Payments company Ripple has set its sights on a new domain: video games.
Ripple’s Xpring initiative, which focuses on supporting blockchain projects in a variety of industries, yesterday announced that it will invest $100 million in unspecified game developers working with blockchain. The fund, though provided fully by Ripple, will be managed by Forte, a company that launched last month and is developing blockchain products and platforms for the gaming industry. Forte’s CEO, Kevin Chou, founded mobile gaming company Kabam, and Forte cofounder Brett Seyler has held executive roles at gaming companies like GarageGames, Unity, and Beyond Games. The company is funded by backers including a16z Crypto, Coinbase Ventures, and Coinbase cofounder Fred Ehrsam.
The ultimate goal of the Ripple–Forte partnership is to create game-based economies that “more closely mirror our experience in real economies” by using blockchain technology, as Seyler’s Medium post announcing the partnership puts it. Naturally, XRP—the token that Ripple holds the majority of—will underpin these economies. (The $100 million reportedly will be paid in XRP and could go to both large and small gaming companies.)
There are a few key components to making such in-game economies work. First, players will need to be able to really own their in-game assets. Blockchain facilitates this through the use of nonfungible tokens, which, when tied to particular virtual assets, certify their uniqueness. Players can use smart contracts to buy, sell, and trade the provably one-of-a-kind assets they own.
This is something Forte and Xpring will be able to do with multiple cryptocurrencies and across different blockchains if they deliver what they’re promising—“a wallet that will be easy to use and integrate with both new and existing games on many platforms and facilitate cross-chain transactions using Interledger.”
Besides Xspring’s Interledger Protocol, which is essentially a blockchain-agnostic platform for smart contracts, Forte has also been working with the initiative’s Codius technology—smart contracts that can operate in connection with multiple blockchains. Combined, these open-source products could facilitate trading between games built on different blockchains.
Of course, that’s looking far into the future. Right now, we’re in the very early stages blockchain-based gaming, where the gameplay is crude and the games themselves aren’t terribly popular. Adoption of cryptocurrency payments for in-game items, however, could happen sooner. In fact, Monero announced its currency was being accepted in the Fortnite merch store back in January (although the payment method doesn’t appear to be currently listed there). If Ripple has its way, XRP will be the cryptocurrency that lets players convert one virtual currency or in-game asset into another. After all, Seyler writes that Forte has been collaborating with Xpring on using “XRP for inter-asset liquidity.”
This would presumably happen the same way Ripple’s international payments product, xRapid, allows for the speedy conversion of one country’s fiat to another’s. Sending fiat across borders can be slow and cumbersome, but trading someone’s fiat for the equivalent XRP, then cashing in that XRP for the local currency of a different country speeds up the process. (Though the product was announced months ago, xRapid only recently came into use; payments company MercuryFX sent its first xRapid payment to the Philippines last week.)
Ripple still has to convince the gaming industry that peer-to-peer economies are a good idea. “Most video games don’t want people trading,” William Quigley, CEO of OPSkins and WAX, virtual trading platforms for both physical and digital goods, told BREAKERMAG recently. “They don’t want people trading because they have a belief that if people can trade the items, they won’t buy the items from them.” That may be flawed logic—Quigley points to the car industry, which is operating just fine in spite of the fact that you can sell your car after purchasing it from a dealer—but it’s still an obstacle he’s encountered in the gaming world, where only a “tiny, tiny percentage of video games” offer virtual items that players can own and trade with each other.
That is the current gaming model that Forte and Xspring want to move away from with the new fund. “The potential is that, by using crypto, the unidirectional relationship (developer sells virtual item to user) can evolve into something radically more powerful: fully functioning peer-to-peer economies where users are primary and active participants,” Xspring’s Daniel Aranda writes. Xpring’s fund may well encourage game developers to build this economy, but whether ever-fickle gamers will want to participate is another issue entirely.