A new frontier for blockchain?
13 Mar, 2019FORTUNE.COM
The cryptocurrency company Ripple on Tuesday announced an ambitious project to integrate blockchain technology into video games. The plan, which features a $100 million fund for developers, could remake the gaming industry by creating a new way to create in-game marketplaces for digital goods.
The fund will be overseen by Forte, a San Francisco company founded this year by prominent gaming executives, and which is backed and advised by a host of big Silicon Valley names, including Andreesen Horowitz, Coinbase Ventures and Battery Ventures.
“Video games have long been quick to adopt new technology, from console to the PC to mobile. Now, blockchain will help game designers who’ve had a hard time facilitating an economy that can serve all types of players,” said Ethan Beard, a senior executive with Ripple’s development arm Xpring, in an interview with Fortune.
Blockchain technology, which provides an indelible ledger run across multiple computers, holds promise for video games because it offers a verifiable way to track digital assets--say a sword or even a character--across different owners in a game.
This is significant because secondary markets for online games, even very popular ones, are clumsy or not entirely legal. Beard notes that people will buy other players’ accounts off eBay for hundreds of dollars, or turn to third party sites to buy in-game currency such as “gold” from World of Warcraft. By integrating blockchain technology into their platforms, game makers could bring such transactions inside the game.
The idea of using blockchain to trade digital goods is not new. In late 2017, a trading game called Crypto Kitties enjoyed a brief flurry of attention because it let users buy and sell unique digital cats, some of which sold for thousands of dollars. In retrospect, though, Crypto Kitties appears to have been more of a proof of concept than a viable game.
“Crypto Kitties introduced what a blockchain could do. It showed the benefit of having a public record of transactions people could trust, and how an in-game economy is well suited to blockchain,” said Brett Seyler, a former Facebook product executive who is now Chief Platform Executive at Forte.
Seyler added that Crypto Kitties failed to gain permanent traction in part because the blockchain it employed, known as Ethereum, proved to be too congested for many transactions.
As for Forte, the company is relying heavily on technology developed by Ripple, including the Interledger Protocol, an open source protocol for conducting transactions across different blockchains, and a smart contract service known as Cordius.
For Ripple, the $100 million development fund represents an attempt to expand its blockchain services beyond its core business of financial messaging software. At the same time, in the event gaming platforms decide integrate the Interledger Protocol, it could spur the broader adoption of the cryptocurrency XRP, which Ripple holds in large amounts.
According to Beard, Ripple’s Xpring will distribute the grants to game developers in the form of XRP, though he acknowledged most recipients will likely convert them to U.S. dollars given that services like AWS only accept fiat currency.
In terms of distributing the grants, Forte and Ripple say they are targeting game developers with over 50,000 daily active users. Beard added that big and small companies will be eligible to receive grants, and that some of the grants could be worth millions of dollars.
More broadly, the push to promote blockchain adoption by video game developers could represent a third major use case for the technology. Currently, many companies are using blockchain for financial settlement and supply chain management, though in many cases those uses have been experimental.
The new fund could also raise the profile of Forte, which launched in February, and is being headed by the founder of mobile gaming platform Kabam. Forte describes itself as a “provider of blockchain-based platform technology for the games industry.” Its other investors and advisers include Coinbase co-founder Fred Ehrsam, Coinbase CTO Balaji Srinivasan and Richard Lyons, the former Dean of Berkeley’s Haas Business School.