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Blockchain is games' new tech obsession

Early tech adoption is part of the essence of the games industry - but proposals to integrate blockchain into companies' businesses, not just their games, should give us pause

The tendency to view video games as an entertainment product - part of a spectrum encompassing things like movies, TV shows and music - is an entirely reasonable one. But it can obscure the fact that video games are also often the most advanced, complex and demanding pieces of software that the average consumer will ever use.

Sure, we get occasional references to how amazing it is that modern games are doing in real-time what it used to take rooms full of whirring servers weeks to accomplish for movie special effects only a decade or two ago; but even these comparisons, being focused solely on advances in real-time graphics, don't fully grasp the extent of the technological accomplishment of modern games. In many cases, video games will be the first contact a consumer ever has with brand new technologies that go on to widespread adoption elsewhere.

As such, it's unsurprising that any new technology with a strong buzz around it is of immediate interest to game creators, business leaders and investors. For games, new technology can present a myriad of advantages; it can open up new possibilities for graphics, gameplay or interaction, or provide time- and cost-saving shortcuts to implement previously complex and expensive features, or simply give a competitive leg-up over other games.

Beyond the advantages of new tech, there's also a fear of missing out behind the industry's drive to engage with cutting-edge technologies, even those which remain unproven; adopting a technology that ultimately doesn't pan out might be a waste of time and money, but falling behind the curve as rivals benefit from a great new technology can be outright fatal to a business.

"At GDC there were lots of evangelists out to push the message: blockchain is The Future, and game creators need to get on board with it"

Plenty of new technologies have generated buzz in video games over the past few years - cloud computing and VR / AR stand out as perhaps the biggest and most important of those, and interest in them remains justifiably high even if their true commercial mettle has yet to be fully tested. This year, however, the biggest efforts to generate hype have been around neither of those things, but rather around something quite different: blockchain technologies.

Blockchain is the technology underpinning the existence of cryptocurrencies like Bitcoin, and its applicability to videogames is somewhat difficult to ascertain at first glance. That hasn't stopped plenty of start-ups and blockchain enthusiasts from trying to promote and capitalise upon the idea of adding blockchain systems to games, however. After all, the reasoning goes, games are the cutting-edge tech industry, so shouldn't they be using the most cutting-edge technology? At GDC last week and at various business events over the past year, there were lots of evangelists out to push that message: blockchain is The Future, and game creators need to get on board with it.

Dig into that assertion, though, and you start to encounter some quite confusing narratives. Blockchain technology, in effect, provides a highly secure, theoretically unalterable, and widely distributed (across a large number of locations / computers) ledger. It's an interesting and possibly even revolutionary system for handling the recording of transactions; that's why its first application was for a virtual currency, and why many of the other uses being investigated are essentially things that would previously have used a centralised ledger, such as land ownership registries, some forms of contracts, or copyright data registration.

These are solid applications in which blockchain technology might offer significant improvements over the approaches currently being employed, though more research and testing is definitely required. However, they're perhaps not the exciting, revolutionary potential that blockchain's more starry-eyed devotees insist lies within their new technological wunderkind.

This is where the games industry - always in pursuit of the latest and greatest cutting edge technology - needs to slow down and be a little cautious. There are a range of things that might be accomplished with blockchain that could, indeed, be advantageous to games, but they're largely restricted to technical aspects of the industry's business model. There's an interesting case to be made for incorporating blockchain technologies into how the industry manages copyright and ownership, for example; the tech could open up new possibilities for how the industry and its consumers handle "ownership" of digital games, which presently sit in a somewhat uncomfortable crevice between traditional definitions of product and service. One could also see a blockchain ledger being a useful and worthwhile addition to the development process itself, especially for games where many different companies are involved in providing and working on countless different assets.

"'Blockchain' has become as much a buzzword as a technology, and that's always a risky point to reach"

Some companies are out there pushing those ideas, and that's great. The problem is that there are also a lot of companies who are pushing far less viable, or outright dubious, ideas as well, and very often they're pushing them hardest at the business end of the games industry, not at the developers who might be better equipped to assess the technology and its applications. "Blockchain" has become as much a buzzword as a technology, and that's always a risky point to reach - and never more so than with a technology that's so closely associated with business, finance and investment activities.

Aside from the sensible and interesting uses of blockchain mentioned above (though that's by no means an exhaustive list), there are essentially two blockchain approaches that are being pushed very, very hard at industry executives right now. The first is harmless, but potentially an enormous waste of time and resources; it's essentially an enthusiastic meme-in-waiting along the lines of, 'Hey, imagine your game, but with the blockchain!', often without a hell of a lot more detail than that. I've heard - first- or second-hand - a variety of pitches along those lines, ranging from using a cryptocurrency for in-game currency, to a blockchain ledger for in-game items, to the deeply unlikely notion of distributing an entire persistent world over a peer-to-peer blockchain system.

In most cases, while there are occasional intriguing ideas for what these might enable in a game, the present proposal boils down to adding significant development and resource overhead, in return for some potentially interesting features - but also for the developers actually surrendering a significant degree of control over their own game world. The notion of turning a game's currency or items into property that developers actually can't control through a central, editable ledger or manifest is an interesting one in theory, but enough to make anyone who's actually played a hand in designing or administering a persistent-world game blanch.

Still, there's perhaps something worth exploring here, if only in an experimental and theoretical way for now. That the implications of the technology could be far reaching makes it a vastly more difficult thing to integrate into a game than many of its proponents claim, but does also mean it has the potential to genuinely enable new things in games; it's just that what those are, and what their actual value will be, remains an entirely undefined area for now.

"What's absolutely crucial is to look before leaping; blockchain is new and exciting, but it's deeply unproven"

What's rather better defined - and arguably a far bigger threat than simply wasting developers' time running down a blockchain blind alley - is the use of blockchain right at the leading edge of the industry's business, in the area of fundraising. This is something that's discussed rather less openly than the slightly airy notions of building blockchain into the game itself, but which causes gleams in the eyes of enough industry executives to be really rather concerning.

Blockchain fundraising involves something called an Initial Coin Offering - an ICO - whereby the company raising funds essentially launches an entirely new cryptocurrency and sells units of it to "investors", who can then trade those units freely (with prices rising and falling like any other currency). ICOs are generally linked through some financial mechanism (which may or may not be transparent in nature) to a company or a product, with a notion that the success of the company or product being funded through the ICO will translate into returns for the coin holders.

If that sounds very much like someone has gone and reinvented the idea of a stock market but with a technology buzzword and none of the systems designed to protect investors from predatory behaviour, that's because that's precisely what it is. At the same time, it's not hard to see why this would be appealing to game companies on some level; the demographic of people who are excited about cryptocurrencies has quite an overlap with one of the core, high-spending demographics for games, and in recent weeks I've heard a handful of musing-out-loud conversations about how an ICO could be used to raise funds, with one common theme being the idea of linking coin ownership to in-game property (items, currency or even "land") in the game created from those funds.

It's an idea that's not uninteresting in itself, but the implications of it - not only for coin investors but for the companies who involved themselves in these schemes - are extremely poorly thought through at this point. ICOs are legal and unregulated simply because they're so new; the chances of regulation or outright bans falling on them like a ton of bricks are incredibly high, and the outcome of that for companies that have involved themselves in this gold rush is likely to be very severe.

Raising money in the games industry is damned hard, and it's pretty clear why people would be interested in a way of doing so that bypasses existing funding systems and could even dovetail neatly with a Star Citizen style approach that links game funding to virtual items in the game world. Along the way, however, it seems that some people are understating or blithely ignoring the risks inherent in ICOs, and the potential degree of legal responsibility being taken on by any firm that involves itself in one - let alone the as-yet unanswered questions about integrating blockchain concepts into in-game property systems, as some of the notions being floated would require.

I have no doubt that someone will try this, and every expectation that the industry will continue to peer and poke at blockchain, as it rightly should with any new technology. What's absolutely crucial is to look before leaping; blockchain is new and exciting, but it's deeply unproven, and unlike a new graphics technique or networking technology, this is a system some people are talking about integrating right into the business and financial dealings of game companies, not just into the games themselves. For once, the industry really needs to pump the brakes a little on its usually laudable embrace of new technologies.

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Rob Fahey avatar
Rob Fahey: Rob Fahey is a former editor of who spent several years living in Japan and probably still has a mint condition Dreamcast Samba de Amigo set.