It’s not hard to come to the conclusion that Bitcoin and gaming are a match made in heaven: digital money meets digital reality, with the native currency of the internet potentially enabling open virtual economies that transcend single game universes and link to the gigantic monetary cosmos that is the Bitcoin network.
And the idea offers a welcome break from the usual narrative surrounding Bitcoin’s disruption of legacy financial markets, which–while very much its core value proposition—might leave a large group of people behind. The majority of the world’s population may be using fiat currencies, but isn’t necessarily familiar with the inner workings of their monetary policies.
Online gaming, on the other hand, comes in various shapes and forms and is enjoyed by many. Be it mobile games, console sagas, or massively multiplayer PC titles, an estimated 2.7 billion people in the world are playing video games in 2020, fed with the bountiful supply of new titles churned out by a $160 billion global machinery.
In the gaming industry, Bitcoin seems to have found an opening to reach a new audience.
The idea: earn bitcoin as you play. Get a small amount to familiarize yourself with the currency, outside of media-imposed bias and inside a gamified environment with minimal friction.
The problem: the Bitcoin blockchain isn’t built to scale to the transactional requirements of even a single massively multiplayer game, which rendered the concept of in-game transactions impractical during the first nine years of Bitcoin’s existence.
Christian Moss, co-founder of gaming infrastructure startup ZEBEDEE, faced this exact challenge: since 2013, Moss has been developing games with a Bitcoin angle, yet always ran into a deadend when it came to scaling the titles up for larger audiences.
But come 2018, the beta launch of the Lightning Network introduced massive scalability potential for Bitcoin and opened the door to a plethora of opportunities.
For Moss, it was clear that Lightning was the missing puzzle piece that would enable game developers to integrate Bitcoin. Together with his co-founders Simon Cowell and Andre Neves, he set out to make that exact integration easier and support the trailblazers in Bitcoin-enabled game design.
Today, ZEBEDEE provides solutions for game developers looking to integrate Bitcoin microtransactions into their games via Lightning. While the exact application can vary, at its core, Lightning payments provide the opportunity to replace classic points systems and in-game currencies, which are usually isolated within a game and useless outside of it.
“Our motivation was to allow developers to tap into [the value captured by Bitcoin], and for it to enrich, both financially and technically, the gaming ecosystem,” Moss explains.
A popular model is that of Lightning payouts to players, which provide a small financial incentive to users: play the game and earn money while you’re at it. The payouts are usually financed by game revenue obtained through ads, sponsorships, or in-app purchases. “It is cheaper than a paid marketing campaign, and we are seeing it increase user retention massively,” details Moss.
As an infrastructure provider, ZEBEDEE works with game developers to blend Lightning integrations into their game structures. The startup’s target group, according to Moss, are indie studios and small developers “that are looking at ways to stand out and offer something different when compared to larger publishers.”
While ZEBEDEE’s suite is still in closed beta, a number of projects brought to life with its tools can already be publicly tested.
Bitcoin Rally, a Mario Kart-inspired racing game, involves players collecting sats on the racing track to boost their vehicles as they compete for a grand Bitcoin prize. The game additionally allows viewers to support the racers by donating extra sats as power-ups.
But is a transferable in-game currency actually desirable?
A game economy design that allows players to move in-game currencies out of the game and sell it on a secondary market is everything but traditional and deviates from common game economy design practices.
Game currencies are often used by game designers to ensure user retention: in the case of mobile games, in-game currencies may be sold in batches to increase revenue and ensure users return to the value they locked into their account. MMO titles may develop massive economies fueled by their in-game currencies.
In both cases, it is usually not permitted or even possible to transfer in-game currencies outside of their respective game, and safe for a small number of top-grossing online games, in-game currencies have little to no value outside of their games.
In-game currencies further have escapist characteristics, as they disconnect the player from the value of the “real world” money they use to purchase an in-game currency. What could ten diamonds or a bar of gold (game gold, that is) buy you in real life? You don’t remember, and you don’t care; you’re too busy enjoying the game. That’s the psychological effect of virtual money.
Bitcoin, however, comes at a real value, more so even than fiat currencies: Over the last decade, Bitcoin has often taken the spotlight from traditional stores of value such as gold, continuously outperforming established asset classes. Today, owning bitcoin means hedging against inflation, and that makes Bitcoin an asset that is often held, but seldom spent.
“I’m less interested in just replacing purchases in games with Bitcoin,” Moss notes. But he has observed an interesting behavior among gamers when it comes to the denomination of their coins.
When users are thinking in sats, they seem more willing to spend. Psychologically, their ‘savings’ are stored in bitcoin in another wallet, but their sats are kind of like their ‘fun’ money.
One sat is currently valued at $0.00017. A negligible amount that significantly lowers the psychological barrier to spend some on in-game items.
When it comes to earning sats as you play, on the other hand, the real-world value attached to satoshis plays into the cards of game publishers, even if the amounts earned are mostly miniscule.
On a longer time horizon, Moss believes Lightning can become a viable option for game economy designers of all calibres. While small titles such as casual mobile games likely have more flexibility to experiment, he anticipates large studios to wait and see while letting things play out for the first-movers.
A lot of AAA studios have incubators and/or own smaller indie studios specifically to experiment with new ideas that are too risky and new to add into their larger titles.
AAA (pronounced “triple a”) games are top-quality titles developed by large studios, usually backed by a massive development and marketing budget. Adoption of Bitcoin payments, be it to pay out rewards, allow users to buy a separate in-game currency, or replace any in-game currency altogether, “will start with smaller games and slowly move up the food chain to larger titles,” Moss says.
Notably, ZEBEDEE is already experimenting with adding Lightning to existing AAA PC titles that are MOD-able, which means they allow users to make alterations to the game, for example through content additions and gameplay cheats. MODs that introduce Lightning to successful games would be “kind of icing on the cake” through the addition of a new financial incentive, Moss believes.
Ultimately, an in-game currency doesn’t make up a game’s entire value proposition, and as such, in-game Lightning payments need to be a means to an end for a game that is worth playing on its own, rather than present a game’s major selling point.
In order to appeal to a large audience, games with integrated Lightning payments also need to consider the user-friendliness of their users’ Lightning wallets, a quest that cannot be taken lightly.
However, Moss, who is drawn to game development in part because of its open environment that allows developers to run free with gameplay ideas, is convinced Lightning can create new opportunities for creative design choices. In the long term, he says, he wants to see ZEBEDEE enabling and furthering these opportunities for economic innovation within games.