.

But by June, the interest waned. It seems that nobody is even remotely interested in buying pixelated punks for a million dollars.

NTF in games: advantages

CryptoKitties and its clones can hardly be called games due to the lack of gameplay. Still, non-fungible tokens can improve the gaming experience of actual games thanks to the tokenization of content. MPG users often collect in-game items like characters, weapons, or skins. They don’t literally own them, though: any in-game item is a record in a database claiming that gamer number X has access to items Y and Z. Developers can block the inventory, remove the item from the game, or close the project. Gamers understand it and don’t value in-game items as much as real objects.

A great example is Magic: The Gathering. Players buy rare physical cards to use in the game, exchange them, or put them up on the wall. The value of rare cards can reach dozens of thousands of dollars. At the same time, the players of Magic: The Gathering Online value the virtual cards obviously less as they know that all the cards will be gone if the developers close the project.

MTGO keeps records on card owners in an internal database. Instead, it can use NFTs on a public blockchain such as Tezos. Thus, MTGO can link a newly created card to a token and send the token to the player’s wallet. Thus the users will come to truly own the cards. They can transfer and sell NFTs and will keep them as tokens even if the game is closed. NFTs can enable devs to implement cross-pollination similar to breeding in CryptoKitties. Users will mix tokens to get new cards with unique parameters.

But building an ecosystem of games with common NFTs is an even more ambitious goal for developers. The same NFT could represent a card in a CCG, skin in an MMORPG, or unit in a strategy game. This will make it easier for players to get into a new project.

A similar scheme is implemented by Valve, the developer of Steam. Gamers can trade items from DotA 2, CS:GO, Team Fortress 2 and other games. They can also sell items for real money to buy other games. But nonetheless, the inventory records are stored on Valve’s servers, and their ownership of games and items on Steam is legally a rent.

NFTs in games: shortcomings

NFTs will create additional complications with the in-game economy. Some players will try to get valuable items to sell for real money, while others will buy them to boost their game progress and gain an edge over other users. MPG devs already have experience in creating an economy where items can be bought for real money. Thus, the creators of space simulator EVE Online have hired macroeconomy experts to balance the prices of in-game items.

NFT with rare in-game items can cause an upsurge in speculations and even those uninterested in gaming will start buying NFT swords as an investment. This will increase the profit for the developers but actual players will hardly enjoy it.

Tezos is a blockchain for MPG

There were 12.3 million gamers involved in this March’s Fortnite event. It’s unlikely modern decentralized networks can process this many transactions even in a day. That is why I see the future of blockchain games in Tezos or a modification thereof. The Tezos protocol works on Proof-of-Stake thus ensuring low power consumption and financial costs of transactions. It is especially important in new gamers’ onboarding as they want to buy and play, not calculate gas costs.

Another major advantage of Tezos over other blockchains is its updating on the fly. Other blockchains get updated via forks, i.e. dividing a chain into two. It duplicates assets in wallets and causes temporary financial disturbance. It’s great that Tezos has no such thing.

On top of that, such on-the-fly updates allow one to easily modify the virtual machine. Thus, Tezos devs have recently increased the volume of smart contract code to 32 KB. For now, I can’t imagine the changes that MPGs using NFTs might require but I’m confident that only Tezos will be able to improve the protocol fast and smoothly.

The future of blockchain games lies with indie devs

Ubisoft’s interest in Tezos may be seen as proof of big companies thinking of integrating blockchain in games. Still, big usually implies cumbersome. It will be years until major game developers release a game with blockchain and wallets. So don’t wait for the giants to make the first step. While we, as indie devs, have limited resources, we have agility, mobility, and risk appetite they desperately lack.

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Tezos Monthly: Technology, Economy, and Community in May ‘21

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