eSports on Blockchain
Bitcoin SV blockchain – eSports Use Cases
No longer the exclusive domain of basement-bound teenagers or the secret shame of countless adults, video games have fast become a massive market for mainstream entertainment, with competitive gaming – more frequently referred to as eSports – garnering widespread attention and driving growth across the industry.
In 2018, video games generated $131 billion, with eSports a quickly growing vertical within that market as revenues topped $1 billion for the first time. But it’s more than just current revenues and bottom line figures that are getting investors excited, the potential for the sector is staggering.
Take Twitch, the video streaming platform favoured by eSports broadcasters that reached unicorn status when sold to Amazon for $970 million in 2014 – well before eSports even truly began to boom. Twitch averages more than 2.5 million concurrent viewers at any time, while generating more than 1.7 billion hours of watched content every month.
As eSports as its own industry continues to mature, more complementary businesses like Twitch are expected to emerge in an effort to capitalize on the wave of future revenue. In the blockchain space, use case examples are already beginning to emerge with solutions targeted at addressing issues in the space related to fairness and digital ownership, with others offering new ways to generate revenue.
For blockchain solutions to be effective in this space, their networks must be fast and able to handle significant volumes of large transactions – but able to do so on a cost-basis that makes financial sense for players and providers alike. Only Bitcoin SV has the requisite stability and scalability to provide the platform for blockchain-based eSports solutions.
Case Study: Kronoverse
As the eSports industry continues to grow in both prominence and popularity, blockchain gaming platform Kronoverse is seeking to bring fairness, integrity and new methods of monetization, to a burgeoning sector using Bitcoin SV.
‘How we got started originally was while we were creating the game CryptoFights back in 2017,’ explains Adam Kling, founder and CEO of Kronoverse.
’Since then, the project has changed its ambition and we have a goal now of being one of the leading examples of how blockchain technology can be implemented.’
CryptoFights, which is now being developed under the Kronoverse umbrella, is an online role-playing game built entirely on the BSV blockchain. Currently in its beta stage of development, CryptoFights capitalizes on different elements unique to the blockchain – incorporating verifiable results, wagering on matches and a system of in-game item ownership based on the same principles of Bitcoin ownership.
‘We started to think beyond just making CryptoFights because of the technical breakthroughs that we were making and problems we were solving as we developed it,’ says Kling.
‘That got us thinking about how these breakthroughs could be used for other games being developed, but then we took that one step further when we realized that this technology could be applied to the wider eSports industry right now.’
As the eSports industry continues along a steep growth trajectory – with direct revenues tipped to top $2.3 billion by 2022, more than Formula One or the UEFA Champions League – business models are being forced to adapt on the fly, while service providers across the ecosystem emerge in an effort to capitalize on the new economies apparent.
‘In eSports at the moment, a lot of the money being generated is from advertising and sponsorship. Big publishers with massive followings create huge events, where they put millions of dollars into a prize purse and fill stadiums with thousands of fans,’ explains Kling.
‘That draws teams, who in turn get sponsorships and attract advertisers – so there’s a lot of money that is being generated in the same way as traditional sports. If you look at the traditional sports world where they have that type of structure, that’s the direction that eSports is going at the moment, which is what I see as more of a legacy system.’
Instead, Kling envisions a different future for eSports, one that utilizes the inherent advantages it has compared with traditional sports – namely, accessibility and low barriers to entry.
‘I see a different direction for eSports and where this huge industry is going, as for me, the strength of eSports is the ability to play from home: I can compete as a professional player and I can make a living doing it,’ says Kling.
‘With Kronoverse, we are providing a dedicated eSports platform that will allow developers to monetize their game in new ways – with features related to in-game items and game integrity.’
Income and Integrity
The Kronoverse platform proposes to change the eSports landscape through three core pillars: items, integrity and income – all of which are made possible by harnessing the power and unique capabilities of the BSV blockchain.
‘The eSports industry has a lot of cheating – that just happens in video games in general – but it becomes more of an issue with competitive gaming and an issue that we are seeking to solve with the Kronoverse platform,’ explains Kling.
‘There have been instances where semi-pro or top-end plays have thrown matches, having bet against themselves to win – throwing the match and profiting from losing. If you have things like this running rampant, you lose the integrity of the games and you risk losing chunks of the eSports market including betting, which is already generating billions every year.’
To address these issues, when a game is played using Kronoverse, all elements of a game are recorded to the blockchain through a transaction – much in the same way that Bitcoin transactions are written to the blockchain – creating a permanent record of the game and its inputs, while also enabling features of smart contracts, such as pay-outs for wagers on games.
‘How we designed Kronoverse was essentially as a gateway, so the player is effectively a Bitcoin wallet and they communicate with a node – so what we’ve done is create a high-performance gateway to take that transaction, which keeps both latency and cost low. With how our platform works, an entire match can be as small as one transaction,’ says Kling.
‘Every player that is playing a game is generating inputs for their moves or a decision in a game, what we do is think of that in a high-level sense as a transaction – so when we do that and we put this onto the blockchain, it means that Kronoverse can’t alter that data because that player input becomes a cryptographically-signed and immutable record of the game.’
By writing those records to the Bitcoin SV blockchain, it creates an entry that in addition to being unchangeable, is also permanently available and accessible – allowing verification of inputs and results, both in real-time and for historical purposes.
‘With no database that can be altered behind closed doors, and with all of the data publicly available and verifiable, game integrity takes on a new look immediately,’ says Kling.
‘What we have is effectively a validator, that is validating the game state and updating what is happening – and anyone can see if someone is cheating, because they are able to see the data that has been input into it.’
‘When we onboard people onto the platform, we also run a player’s account through KYC [know your customer] so that we know the true identity of that player. This gives us a chain all the way down to the real identity so if players do cheat, that is immediately stored on the Bitcoin SV blockchain and can be audited by anyone,’ says Kling.
‘Being caught cheating will follow that player through every single game they play on the platform – so what it does is create all of this risk for a prospective cheater. It doesn’t matter if they play one hundred games and cheat in one, we will know. That can subsequently end in you banned from every game on the platform – or worse, facing criminal penalties because of the substantial amount of money involved in some of these games.’
The KYC requirements come into play because the Kronoverse platform also provides wagering facilities for cash games, which has the supplementary effect of strengthening their game integrity offerings. Together with the inherent capabilities of the blockchain, they enable Kronoverse to create an environment with games that have verifiable results, provable integrity and cash prizes – effectively allowing professional eSports matches to take place anytime and anywhere.
‘Because we’re using the dust limit on the transactions, the cost of playing in an unranked, non-cash match with verifiable integrity is going to cost fractions of a cent,’ says Kling.
‘In our ranked mode, there is a cost of entry for matches – it might be 10 cents, it might be $5 each for twenty players – with cash prizes distributed to the winners. In these games, we take a 10 percent cut of the prize pool as our operator fee, a percentage of which we pass directly to the developer of the game – giving developers a new revenue stream for their games too.’
In-Game Items and Tokens
Capitalizing on an already proven concept on the blockchain is the third key element of the Kronoverse platform, which shifts the dynamics of in-game items and collectibles. It does this by eliminating the centralization of the digital assets, achieved through embedding ownership rights outside of the game developers own infrastructure in the same way that ownership is attributed to Bitcoins.
‘How in-game items work now is that I go into my game and I pick my item that I want to buy, whether that’s a skin or a new character, then I pay that game developer or publisher to get access to that item in the game. If I ever lose my account or I can’t get back in for whatever reason, then I no longer have that item. I’m essentially paying for the access to that item – like renting it,’ says Kling.
‘With the blockchain however, we can change this. When you think about Bitcoin, the whole idea underpinning it is that when you have a Bitcoin, it’s yours, it’s in your wallet. It’s the same thing with items that are stored on the blockchain – you actually own it and it can’t be replicated. There is provable scarcity and you have the ability to use it, sell it or trade it in much the same way.’
‘What we see is that gamers love to collect. They love to be able to sell the items back to earn some of their effort back in real dollars, with speculative value on items and the marketplace trading them a big deal in many games,’ says Kling.
‘What we are really doing is creating a new ecosystem of trade. You can essentially have a stock market for game items. This is already happening on the blockchain and is one of the more proven applications of gaming on the blockchain.’
While they may only have relevance in-game, digital items can translate to eye-watering real-world valuations – with the price of weapons and skins regularly reaching into the thousands of dollars, while pieces of virtual real estate has previously been sold for more than $6 million. By using the approach of Kronoverse, the pundits trading in these digital assets can derive ownership rights independent of the games’ ecosystem – with the asset itself stored on the blockchain.
‘One of the ways that our platform differs is by using Bitcoin SV is that we can store more data than other blockchains can. So for example, if we had a weapon for a game – on the blockchain we can store the 3D model, the textures, the sounds for how that weapon works in the game – and that is a digital asset that is stored on the blockchain forever and its owner owns every part of that asset,’ says Kling.
‘On other blockchains, using Enjin tokens on Ethereum for example, it’s just not possible to store all of the data for in-game items on the chain, which means that the 3D model and textures exist with the game developer – so if they want to change how it looks or how it works, they can do so – and that might invalidate the value of the item when it is traded. But with our system, everything is immutable, right down to the item itself.’
Later in 2020, Kronoverse will take the next steps in empowering gamers with in-game items by introducing the Kronoverse Marketplace – allowing players to buy, sell and trade items. Once acquired, items will be automatically stored in side a players’ Kronoverse wallet – charting the items description and stats, as well as the provenance and history of the item. These items will be represented as tokens on the Bitcoin SV blockchain, moving away from the Enjin-based Ethereum system that Kronoverse was originally built on.
Lifting Limitations with Bitcoin SV
‘I looked into Bitcoin back in 2013 and I thought it was a really cool technology, but it was all about the payment functionalities of it and it kind of went sideways for me until I saw CryptoKitties hit the headlines,’ says Kling.
‘When I saw a CryptoKitty traded for $100,000, it showed me a proof of concept that there was real value in digital scarcity and non-fungible tokens. That started off the race for blockchain gaming and was also when I started my project.’
Kling started work on his first blockchain-based gaming product shortly thereafter with CryptoFights, a turn-based combat game that completed its second beta-testing phase in January 2020.
‘Originally we started coding CryptoFights with Ethereum. That’s where a lot of the development activity was happening at the time, as the development community was focused there – and for good reason – the other blockchains weren’t really there yet and Bitcoin Core was just for payments. But when we began coding, we started to run into a lot of complex problems,’ says Kling.
‘We wanted to run our game on the blockchain, but with how this was being done on Ethereum, it was creating a lot of issues for us where we were worried about the cost of transactions and the speed of transactions, which would restrict the types of games we would be able to run.’
The limitations of the Ethereum network for projects in the video game and eSports space is far from new information. When CryptoKitties was at the height of its popularity, the Ethereum network was overwhelmed by the number of additional transactions being generated, increasing both the price of transacting and the time taken for all transactions across the network to confirm.
‘One of the problems that we had on the Ethereum side was scaling, because that problem existed on layer-one where you submit data to the blockchain, which resulted in all kind of issues like gas fees,’ says Kling.
‘When I looked at the scaling roadmap of Ethereum, it became clear that we were never going to be able to have a million players playing on Kronoverse. Instead, everyone is having to develop layer-two technologies and are only submitting the results to the Ethereum blockchain. With Bitcoin SV, we wouldn’t have to do that.’
A year into the project, Kling – and then Crypto Fights – shifted their project from Ethereum and began the process of moving it to Bitcoin SV, a major decision in the roadmap for the early-stage start-up, but one Kling is confident was the right move for their business and its future prospects.
‘When we first started hearing about Bitcoin SV, we had a look and a colleague of mine realized that it solved everything for us. We were working on what’s called a DAG – a directed acyclic graph – to use in a layer-two system, which was a really complex solution to the limitations that Ethereum posed. With Bitcoin SV, we suddenly realized that we wouldn’t need it anymore,’ explains Kling.
‘What was important for us was that the consensus layer on Bitcoin SV is different than on Ethereum, which means that it can be on the client side. We went from there and when we really got stuck into it, it was like having a whole new programming language to use.’
By transitioning from Ethereum to Bitcoin SV, the scope for the project expanded exponentially, as Kling and his team got a handle on the potential of the BSV blockchain. Instead of developing a blockchain-based video game, Kronoverse was created – bringing with it a vision to create a platform with the potential to change not just how eSports are played, but to broaden the user-base by making professional-tier features accessible to all.
‘When we started working with Bitcoin SV, we realized just what was possible and I started thinking about all of the things that could be done in the gaming world with eSports. Bitcoin SV really was the inspiration to create Kronoverse, because it was the foundational component we needed to build what we wanted to build,’ says Kling.
‘Bitcoin SV is much cheaper than Ethereum and it’s more flexible for us. We also have the ability to partner with transaction processors like TAAL to negotiate a monthly fee for our transactions if they have the hash power – so that gives us a level of economic freedom that we didn’t have with Ethereum, which further helped our business case.’
Kling says that the technology and platform is in place with Bitcoin SV to establish Kronoverse as a game-changer for eSports – with a first-mover advantage over potential competitors helping position Kronoverse at the forefront of any sector-wide shift.
‘We are a part of the Blockchain Game Alliance and a lot of the members are still on the Ethereum side,’ says Kling.
‘It shows to me that they are still dealing with a lot of those same limitations that we did and are having to design around those limitations. Our back-end technology is just so far ahead of them because of that and I think our switch to Bitcoin SV is going to end up being one of our big achievements.’