Blockchain Technology and Virtual Worlds — Part 1 How Blockchain Technology Will Change the Gaming Industry

The concept of part or all of the human race migrating to “virtual worlds” has existed in science fiction for decades, and more recently gained mainstream attention with the blockbuster release of Ready Player One, directed by Steven Spielberg and based on the book by Ernest Cline. In most depictions of these virtual worlds, we see humans hooked up to a piece of technology that “jacks them in” to a virtual world, after which their body remains in one place (such as on their couch), while their mind is transported to another (such as The Oasis). This transportation happens by repressing the individual’s “real” senses (audio, visual, etc.) and replacing them with an artificially-created, pre-programmed reality, through a device such as a VR headset.

This is pretty cool and all, but virtual worlds are still in the realm of science fiction…

…Or are they?

I’ll skip stating the obvious fact that virtual reality technology has been improving rapidly over the past decade and putting on an Oculus or Vive headset today can already transport us to all kinds of different environments (although we might puke if we stay there more than fifteen minutes).

Instead, I want to propose that:

Right now, at this very moment, most of us are already spending a significant portion of our lives inside of a ‘virtual world’.

Don’t believe me? Let’s try a little experiment. Next time you are in a public place, whether that’s sitting on the subway or standing in line to order coffee at Starbucks, stop and look around you.

I’m serious… really just stop and observe for a minute.

How many people around you have their eyes glued to their phones (or laptop screens)?

Pretty much everyone, right?

Is this so different from what we see in the movies?

Now let’s try something…

Picture in your head everyone who is immersed in their device getting sucked up into their screens and disappearing from the real world.

How many people are left?

Now let that picture sink in.


The fact of the matter is that we are already very much living inside of virtual worlds, whether we like to admit it or not. While we may be linking up with real people on the other side of our screens, our senses are being directed at a device and our brain is being transported to another place (we’ve all tried talking to friends or family members when they are using their devices only to be completely ignored).


Virtual Worlds in Video Games

In the video game industry, multi-user virtual worlds started emerging in the 1970s, initially in the form of multi-user dungeons, aka MUDs. In these rudimentary text-based online games, a player could take on the form of a brave human, fearsome orc, or deft elf, versed in the arts of magic, swordsmanship, archery, and more.

Starting in the late 1990s, large-scale, graphical, 2D and 3D virtual worlds started becoming popular with the rise of massively multiplayer online role-playing games (MMORPGs) such as Ultima OnlineEverquest, and Asheron’s Call.

These games featured meticulously-crafted, beautiful virtual environments where players could make friends, form guilds, and work together to conquer evil wizards and fire-breathing dragons.

MMORPGs quickly became popular, and it was not uncommon for ‘hardcore’ players to spend upwards of 8 to 12 hours per day in games such as Everquest (leading some to start calling the game Evercrack).

In 2004, however, a game came out that would change the landscape of virtual worlds for years to come. That game, as many of you can guess, was World of Warcraft, by Blizzard Entertainment. Hitting peak subscription numbers of over 12 million monthly users, WOW took the gaming world by storm, quickly becoming a cultural phenomenon.

Again, while I could talk for hours about how much fun WOW was as a video game, that is not the point of this article. What is important here is that, for the first time in human history, we witnessed a voluntary migration of 10 million plus human beings to a virtual world. While each individual player’s level of commitment to this virtual world varied, (some playing for an hour or two a day, some playing for 20+), 12 million people made the virtual world of Azeroth a part of their every-day lives. Many of these players could tell you more about the history and the lore of this ‘game world’ than they could about the ‘real world’.

To this day, 14 years after its launch, World of Warcraft is still the largest MMORPG in the world by subscriber count.


Virtual Economies — Very Real

Virtual worlds contain many features that mirror the real world. They have diverse populations (every player is represented by a unique avatar inside of the game), involve work (killing monsters for hours a day in order to level up), contain social organizations (guilds who must work together to achieve heroic feats), and, of course, feature robust economies with currencies used to facilitate trade between players.

In games like World of Warcraft, players spend a majority of their time working to earn coins or items to increase their characters’ strength, make them more unique, and gain virtual prestige. The more difficult an item is to acquire, the more virtual coins it is worth. Some epic or legendary items could take months of farming (repeatedly killing certain monsters) or thousands of gold to acquire.

While what this led to may seem obvious now, in the late 1990s, I can state that it had not even crossed most game developers’ minds.

Players started trading their virtual coins for real money.

In 1999, if you were to tell someone that there were people out there willing to pay ‘real money’ to buy ‘fake money’ inside of a video game, most people wouldn’t believe it.

Yet that’s exactly what happened. A secondary economy quickly emerged, with players selling their gold, items, and characters on eBay for cold hard cash.

What started as a way for players to earn some extra pocket money by selling off unwanted game items, later exploded into a massive industry with the release of World of Warcraft and the entrance of large-scale “gold farms” in countries like China to “farm” digital currencies like WOW gold for other players.

In both the real world as well as the virtual, there is a distinct relationship between time and money. Not many of us have as much of both as we would like. So players with money in real life started buying virtual coins from players with extra time who wanted to earn money, and players with extra time would ‘virtually work’ to produce items for those players who had money.

The difficulty for ‘normal people’ to understand how video game currencies could be valuable in 1999 is remarkably similar to how people have difficulty understanding the value proposition of cryptocurrencies like Bitcoin and Ethereum today.

The concept of value is pretty simple. If enough people view something as having value, then it is valuable. To the millions of gamers living in the shared fantasy world of Azeroth, WOW gold, which was only designed to be exchangeable for other virtual items within the game, primarily because of the shared value system of its community, had real-world value, and therefore started being exchanged for FIAT currency.

Before Satoshi’s game-changing (no pun intended) whitepaper had ever emerged, there was already a billion dollar market for virtual currencies in online games like World of Warcraft.

Video game currencies have been trading against the dollar for years. New generations of gamers worldwide don’t see anything strange about exchanging their real life hard-earned dollars for items which only exist as strings of 1s and 0s. There is a very good chance that it could take cryptocurrencies five or ten years to gain mainstream acceptance, but the transition will be inevitable.

— Jared Psigoda (@swaysnt), Founder of BitGuild

Part 2 of this article will talk about how blockchain technology and cryptocurrencies were in some part ‘made by’ and maybe even ‘made for’ gamers… Stay tuned!


BitGuild’s mission is to revolutionize the global gaming industry by creating a platform for a brand new class of games that live on the blockchain. Blockchain games completely redefine the relationship between players and developers by facilitating full and true ownership of in-game assets, cheap & safe item trading, cross-game compatibility of items & currency, and more.

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