What does Blockchain and Video Games have in common?

(It might not be what you think)

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I love playing video games, ever since I was a child I’d spend countless hours sitting in front of the TV helping a fictional Italian plumber defeat a dragon to win the love of Princess Peach. 

A lot has changed since my early days playing Nintendo 64. Since the internet became widely adopted most video games nowadays are online multiplayer platforms where gamers create a digital identity with items that can only be found by playing the game or purchasing it directly from other players. 

Gamers in Massively Multiplayer Online platforms (MMOs) need to do certain tasks to ‘farm’ gold, this can be things like defeating monsters in order to obtain money which can then be later exchanged to other players for goods in the game’s open market. Some of these goods are very scarce which has a greater value among the community and thus a higher price.

Many games in this genre work well until there is a massive adoption and many players enter the platform, as the game’s influx of new players starts to grow exponentially so does money and creates a fundamental problem called “inflation” and it’s more common in video games than what you might think. 

The problem with this method is that there is always new money being created and injected into the economy all the time, this creates a hyper-inflation scenario which quickly crumbles the purchasing power of players. Some players have even left the game for a few days just to find out that their money is worthless when they come back to play. 

In the game Asheron’s call the in-game currency became so inflated that players started to use shards as a form of money because it was easier for them to hedge inflation. In games like Diablo II and Gaia online, players decided to use other currencies different from the one the game developers designed for because it was a way for them to protect their assets. 

Some games have even gone to the extent of pegging their in-game currency to fiat money, usually to the US dollar so players would have a clearer picture of the value of their assets, however, this doesn’t solve the problem of crippling inflation and oftentimes it creates a black market for commodities. 

Some items can’t even be bought with money and can only be obtained by playing the game for large amounts of time, making them even more valuable. In 2005, a Shanghai online game player was stabbed to death by a competitor who sold his cyber-sword online. When the gamer called the police to report the "theft" of his item the gamer was told the weapon was not real property protected by law. 

As you can see there are various similarities that video games and blockchains share which involves economic principles and perceived digital value. One can argue that this is the path the world is going towards becoming more digital. One can argue that developers sometimes act like central banks often making the problems bigger instead of solving them, because eventually the market goes back to sound money principles and leaves behind inflated worthless money.