Humans are on the move.
The common rhetoric is that AI is increasingly integrating itself into our world and, given enough time, will eventually lead us to the servitude under our post-apocalyptic robotic overlords. But less discussed is how humans are very rapidly making their way in the opposite direction. Entire open virtual worlds now allow humans to interact within a structured social and financial system that simply could not be created previously within a digital landscape. One only has to look as far as science fiction movies like Ready Player One as an example of where we are headed.
Ultimately, what will these hypothetical digital ecosystems, and their respective in-game economies, look like in the near future? And how can blockchain play a role in ensuring both the virtual landscapes, and the users within them, remain autonomous and truly free?
Centralized In-Game Economies can work
We’ve already seen that free market economies within virtual worlds can be created and maintained to great effect. In 2015 alone, the Linden Labs virtual reality gaming project, Second Life, had a GDP estimated to be “approximately $500 million with its gross resident earnings averaging $60 million.”
Brock Pierce, the well known co-founder of EOS, started Internet Gaming Entertainment (IGE) in 2001, “a company which pioneered the MMORPG currency-selling services industry.” In 2005, IGE accounted for nearly $500 million in annual volume by “selling virtual goods for real money — magical swords and capes and other accoutrements that granted video-game players power and access in more than a dozen popular online role-playing games.”
However, the economy within Second Life features a centralized marketplace, meaning that much like the in-game economies that exists within other Massive Multiplayer Online games (MMOs) such as World of Warcraft and Runescape, the creating company has control over the issuance of currency, maintenance of the ledger of transactions, and basically every other facet of the game. They are the Gods of their respective universes.
Enter blockchain, the destroyer of (centralized) worlds.
Through the use of blockchain technology, we can essentially unshackle the closed-loop virtual currencies that exist within these current economies (Gold within WoW/Runescape or Linden within Second Life), and replace them with a variety of open-loop cryptocurrencies that allow for these in-game free market systems, and the users interacting with them, to TRULY be free.
Open virtual currency - a currency that can be substituted for real money using online exchange systems or ATMs that are designed for virtual to real currency exchanges.
Closed virtual currency - created to operate in closed-loop environments and are limited to transactions in virtual goods within the closed environment. A closed platform allows for real currency to be exchanged for its virtual currency. In contrast, open virtual currencies can be redeemed for real goods and real currency.
The Backbone of In-Game Economies
"Professions" are the primary drivers of the multi-million dollar economies inside these games and allow for each individual user to earn money. As a user increases their profession experience the higher level resources they can accrue (Level 1 Fisherman=Small Fish, Level 100 Fisherman=Shark). The user can then take those resources and sell them on the free market to other users.
In the real world this works the same. A high level executive or an experienced tradesman earns more for his time and can therefore buy and sell more optimal assets.
Virtual Accounts as Assets
A popular example of how blockchain can disrupt in-game financial systems that has been picking up steam over the past year has been the idea of in-game asset leasing.
The trendy example goes something like this:
I want to own the rarest sword in Runescape, but my profession level prevents me from buying this item outright. I would agree to the terms of a (collateral-backed) rental agreement with the owner of the item, who agrees to lease me the item for the allotted time period. Because this item can now be represented by an NFT, this transaction can occur without a third-party interaction.
Aside from the fact that most MMOs have level based requirements for items that would keep all but the highest level of players from being able to actually equip a leased rare item, or mount a leased epic dragon. The fundamental flaw is that the user is LOSING capital for the brief experience of owning a sword or mount for a moment in time. Now this isn’t inherently bad, as we spend well earned resources for the sake of experiences all the time (your latest vacation comes to mind), but it simply misses the bigger point.
Blockchain allows users the ability to rent and lease ACCOUNTS in a “Rent-to-Earn” model that financially benefits both lessor and lessee.
In the real world, you wouldn’t rent an executive position within a company or have the tradesman skills necessary to craft valuable items. However, a less-skilled user inside a virtual world could hypothetically LEASE a higher-skilled account, complete the same tasks, and accrue the EXACT same resources as that higher level user.
As in-game economies continue to mature, the assets within them will become as real as the house you rent on Airbnb. Blockchain will slowly decentralize the market systems currently controlled by game developer studios and allow users the ability to lease not only items, but physical accounts to other users for the financial benefit of both parties.