From Coin-Operated Machines to Token-Operated Gaming

In 2021, streaming giant Twitch suffered a massive data leak when an anonymous hacker got access to the company’s server and private data, including the platform's source code and payout reports for thousands of streamers.

This incident highlights how even big, well-established platforms struggle to protect sensitive data. It's a stark reminder of the ongoing risks in our digital world, especially for communities that rely heavily on real-time interaction and personal broadcasting. Such breaches put user privacy and financial security at risk, shaking the trust and safety of the entire gaming and streaming community.

This op-ed is part of CoinDesk's GameFi Week.

To better protect users and their earnings and build a healthier ecosystem where trust and ownership is front and center, the industry needs to continue moving toward a more secure, decentralized, tokenized future.

The hidden threats

Securing the gaming world and building a better ecosystem requires us to take a look at the current market inefficiencies that exist in online gaming. This is especially important as the value of in-game assets—like skins, weapons, and virtual land—experiences massive growth.

One major issue is that games are still controlled by the developers. Currently, Web2 gaming platforms involve three market participants: users, game publishers, and platform (console) facilitators, with the market being tyrannically controlled by the facilitators.

Moreover, games aren’t properly gated, and Web2 platforms face immobility of reputation, where skills and achievements cannot be transferred across different platforms, games, or communities. This, combined with the automation of bots, makes it difficult to manage growing gaming communities sustainably because it’s hard to know who to trust.

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Additionally, games have inefficient value collection, as gamers in Web2 lack a transparent, easy, or native way to ask for returns on the value they generate, with market facilitators and platforms often prioritizing their interests over those of individual gamers.

Play on(chain)

On-chain, decentralized, permissionless messaging apps are on the rise, and are a promising shift towards prioritizing user privacy and security through encrypted communication protocols. These new protocols are designed to empower users, allowing them to own, manage, and drive the games and community, while fully embracing decentralization and the crypto ethos of protecting privacy.

On-chain games that use these new protocols and establish a community-driven governance model, where players actively participate in decision-making and contribute to developing security and privacy policies, provide real ownership and accountability within the gaming community.

A different type of token-operated game

Secure, on-chain platforms play a crucial role in enhancing gaming security. By integrating advanced security measures like end to end encryption and prioritizing community safety by affording mechanisms that enforce reputation, these platforms can significantly mitigate risks. Novel approaches, involving decentralized social platforms with native and transparent experiences to solicit and reward gamers, are setting new standards for security and ownership for communities in the gaming world. These innovations are proving pivotal in creating safer and more meaningful gaming environments.

Read more: What Hamster Kombat Did: How Telegram Built a Web3 Gaming Juggernaut

Furthermore, games should be protocols, decentralized and governed by fee-generating guilds and platforms, with game publishers acting as node operators. This structure allows participants who generate value to find an efficient market price for their contributions and in-game assets.

Additionally, games should be permissionless, with programmable and permissionless game dynamics enabling game creators to build and maintain better communities by enforcing good behavior and granting different entitlements based on users' verifiable actions on-chain.

Finally, saying ‘Yes’ to the transferability of earned loots and assets, though potentially controversial, is no more so than the concept of ride-sharing with strangers in an Uber. Allowing people to trade their hard-earned loot for money can unlock significant value, as blockchain rails create new opportunities where gamers retain more of their rewards and games gain an exciting new dimension of network play.

To protect gamers and their rewards effectively, continuous innovation and collaborative efforts are essential. The future of gaming is being reshaped on-chain, promising secure communication and ironclad security for a safer, more engaging experience.

Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.