Date
17 November 2019
Yat Siu and his gaming firm Animoca Brands partnered with Formula 1 to launch the blockchain-based racing game, in which players collect virtual cars, existing as non-fungible tokens in Ethereum blockchain, and race against each other. Pic: Animoca Brands
Yat Siu and his gaming firm Animoca Brands partnered with Formula 1 to launch the blockchain-based racing game, in which players collect virtual cars, existing as non-fungible tokens in Ethereum blockchain, and race against each other. Pic: Animoca Brands

Animoca Brands offers crypto collectibles for F1 racing game

As players turn more serious about their gaming life than ever, virtual gaming assets are becoming as important and valuable as tangible assets. Recognizing this phenomenon, a Hong Kong gaming company has introduced a blockchain solution in the gaming space, aiming to churn up a verifiable scarcity of virtual objects and collectibles, just like art or antiques, which can represent huge value.

Animoca Brands published its blockchain game “F1 Delta Time” under a partnership with Formula 1, the world’s most popular annual sporting series, leveraging the blockchain technology, which underpins cryptocurrencies such as bitcoin.

In applying blockchain into the game, each of the in-game digital items, characters and other components becomes an Ethereum-based non-fungible token (NFT), which is a specific type of token that represents a unique asset, and can’t be replaced by another similar token.

As a blockchain platform, Ethereum allows projects to create new tokens with multiple technology standards, according to their use case. The most widely known among Ethereum token standards is “ERC-20”, which became popular with crowdfunding projects working on initial coin offering (ICO) cases. These tokens, identical with each other, are interchangeable with ease, similar to dollar coins and notes.

This all changes with non-fungible tokens, many of which are compliant with the standard “ERC-721”, as the tokens can hold different values when they are exchanged within the same ecosystem. For simplicity, these can be compared to soccer or baseball cards, each of which has unique information and varying levels of rarity. Also, unlike ERC-20 tokens, the non-fungible ERC-721 tokens cannot be divided and must be bought or sold whole.

Nowadays, traditional games such as console, PC and mobile games have been monetizing their products by convincing players to pay in-game for virtual items, which are ultimately owned and controlled by the gaming companies. However, in blockchain games, those items can be stored on the blockchain and then owned by the player indefinitely.

Also, blockchain offers discernible proof of provenance of specific virtual items, said Yat Siu, co-founder and chairman of Animoca Brands. By applying blockchain, each of the in-game items has an immutable, verifiable history of its authenticity, existence and ownership.

“Imagine in a shooting game, there is a gun previously owned by a famous e-sports player, or a world champion, that would probably worth more than a gun with the same functionality but was brand-new. This is the element you can now introduce in gaming because of NFT,” said Siu.

Siu believes this could open the doors for a new level of interoperability among different ecosystems, changing the whole digital economy.

“The [in-game] item you own in the game is permanent, meaning another game company can use the item for the other game,” he said, “we game companies will share our items throughout other games, and if your virtual ‘sword’ can be used in 10 games, that sword will be more valuable to you.”

Blockchain games also had the role of the game producers changed. Instead of releasing and selling in-game items to make income, Siu said game producers of blockchain games can benefit from the trading of NFT among players. “As a company that is making the in-game items (NFTs), it can get a commission, just like a tax, every time an item is traded.”

In Animoca Brands’ blockchain-based game “F1 Delta Time”, limited-edition racing cars, parts and accessories, and racers, among other components, are turned into NFTs, allowing gamers to purchase and use in the game. On May 29, the company hosted its first digital item auction, with its “1-1-1” car getting acquired for 415.9 ether, which was worth approximately US$103,000 at the time of writing.

Rare digital collectibles can sell for very high sums at auction. When CryptoKitties, a game where players have the chance to collect and breed digital cats, brought the blockchain gaming to mainstream attention in late 2017, the most expensive CryptoKitties NFT was sold for 600 ether, about US$170,000 at time of sale.

However, when the blockchain-driven Pokemon-like game burst on the Ethereum blockchain, it drove enough excitement to bring the popular blockchain network to a grinding halt, which underscored one of the technology’s biggest downsides: lack of scalability.

On the CryptoKitties congestion crisis, Siu believes one of the reasons behind it is the fact that the game runs entirely on the Ethereum blockchain, creating pressure over the network to process transactions. In contrast, the “F1 Delta Time” will be “partly on-chain”, which has a marketplace built inside the game for players to conduct NFT transactions on the Ethereum blockchain.

Also, Siu said while using Ethereum, the second largest blockchain by market cap, for the game makes sense for now, the company is agnostic to the technology platform used for its games, without ruling out the possibility to build the game on other blockchain platforms.

“I think the key thing is that for the first time, people can implement value in a programmable way, through a kind of token,” he said. “That is what Ethereum represents: the ‘programmable value’.”

Cryptocurrencies have received mainstream attention with the meteoric surge in the prices since 2017. However, mass adoption of cryptocurrency usage is yet to happen. According to its official website, players of F1 Delta Time are required to use ether to bid in the NFT auction, but for the non-blockchain users, Siu said they can also make purchases via credit card.

After receiving customers’ fiat payment, the company will convert the payment into the ether for them in the back-end. Animoca Brands is working with exchanges and trading platforms, and the fiat-crypto conversion will be conducted by those partners.

“We are not getting users to learn blockchain to play the game, that’s not the point,” said Siu, as the company has been focusing on removing the technical hassle of the blockchain usage, making the user experience as seamless as possible, to allow players to enjoy.

Powered by blockchain technology, he believes the benefit of the true ownership of digital collectibles can convince more gamers to pay for in-game items.

“If there is 1 percent of gamers convert to be willing to buy paid content in the game, that’s a US$25 billion market [in size],” he said, “This is how gaming in the digital world will grow, I think this will happen in the next two to three years, where gamers would actively be trading [NFT] items.”

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RC

The first virtual racing car issued for blockchain-based game F1 Delta Time was acquired for 415.9 ether in an online auction held late last month. Photo: Animoca Brands


EJ Insight writer