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Hello, hi everyone,

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welcome to the seventh week of the University of Nicosia's free MOOC on NFTs and the Metaverse,

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this is George Giaglis and today our topic of discussion is going to be gaming NFTs,

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so we're going to be discussing gaming today.

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So today's session, I would dare say is sort of a bridging session because as you know,

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this is a 12-week course we've done, we've covered the first six weeks which were about

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NFTs,

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so we did an introduction and we saw the various use cases and application areas of non-fungible

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tokens.

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As of next week, we're going to move to the second part of the course which is more about

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Web3 and the Metaverse.

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And today's session is sort of transit or sort of trying to bridge these two areas in

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the sense that it is my personal feeling that many people will first experience the metaverse

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through some sort of a game,

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so I'd like to spend some time today discussing the various types of games, the history of

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gaming, how do NFTs fit with a future of gaming and how these could facilitate the transition

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to a more immersive, more persistent digital experience for everyone, what we usually define

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as the metaverse.

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So we will start by going through a short history of video games, and how it all started,

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and I'm not going to, it's totally impossible to cover everything of course, but I'll try

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to go through the major milestones trying to give you a perspective in the sense that

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where we are today and where we're probably heading tomorrow in terms of our gaming experiences

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is something that is very compatible with what has happened so far and although we might

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sometimes tend to think of blockchains and NFTs as a hugely disruptive experiences, I think

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it's somehow the natural next step in the evolution of gaming.

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We'll discuss a little bit the process of creating games, not because I'm going to turn

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any of you into gaming designer production experts, again, we cannot do this in the short

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time of one session, but because I think it is important to understand the various dimensions

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so that we can see why existing blockchain-based games and why existing gaming NFTs have still

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not managed to live up to their expectations,

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so the complexities and intricacies of the process of creating games make it quite difficult.

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We will discuss the main types of benefits that blockchains bring into gaming, namely

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the ability to facilitate real ownership of game assets for the players, the ability

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to transfer assets between games and to create an interoperable in-game or across-game economy.

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We'll discuss it a little bit later again, not trying to do an exhaustive review.

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This is everything that we're discussing are still phenomenal that is under development,

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so we're just going to see where we are today and what the potential next steps might be

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and maybe talk a little bit about the size of the market in-game.

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As usual, our disclaimer, this is educational material only, so although I will be referencing

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a number of projects in this presentation, none of them is included for anything else

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apart from as an indicative example for educational purposes.

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So please do your own research if you decide to delve more in-depth into any of the projects

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that are mentioned in this course.

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So, let's start with the first argument that I'd like to make.

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The argument, as I've said, is that games can be thought of as very early examples of

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Metaverses,

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so those of you in the audience that are already gamers know what I'm talking about

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because you know that many of the MMORPGs that exist out there look and feel like what

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most of us think about as the Metaverse.

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Obviously, with a very specific setting of the virtual world and a very specific objective

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and gameplay and the types of things that are happening are not like a virtual world

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as a whole is a very specific, narrow virtual world, but a virtual world nevertheless,

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so I think as I've said that games can be thought of as proton Metaverse, so very

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early examples of a Metaverse and I think many of us are going to experience the Metaverse

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through games.

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I like this definition of what a game is,

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I'm not really sure that we need the definition, but nevertheless, it's always good to start

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with a common perspective.

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A game is an interactive experience, so it's something that is between players or between

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a player and a computer and is an experience that provides a player with an increasingly

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the challenging sequence of patterns which the player learns and eventually masters,

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so most of the games will make the player go through a series of steps, tasks, challenges

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or whatever that are of increasing difficulty until either the player loses or the game

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concludes with some successful and some games have an objective, others you still continue

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playing for as long as you can and there's never a natural finish and successful finish

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to the game.

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So according to this definition, you can think of video games as having three main components.

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One is a user interface, so the player needs to somehow interact with the game, and usually

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this would happen through a console, a joystick, a controller, or some sort of motion sensing

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device or what have you.

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There needs to be a video display device early on, it might be our TV, now a computer monitor,

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tomorrow maybe a virtual reality headset, but there needs to be something that shows

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us the virtual world through which we traverse while we're playing the game and there needs

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to be a storyline, there needs to be a setting, there needs to be a context, there needs to

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be a virtual world in which the action of the game takes place and if you think about

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it, the combination of these three things, so having a virtual world out there, a virtual

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the world that is displayed in some sort of output device which could be immersive, it could be

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a virtual reality headset.

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The last ability to interact, live and do things within this world sounds a bit like what the

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metaverse would be about, I mean we'll formally define the metaverse next week, but I think

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most of us would agree that a virtual world in which we exist as a character and do things

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and receive feedback and interact with other players or with the virtual world is what

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a metaverse is all about, that's why I'm saying that video games can be thought

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of as sort of metaverse type of experiences.

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The history of video games is quite old, I mean beginning of the 70s with things like

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Zolk, for those of you that are into text-based, a bunch of games or with arcades like punk

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which was the first ping pong-themed arcade game and you see here on the right the type

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of the game that I'm talking about, but remember this is 1972, we're 10 years before the introduction

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of the personal computer, so this is a very, very proto type of experience in an arcade

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type of interface where you have very simple two-dimensional graphics effectively, two

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players or one player and the computer, is controlling a dash that moves up and down

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the screen and there's a ball moving in between if you might not cut the ball and throw

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it to your opponent, then the game continues, if you don't then you lose a point and this

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is how it all goes.

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Pong was developed by Atari, one of the very famous gaming computer developers of the 70s

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and the 80s, Atari has a very special place in my heart along with the Commodore and the

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ZX Spectrum and all these computers because these were the first types of computers that

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I interacted with, so Atari is a legend in the early computer gaming era, Pong was a

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very interesting game, it was created by a guy called Allan Alcorn and it was not created

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to be a commercial game, it was created as a training exercise given to Allan by his boss,

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one of the Atari's co-founder Nolan Bushnell, so Allan did such a great job that Atari thought,

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wow, we gave this as an exercise but there's probably an opportunity here to commercialize

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this, so they did and they commercialized it like this, when we're talking about games

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in the 70s, this is the setting that we're talking about, stand-alone, special made,

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you know, whole 'cupboards' that included a screen and they, and some controls as you can see

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here on the left there are two controls for the two players that are playing Pong and

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there's a coin-inserting machine, so you would go to a mall, to a supermarket, to a shop that

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had arcade games and you would play this game for money, there were no computers, there were

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no, there was no way in which you could do this at home, the big revolution and the big

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advancement in gaming was when we made the transition from arcade consoles, so when computer

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games started the kind of home entertainment again from the 1970s, you can see on the right

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a picture of two kids playing the same game, this is Pong now, but now they're playing

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it at home in a console that is connected to the home computer.

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This, the fact that games entered our homes created an explosion in the types of games,

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so there are, I mean, nearly countless genres of the game today, games would most typically

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be categorized according to the interaction and the game place will have adventure games

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or fighting games or puzzle games or shooter games or sports and so on.

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And another big distinction is whether we're talking about first-person or third person

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games, so like the picture that you see there on your left, you are the character holding

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the machine gun but you never see your actual avatar, you never see your character, the

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the whole world revolves around your own point of view.

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In the third person games like the example we see on the right, you control a character

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that you can see in front of you and you see how he or she might interact with their environment.

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Another way of classifying games could be according to their dimensionality, so we'll

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have 2D games, the early examples of games where we like have very crude graphics both

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for the avatars and for the surrounding world, so Super Mario as you can see there on the

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left is an example of such a game and I'm not trying here to make an argument that says

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that two-dimensional games are worse than 3D games, they are just older and there's

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a different type of modality of interacting with a virtual world and I'm saying this

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because I might be proven wrong here but contrary to what most people expect or predict, I think

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there's going to be a sizable market for metaverses in the beginning at least of the commercial

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era of the metaverse where the world around us would be deliberately simple, so everything

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in a computer is a model of reality and we can decide what type of abstraction we want

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to have against that reality, so many designers and producers and providers and then users

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I think would choose to go to simpler models where they can focus more on the social interaction

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rather than be consumed by the elaborate details of the worlds around them but that's one possible

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direction and some people will take that path, others might choose to go to a more realistic,

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photorealistic I mean games, so we have 3D games now like the most you see on your right

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where your view of the world is essentially a 3D camera perspective, either first person

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or third person as we discussed and there are some games in between these two like the

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payments from the middle from Wolfenstein which was the first game that popularized the shooting

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games, a genre where there was a sort of a pseudo 3D environment in the sense that everything

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was in reality 2D, there were no 3D models there but the use of two-dimensional sprites

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creating the impression to users that they were seeing a 3-dimensional world. Now the

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most important distinction of games and most important for the purposes of this lecture

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because again trying to make a point that would lead us to NFTs and Web3 is that most

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video games would be classified as what we call RPGs like Role Playing Games in the sense

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that when you play the game you assume the role of a character and you take control of

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the actions of that character, so most of video games are RPGs. One sub-gender of

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RPGs that became popular especially in the 80s and beginning of 90s, was what we would

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call multi-user dimension, originally it was called multi-user dungeon or multi-user domain

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games, it became popular with the art from the MUD anyway. Dungeon because it started

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from adventure games that used to take place in the worlds characterised by dungeons

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and the distinguishing characteristic of these games was that they were typically text-based

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or storyboarded. So there were no elaborate graphics, and sometimes there were no graphics

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at all, a player would enter a world that was usually fantasy or science fiction inspired

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world and they would receive text-based descriptions. So you are now in the forest you see you know

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housing front of you, this was typical like the introduction to Zork, one of the first text

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based adventure games but the distinguishing characteristic of MUDs was that they were

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multi-player, there were many players that could play the game at the same time and they could

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have either an adversarial or a collaborative relationship between them depending on the

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game and how it works, so sometimes you would know be there to kill other players or

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to cooperate with them in order to achieve some objective and this sounds sort of like,

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you know, trivial today but it was far from trivial back then, the ability to create worlds

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that would accommodate many users. So MUD types of games were the first games

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that created an internet type of experience for the users back then in the early 90s, many

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people back then discovered what we call today the internet so a worldwide connected network

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of computers through playing such kinds of games but because of you know bandwidth or

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technology limitations these games were usually very limited in terms of their graphical interfaces.

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Now, RPGs and MUDs came together and evolved into what today we would call MMORPGs or massively

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multiplayer online the wrong playing games which are video games here we're talking now

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about virtual worlds that have you know a very significant graphical interface sometimes

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with a very high degree of photorealism and allow a massive number of players I mean I'm

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talking in the range of even millions of players to play the game at the same time. Another

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distinguishing characteristic of these games and this characteristic that is very important

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for us is that these games feature what we would call persistent worlds, in other words

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we're talking about games where if you as a player stop playing the game the game still

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continues to exist, other players are there, the world evolves, things happen, so next time

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you go back online you might find a very different environment because things have happened while

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you were away and this is something that, okay for the younger people here that you know the

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first types of games that they got used to were MMORPGs might sound like a natural thing but

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for us it's a total revolution it was a total revolution because previous types of games

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existed only as far as long as I was playing them the moment that I stopped playing the

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game when you know I got offline or when I got the game over sign the game didn't exist

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there the world stopped existing it came into existence and it stopped being there when

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I entered and when I stopped playing the game. MMORPGs are the first example of persistent

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worlds and as we will be discussing next week because persistence is a very important defining

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characteristic of the metaverse, I would say that you know most early metaverses

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is that we will say enjoying some type of real commercial success in the sense of having

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many users in them will feature some sort of game-like persistence in the experience of

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the users. Now these games have become hugely popular those of you that play such games

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know that already for those of you that you know all these are new there are games like

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World of Warcraft where the total player count of people that have accounts play that game are,

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like you know, in the in the hundreds of millions and there might be more than a million people

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playing the game at the same time around the world so we're talking about really really

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popular really successful and mass-adopted games in the respective communities

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and this has resulted naturally in gaming being a huge industry, I mean I come 

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from a blockchain and crypto type of background into this course so for me, the fact

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that the whole crypto industry is worth around a trillion is, mind-blowingly

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hugely successful but we're talking here about an industry in which the

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number of cryptocurrency users are measured in the hundreds of thousands of millions

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around the world, here we're talking about an industry in which almost half the world more

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than 3.2 billion people worldwide play some sort of computer game, many of these people

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play MMORPGs but not only that and there's a very aggressively growing e-sport industry

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where the audiences have grown to more than half a billion people in 2022 so you think

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about it, almost one in every two persons in the whole world are playing games and around one

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in sixteen people are watching video games being played competitively by other players so this is

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a huge industry and if it somehow makes the transition to Web3 it's going to be

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a killer app for blockchains, for Web3 and for NFTs in general. The global gaming

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market is projected to be worth more than 250 billion dollars by 2025 so we're talking about a huge

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industry, there's console based marketplaces where you can get games like Nintendo,

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PlayStation or Microsoft Xbox and stuff like that, a whole industry of course in mobile games, iOS,

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Google Play for Andriod and so on, a huge number of websites and a huge number of platforms

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that provide access to gaming to desktop computers of which I think Steam is the largest, they support

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around 70,000 gaming titles. The industry is huge and being dominated by players that come from all

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backgrounds so you see technology companies like Microsoft, you see consumer electronics

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companies like Sony, you see game studios like electronic cards and games like Rob

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Blocks being in the top 10 of the gaming industry and you see the top 10 companies have

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market caps that range from tens of billions of dollars to, okay Microsoft has a huge market

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cap but it's not only gaming, so we're talking about a very very big industry that might make

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the transition towards Web3 in the coming years. Now this was a very quick introduction

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to the history of gaming and how we have arrived where we are today with NFT games but before

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discussing this I'd like to spend just a few minutes discussing game development. So

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the games that you saw a couple of static images from in the previous slides like

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world of Warcraft or Minecraft or similar types of games are very very complex competitive

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projects to develop, they need huge teams of engineers, of artists, of designers and of

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producers to be coordinated and to be able to create something that is not a one off thing,

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it's not like a Hollywood movie where you might also need a similar type of

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array of people coming together and coordinating themselves for a limited amount of time until

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the movie gets out to theaters and then that's it, here we're talking about an ongoing process

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of always improving, developing and evolving the game while the game is being played

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and especially in the case of MMORPGs you need to be able to deploy

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upgrades in real time while millions of people are using the product so we're talking about a very

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complex and there go and I'm saying this because I want you and I want people like me

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also to be a bit lenient when it comes to judging the gameplay, the design and the general

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complexity and sophistication of blockchain-based games that we see around us because we're

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trying to compare what huge companies with billions of dollars of market cap and thousands of employees

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are able to produce after 10 or 15 years in the industry, with what a team of five

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or ten start-upers might be doing in a whole new technology with whole new types of assets like

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fans of the lot non-fungible tokens and sometimes I see reports saying, yeah but none of

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these games are fun to play or sophisticated enough or whatever what do you expect did you

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expect that you know a team of people that have just released a game that there's no

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trodden path and there's no prior learning or whatever would be able to achieve anything close

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to what a very sophisticated professional public company making billions of dollars is

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producing, I mean, it's sort of expected that you would see the types of games that we see in the

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in the blockchain and the crypto world today. So anyway, coming back to the team you would need

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engineers obviously and not only people that would actually code and program the software but

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especially when we're talking about console-based games, also people that would design and

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manufacture and integrate the hardware on which the software will be running, you would need a huge

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array of artists because you would need people that would define the concept, what is the game

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vision of the storyline and everything, you would need people that would do the 3D modeling

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of everything within the virtual world, the environment, the characters, the assets you would

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need texture artists that would add textures and details to the 3D models created by the

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modulus, you would need people that would spend their time working on lighting and motion capture

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and sound and all these things. If you attended and watched the discussion of (Punk) 6529 

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with Beeple the other day you might remember how much time and energy Beeple was

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telling us that he was he's spending when he's creating his digital art, not in actual

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modeling or customizing the models that he started working from but actually is sculpting or

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photographing or playing with the lighting around these objects that he creates. So you will

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need designers, you will need people to design the mechanics of the gameplay, to design the modalities

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of player interaction and so forth and you need a production team that would actually bring

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everything together would deal with this as a project with specific milestones and

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deadlines and phases and what have you, and they was they would liaise with the business units

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that would commercialize or market or sell the game, so we're talking about very big teams and

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that's why sometimes we make distinctions between what we call indie and AAA games so there are

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publishers that can afford having all these things and they are like they're the Hollywood type of

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of actors in the gaming industry and there are indies so an indie game would be produced by an

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independent studio or a small number of individuals and this is all the games in the blockchain

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world, I guess. I spoke about mechanics so the mechanics of the gameplay is a very very important

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thing because it defines all the rules and procedures that guide the player and they also dictate what

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the game responses to the player's moves or actions can be; an interesting thought here is that

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many/most of the games that we have today, in order to not confuse the player or not

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create a steep learning curve for a new player, try to adhere to the laws of physics so you

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know when you leave an object in the game it will fall down you know pulled by gravity as it would

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in the physical world however, you understand of course that there is no reason for this to happen

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in the digital world, we are free from all these constraints so in the metaverse sphere I would

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expect that we would see some very original or experimental modalities regarding game mechanics

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or world function mechanics where the world would not necessarily work as it does in the physical

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world, so we might you know free ourselves from the limitations of the physical world in these environments.

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Another important aspect is creating assets and here you would need to have access to

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quite sophisticated software for 3D modeling either to create characters as you see in the picture

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in the top of the screen which is I think from blender one of 

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the open source types of software for 3D modeling all creating the details like the last

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and best practices in the machine gun that you see in the image below which is from

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a map software I think is from 3D Studio Mark so you would need to have all these things to create

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assets and here I'm still talking about design and creating the assets you would need to enrich the

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assets that come from your 3D modeling software and you usually start from some sort of mathematical

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polygonal type of structure to create and add texture and details and lightning and stuff like

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that on top of this and all this work is still to create the asset itself which could be part

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of the virtual world, could be a playing character, it could be a non-playing character within a game,

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it could be a weapon or a shield or a uniform or you name it, and has nothing to do with the actual

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gameplay and ownership and transferability and where you would be able to find and how you would

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be able to sell or swap or trade these types of assets, so the learning outcome here is that

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creating a sophisticated competitive game is a very very competitive process. There are there 

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a number of game engines so there are a number of software environments that can be used to

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allow game designers to bring everything together so 3D modeling gameplay mechanics as a creation

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interaction between players and non-playing characters and so on, examples are the unreal engine

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or unity or cryogen that you see here in this slide and there is also a huge body of work in

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developing standardized libraries for APIs and software interfaces for either 3D graphics

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processing hardware like your GPUs in your computer, like OpenGL and WebGL or more proprietary types

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of APIs like DirectX by Microsoft for those that are programming games on Microsoft platforms.

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Now having said all this and I understand that this is a very very

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quick and shallow introduction to the technologies and processes around game creation

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I would like to focus the remainder of our time on what we're interested in today, like

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what happens when the technology of blockchain when cryptocurrency when fungible tokens and non-fungiable tokens (NFTs) 

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meet gaming, how might we see the future of gaming through this

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this lens and as I've said in the beginning I think that there are three major

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types of implications that blockchain will have in gaming, blockchain being a technology that allows

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for value creation storage and transfer over computer networks, I think it will have a substantial

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effect on gaming because it will provide a much-needed layer for storing and transferring value

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in gaming and I think there are three things there, one is asset ownership so who owns the assets

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in a game, there's this famous story that Vitalik Butterin thought of a non-centralized Ethereum

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when I don't remember which game he was playing but they deprived him of one of the weapons

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or sheilds that he had managed to earn by playing the game and he realized that although

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he thought that because this was in his inventory it was his it was actually not there was not, there's

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no real ownership of your character, your avatar, your asset, your weaponry or whatever when you're

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playing a game, everything is being controlled centrally by the game provider so if they want

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they can throw you out of the game they can, 

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block your account or they can

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deprive you of any asset that you might have had so blockchain will change all that

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because it would allow people to actually really own their assets that they use in the games and

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when I say really own I mean they would have the ability to not only trade them with other users

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but also do that and many other things outside of the game, so when you are when you have the asset

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in your wallet as an NFT, you might use it in this particular game but the asset becomes also interoperable,

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it can be used in other things so for example many of you have minted the course access token

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for UNIC, this is a token that give you access to some of the material for the course and certainly

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the exams so it's a token that helps utility within the ecosystem of this course but nothing

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stops someone from creating some other experience which could be educational, a game or what have

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you and have this experience token gated controlled and affected by the ownership of this token

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so have created something that is accessible only by people who happen to have this asset on their

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wallet so assets become more important than the games themselves, I don't know how many of you

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are familiar with projects like Loot (for Adventurers) or the N Project in the NFT

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space but both these projects and many others have flipped the idea of a game

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on its head and they said why should we create a game and have assets only within this game

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and not create the assets first, so create a set of weaponry and

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shields and shoes and helmets and so on with different powers and different degrees of rarity

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and aesthetics and so on and let everyone use the collection of these, this becomes an NFT

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collection of assets in the games or arts or experiences that they create, so we're talking

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about a wholly different perspective on how we view games if we have blockchain-enabled NFTs as

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assets in them. And the final the effect of blockchain into gaming is the ability to create

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in-game and sometimes (hopefully in the future) across game economies, so create whole economic

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structures with supply and demand dynamics in which value is distributed to users and controlled

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by the users within the game and not monopolized by the platform creating the game itself. So again

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NFTs allow for true digital ownership for game assets so if you hold your character or

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avatar as an NFT you are the real owner it cannot be taken away from you any asset that you buy

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or you collect while playing the game can also be an NFT and then you can swap or trade with other

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players without any intermediaries and without any possible censorship by the game owner and they

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can also exist as I've said outside the game as independent entities that might have other

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users or internal values so the collection of these four properties that you see in this slide

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create a revolutionary, I would dare say, environment on how assets in games can be thought of that

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was simply not possible in the pre-blockchain world even in the MMORPG era.

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This has created a number of experiments, one of them that I'd like to spend a few minutes

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discussing because it has received quite some attention by the community (at least the blockchain

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community) is the so-called played-win games so as the names suggest these are games in which

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the economics go to the next level because they allow their players to play the game for some sort

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of a financial gain. Not in the sense of gaining from other players so like betting and battling

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and whoever wins takes the money and wins the bet but in the sense of creating adding value,

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creating new value that is created by playing the game itself. There are typically two broad

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categories, those that are called "free-to-play" games, so you you can start playing the

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game for free although if you do that you most probably will be limited in your ability to

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to gain money from playing it, or, the so-called "pay-to-play" games in the sense that users will need to be

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equipped by some sort of NFT so you would need to get an avatar or weapons or your shoes or whatever

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so you need to buy NFTs you need to invest in the game in the beginning and once you've made

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that investment, depending on how good you are in the game and how powerful or rare the properties

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of your NFTs are, you might earn money usually in the form of some digital tokens which has fluctuating

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value so whether these games would be able to create sustaining economies is a different

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question that we're going to see in a while. Typically in such games players will be able to create

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or breed new characters so you would be able to you know literally breed your characters and create

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new ones that you can either use for playing or sell in the marketplace, you would be able to purchase

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items either within the game or in third-party marketplaces and you would typically be able to

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unlock or earn additional digital assets or tokens by playing the game depending on how long

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you played or how good you are at it and so on. The archetypal example here is actually infinity,

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I'm not going to spend so much time on it because I think it's old news now but I don't

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think any discussion about "play-to-earn" would be complete without discussing. Actually because it

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was the first game that became hugely successful I mean at some point a year or a year and a half

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ago there were lots of people, especially in countries like the Philippines where it was

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extremely popular but were actually doing it as their job, they were making money by

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playing the game. What is typical about Axie is that they pioneered this dual token structure so

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these games usually have more than one type of tokens so they have both fungible and non-fungible

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tokens and the fungible tokens usually are split between a governance token in the case of Axie

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Infinity it's the Axie Infinity Shard and the AXS token and a utility token in the case of Axie Gold Smooth

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(I thought the small anyway smooth or small) love potion the SLP token which is the

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reward token or the utility token that people would earn and there's also NFT tokens in the

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the case of Axie the playing characters are NFTs the Axie themselves as well as tokenized lots of

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land that act as forms or basis of operation for the activity. The game is about battling

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with with other opponents your Axie against them so it's mostly a card-based game in which

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players playing Terrence is not very interactive. There are a number of games that have been developed

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following on the same or similar ideas. I have just some indicators examples here so Alien

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Worlds or Galaxy Fight Club or Gods Unchained they are I would dare say and forgive me because it's a

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very simplistic type of description and maybe unfair to them they are advanced versions of Axie

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infinity in the sense that they follow a similar trajectory in terms of creating environments in

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which characters fight or battle each other and players might make money if they

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win against their opponents. A different Sam Zendre is the one in the bottom,

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projects like Stepping or Genopets which are what we would call "move-to-earn"

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games in the sense that they would reward users for their daily movements so the more that you

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walk or run or in the case of Genopets is much more complicated because you have

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this virtual pet so on top of banking steps you might do other things it's

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more move-to-earm and plat-to-earm type of game but all of them (or most of them) have the same

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basic underlying economic structure in the sense that there are a number of NFTs so in the Galaxy

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Fight Club you have your fighter and you have weapons that this fighter is equipped to

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and depending on you know what type of fighter or what type of weapon you might have different

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abilities in battle and so the outcome of the game would be a combination of your skills combined with

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the types of assets that you own. In the case of Stepping how much money you would make

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would depend on a combination of factors like you what type of shoe you have (so this is an

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NFT) what type of added properties you have equipped these shoe with and different shoes have different

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properties and these properties have different values so for different uses there are different

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optimal configurations of your shoes so quite complicated but at the same time this

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complication might increase the joy or the satisfaction that users get

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by playing the game. So these types of games exist today but I would like to emphasize that we are

410
00:51:01,480 --> 00:51:09,960
still extremely early in the NFT gaming phenomenon not only played one games but generally and

411
00:51:11,960 --> 00:51:18,760
I said earlier that we sometimes tend to be unfair to the people that are creating these games

412
00:51:18,760 --> 00:51:28,520
because we compare them with huge conglomerates that have been hugely successful

413
00:51:28,520 --> 00:51:35,080
in monetizing Web2 types of games but these people are startups that are trying to redefine an industry

414
00:51:36,280 --> 00:51:42,760
and it has proven to be very challenging to create a self-sustaining in-game economy. So as I've said

415
00:51:42,760 --> 00:51:47,560
most of the projects are using a dual layer structure so both fudgeable tokens and NFTs

416
00:51:48,200 --> 00:51:54,120
and a multi-tokens structure within its layer so you might have a governance and a utility token

417
00:51:54,120 --> 00:52:03,160
and multiple NFTs but I have yet to see a successful token economics mechanism so if you

418
00:52:04,440 --> 00:52:10,840
if you witness most of the projects they follow a trajectory in which at least if their utility

419
00:52:10,840 --> 00:52:19,400
token doesn't have enough utility it tends to fall in value because people would sell

420
00:52:19,400 --> 00:52:27,080
it if they have nothing to do with it within the game and this of course creates a selling pressure

421
00:52:27,080 --> 00:52:34,360
that combined with the infinite supply utility tokens that most projects would follow

422
00:52:35,000 --> 00:52:41,160
will result a in a death spiral for the price of the token. It is interesting because

423
00:52:41,160 --> 00:52:49,880
some analysts go as far as claiming that the play-to-earn movement itself is not sustainable

424
00:52:49,880 --> 00:52:56,760
because giving monetary rewards may prove to be bad for player retention because it weakens the

425
00:52:56,760 --> 00:53:02,680
the internal motivation that players would have at playing the game, I'm not sure I subscribe to this

426
00:53:02,680 --> 00:53:09,800
line of thought I think there's a very huge incentive for people to play games for some

427
00:53:09,800 --> 00:53:21,400
monitary gain and if we are true believers in our conviction that Web3

428
00:53:21,400 --> 00:53:29,240
is about taking value from the platforms and giving it to the users then all these

429
00:53:29,240 --> 00:53:35,720
billions that we discussed earlier, being made today by the gaming industry and being shared by a

430
00:53:35,720 --> 00:53:45,000
small group of companies that control it, we will flow through to the end

431
00:53:45,000 --> 00:53:54,760
users if and when we start finding self-sustainable economic models for that. A more

432
00:53:55,400 --> 00:54:00,440
fair criticism is that most games today seem to emphasize the tokenomics that I discussed

433
00:54:00,440 --> 00:54:07,640
earlier more than game design but we have to understand that for game design on blockchain we have

434
00:54:07,640 --> 00:54:15,320
huge technical challenges which at the moment prevent us from creating 100% decentralized

435
00:54:15,320 --> 00:54:22,120
games, remember the metaphor I used earlier, we are in the early days of the internet so as the first

436
00:54:23,080 --> 00:54:29,880
popular games in the internet era where months there were games that allowed many people to play

437
00:54:29,880 --> 00:54:36,920
together but they were text-based or storyboarded because you couldn't have sophisticated graphics

438
00:54:36,920 --> 00:54:43,640
in the primitive internet infrastructure we have the same thing here, we have blockchains that are

439
00:54:43,640 --> 00:54:51,160
very slow, transactions are public so you cannot have a real-time game, you cannot have game in

440
00:54:51,160 --> 00:54:56,680
which if I do something and this something creates a transaction on the blockchain and this

441
00:54:56,680 --> 00:55:04,360
is published you know 12 seconds later in Ethereum then my character will wait for 12

442
00:55:04,360 --> 00:55:11,080
seconds before it fires a bullet out of their weapon, this is a very bad user experience

443
00:55:11,080 --> 00:55:16,920
so we need to solve these technical problems but I'm not worried about technical problems like it

444
00:55:17,480 --> 00:55:24,360
happened in the early days of the internet and many people thought back then that this would be

445
00:55:24,360 --> 00:55:28,120
the lack of speed or security or whatever would be something that would

446
00:55:29,480 --> 00:55:35,880
condemn internet to oblivion and of course, it didn't happen, I am sure that the technical

447
00:55:35,880 --> 00:55:43,400
challenges will be solved. In the meantime we will be looking at games that are only partially

448
00:55:43,400 --> 00:55:50,520
decentralized and when I say partially I mean the characters, the avatars and the assets are

449
00:55:50,520 --> 00:55:56,840
decentralized they exist on public blockchains and they are truly owned by the players but the

450
00:55:56,840 --> 00:56:05,720
gameplay mechanics are still centralized and they happen on centralized servers. So concluding

451
00:56:07,480 --> 00:56:15,480
this session I would like to just emphasize four points: Number one is that gaming is huge

452
00:56:15,480 --> 00:56:23,560
and if gaming moves to blockchain and mass this will prove to be a killer application for

453
00:56:23,560 --> 00:56:31,800
NFTs I know that with (Punk) 6529 you've discussed a lot about art and generative art and PFPs and

454
00:56:31,800 --> 00:56:38,840
all these things and these are all fine applications but I think gaming is going to prove to be one

455
00:56:38,840 --> 00:56:44,600
of the killer application of NFTs and of course PFP collections and even generative and stuff like

456
00:56:44,600 --> 00:56:53,320
that has a huge role to play in gaming. The second takeaway is, I think that blockchain

457
00:56:54,040 --> 00:57:01,240
will act as the value layer in games providing three things, one is true ownership of assets by users,

458
00:57:03,000 --> 00:57:09,000
number two interoperability of assets so the ability to move assets across games and, number

459
00:57:09,000 --> 00:57:17,720
three, creating sustainable in-game and across-game economics. Take away number three, there are still

460
00:57:17,720 --> 00:57:24,200
significant challenges to be overcome many of them are technological and design oriented, we still

461
00:57:24,200 --> 00:57:33,480
haven't figured out ways in which we can move game mechanics to the blockchain and some challenges

462
00:57:33,480 --> 00:57:40,120
are economic we still haven't managed to find the perfect balance between governance,

463
00:57:40,120 --> 00:57:47,400
utility and non-fungible tokens to create a self-sustaining economy within a game.

464
00:57:48,360 --> 00:57:55,960
Finally, keep in mind and we'll discuss this next week with (Punk) 6529 in more detail that games

465
00:57:56,920 --> 00:58:00,760
can be thought of as early examples of metaverses and may

466
00:58:00,760 --> 00:58:06,760
yet prove to be the application type through which most people will have their first

467
00:58:07,640 --> 00:58:15,080
work-free exposure. As always we have some further reading for you and this concludes

468
00:58:15,640 --> 00:58:25,240
the slides for this week. If you have questions let me move to Discord. I mean as usual, you can

469
00:58:25,240 --> 00:58:33,080
see in the screen you can ask your questions in the OM Chat or on Twitter using the #NFTQnA

470
00:58:33,080 --> 00:58:42,680
hashtag my colleagues will have probably already started feeding questions on Discord for me so

471
00:58:42,680 --> 00:58:50,680
let me switch and see if I can find them there and I have my colleague Chris Christou from

472
00:58:50,680 --> 00:58:57,240
the UNIC Virtual Reality Lab with me in case there are questions that are more technical

473
00:58:57,240 --> 00:59:03,960
because as I said I don't come from a gaming background I might call him to join me in

474
00:59:03,960 --> 00:59:15,160
answering them so let me see. So there's one question that says "is it actually sustainable

475
00:59:15,160 --> 00:59:22,520
to release a token for a game that can be exchanged for fiat?" well that's a

476
00:59:22,520 --> 00:59:33,480
million dollar question. It's certainly this is the case we have it is proven by the gaming

477
00:59:33,480 --> 00:59:38,680
industry that people there's lots of people out there there's a big market for gaming so there's

478
00:59:38,680 --> 00:59:44,760
lots of people that would actually be able to open their wallet and pay money to play a game,

479
00:59:44,760 --> 00:59:53,560
they pay literally billions every year to play games. Whether this could translate into a sustainable

480
00:59:53,560 --> 01:00:03,720
mechanism through which money flows into an in-game economy in blockchain and allows that value

481
01:00:03,720 --> 01:00:10,360
to be multiplied between the users of that economy and somehow shared between those that

482
01:00:10,360 --> 01:00:18,520
create the game, those that play the game and those that provide the foundational infrastructure for

483
01:00:18,520 --> 01:00:28,760
security and scalability so the underlying blockchain is something we

484
01:00:28,760 --> 01:00:35,560
need to see how this could happen. I have to say that out of the examples that I showed you earlier

485
01:00:35,560 --> 01:00:42,920
and all the others that I've seen in the NFT gaming space this hasn't happened yet and I think it

486
01:00:42,920 --> 01:00:54,680
has happened for two reasons. One is that there hasn't been a game yet that would attract people

487
01:00:56,520 --> 01:01:03,080
for the intrinsic motivation, there have not been games like Minecraft or Roblox or

488
01:01:03,080 --> 01:01:09,160
the World of Warcraft or all the other games that have managed to create communities of millions of

489
01:01:09,160 --> 01:01:15,240
people that want to play the game for the shear pleasure of playing the game and even pay to play

490
01:01:15,240 --> 01:01:24,840
that game. Here we have mostly seen people that come in like "Kamikazes", getting into the game to

491
01:01:24,840 --> 01:01:33,400
make a quick gain out of it and this mentality does not help the community of a very particular game

492
01:01:34,120 --> 01:01:36,440
to create a lasting

493
01:01:40,360 --> 01:01:45,400
with real life with games

494
01:01:45,400 --> 01:01:51,400
games

495
01:01:51,400 --> 01:01:58,120
option that is more organic and less important people that play the game because they like it and

496
01:01:58,120 --> 01:02:04,760
they're not ready to leave it to go to the next game because they would make more money in the short term

497
01:02:04,760 --> 01:02:16,200
out of it. I'm not saying it's not

498
01:02:16,200 --> 01:02:19,400
I see myself

499
01:02:23,720 --> 01:02:26,920
some sort of internet

500
01:02:26,920 --> 01:02:27,560
let me know

501
01:02:27,560 --> 01:02:34,280
okay sweet okay I will continue saying that

502
01:02:38,920 --> 01:02:40,680
you know they will not do it

503
01:02:42,920 --> 01:02:50,040
maybe it's a process some of the games that we've seen become useful for a

504
01:02:50,040 --> 01:02:57,560
community or a longer amount of time like Axie Infinity or Stepping might make it

505
01:02:57,560 --> 01:03:04,280
but go through you know so what happened they went down now they will go up and find you know an

506
01:03:04,280 --> 01:03:12,200
equilibrium but I think to answer your question that we will see games and we will see games very soon

507
01:03:12,200 --> 01:03:23,560
that people would be willing to use their tokens inside the game and sell it outside the game for fiat

508
01:03:23,560 --> 01:03:29,080
and there will be a thriving demand

509
01:03:32,120 --> 01:03:36,760
and this is becoming the speed of blockchain transactions

510
01:03:36,760 --> 01:03:38,760
I mean

511
01:03:38,760 --> 01:03:40,760
yeah

512
01:03:40,760 --> 01:03:42,760
question

513
01:03:46,200 --> 01:03:52,280
blockchain scalability is a challenging thing I mean

514
01:03:53,800 --> 01:04:01,160
I've been in blockchain since the very beginning. Satoshi chose a 10-minute interval between

515
01:04:01,160 --> 01:04:13,240
blocks in the Bitcoin blockchain because it wasn't possible to propagate transactions in the network

516
01:04:13,240 --> 01:04:21,880
in a less amount of time so that all miners would know of the latest block

517
01:04:21,880 --> 01:04:26,360
and we'll be able to start working on the next one when the previous one was mineg so

518
01:04:26,360 --> 01:04:32,680
the Bitcoin blockchain had and still has a 10-minute interval between

519
01:04:36,440 --> 01:04:38,440
between blocks

520
01:04:40,920 --> 01:04:42,840
now moved to

521
01:04:45,560 --> 01:04:54,440
my 12 intervals between blocks so in 10 years time because Bitcoin started in 2009, we're not

522
01:04:54,440 --> 01:05:03,800
2022 so 13 years time we have gone from 10 minutes to 12 seconds and there are all sorts of solutions for

523
01:05:05,240 --> 01:05:14,280
scaling that further and new technologies are coming all the time either for Layer 2s like optimistic roll-ups or

524
01:05:14,280 --> 01:05:26,120
zero-knowledge snarks or other ways all for Layer 1s that have much much less demands in terms of

525
01:05:26,120 --> 01:05:39,720
space or computing power or synchronization of nodes and so on so I'm sure that in the future

526
01:05:39,720 --> 01:05:47,480
this problem will be solved but for the time being because games need near-instantaneous

527
01:05:49,000 --> 01:05:56,520
type of reactions, when I have a shooting game and you fire the weapon it's the bullet to go

528
01:05:56,520 --> 01:06:02,360
watch it its target of not hit it's targeting and do whatever it will do instantaneously I cannot

529
01:06:02,360 --> 01:06:11,480
wait 12 seconds I cannot even wait two seconds for the experience would be detrimental so

530
01:06:12,760 --> 01:06:22,680
my personal six times of game the first types of games will be becoming not going to be like

531
01:06:25,240 --> 01:06:30,680
huge requirements in terms of speed that's why we're seeing you know card-based games in which players

532
01:06:30,680 --> 01:06:36,920
play in terms so there's no real-time interaction we see the move to earn type of

533
01:06:37,480 --> 01:06:38,840
standard you get

534
01:06:40,040 --> 01:06:49,480
free for or stepping or whatever because these things do not have with and and real-time interaction

535
01:06:49,480 --> 01:07:01,640
requirements it will probably be a few years before we start seeing the migration of 

536
01:07:01,640 --> 01:07:09,720
interactive games to the blockchain today. I have to wait until the holographic technology comes out and

537
01:07:09,720 --> 01:07:17,240
then games will be the ultimate experience, that's very interesting and I think I will answer

538
01:07:17,240 --> 01:07:26,600
this question then we can probably wrap this up. In the reader science world there have been two

539
01:07:26,600 --> 01:07:34,840
technologies that (how can I say) invited radical of researchers at

540
01:07:36,120 --> 01:07:41,800
indifferent points in time one was artificial intelligence that started in the late 60s with

541
01:07:41,800 --> 01:07:49,880
lots of unfair and expectations never managed to deliver much until the

542
01:07:53,240 --> 01:07:58,120
the discovery of Neural Networks and Deep Learning a few years ago and suddenly we have a

543
01:07:58,760 --> 01:08:04,760
solution. The other technology is virtually everything that has to do with the virtualization of the reality

544
01:08:04,760 --> 01:08:13,480
around us, either pure virtual reality or of managed reality has up to nowbeen more hype

545
01:08:13,480 --> 01:08:24,040
than reality so to address the students comment I will say yes, I agree, if and when we see a holographic

546
01:08:24,040 --> 01:08:37,400
technology come out or be too heavy and difficult to use and we'll not have

547
01:08:37,400 --> 01:08:41,960
a huge latency and I will not get dizzy after using them for 10 minutes or whatever,

548
01:08:42,520 --> 01:08:48,120
yes, there's huge potential for virtual long-term reality and also to be extremely

549
01:08:48,120 --> 01:08:55,560
uh and this happened we'll discuss all these in a couple of weeks because we have a dedicated

550
01:08:55,560 --> 01:09:03,000
session in transiting visualization technology, I think Chris would have a lot to say then but

551
01:09:03,880 --> 01:09:09,720
until the time that these technologies become really
552
01:09:09,720 --> 01:09:23,160
let's say, come to go to standard in which they can be commercially deployed for the mass market

553
01:09:25,480 --> 01:09:34,040
need some time so we'll see. Another question is "what incentive do current game designers have

554
01:09:34,600 --> 01:09:39,400
to explore or adopt blockchain in their games, don't they currently benefit from their centralized

555
01:09:39,400 --> 01:09:45,880
approach?" The answer is a clear yes but that has never stopped the world from progressing it's you know

556
01:09:46,920 --> 01:09:53,240
heard this argument time and again and says "what incentive does Kodak have to

557
01:09:53,240 --> 01:09:59,800
invest in digital photography, don't they profit from analog photography?" The answer is yes

558
01:09:59,800 --> 01:10:06,120
they did profit but some competitors will disrupt them and will if they do not adapt to the new

559
01:10:06,120 --> 01:10:13,480
technologies they will die so for the studios and the game designers and the big technology companies

560
01:10:14,600 --> 01:10:20,280
that decide now it should be more to have a centralized approach I'm not looking at

561
01:10:20,280 --> 01:10:25,880
blockchain as an alternative they might be lucky and blockchain never makes it but if it does

562
01:10:25,880 --> 01:10:34,280
you know in 10 years' time many of the household names that we know today will be in history like

563
01:10:34,280 --> 01:10:43,480
Kodak or Fuji in the analog for those businesses and they will be substituted by others.

564
01:10:44,760 --> 01:10:52,760
So, i think this concludes today's lecture, thank you very much for being with us, next week we'll

565
01:10:52,760 --> 01:11:08,680
have a (Punk)6529 discussing the Metaverse, thank you very much for being here and see you next week. Bye bye

566
01:11:22,760 --> 01:11:25,400
you