Can Blockchain Technology and Video Games Inspire a Universal Basic Income?

Indiana video games and virtual economies University Professor Edward Castronova published a whitepaper in 2016 about the nature of video games and the future of work. While the gaming industry is one predominantly for leisure, Castranova argued that video games will have a significant impact on the future of work as it will act as a haven for low-skilled workers in the future.

Automation, Artificial Intelligence, and the Low-Skilled Workforce

Castranova noted that in five years, “some game companies will be paying players” in some way to play their games. This trend will, however, shift in the next decade as “paying for players will become a standard revenue model” in the gaming industry. Within the next twenty years, game playing will, however, become a “significant source of income for the low-skilled workforce.”

Ed Castronova's 5, 10, and 20
(Source: Medium)

While millions of people may earn a significant portion of their living from playing video games, this is only possible if individuals can receive true ownership of game content where an economic model resembling a universal basic income (UBI) is viable. The immutability possible via blockchain infrastructure is thus necessary if video games are ever to become the universal basic income for low-skilled workers.

Castranova mentioned in his whitepaper that technological trends like automation and artificial intelligence (AI) may significantly increase the level of inequality in technologically advanced nations. Unfortunately, in these countries, low-skilled workers will be unemployable in many occupations. Conversely, the wealthy elite would have a large sum of funds to support their lifestyle of which a large proportion would be dedicated to leisure activities like video games.

Strangely, this is nothing new as such a wealthy elite already exists in the gaming community today. While a free-to-play revenue model was unheard of a few decades earlier, Castranova noted that this mechanism works extremely well today because it enables big spenders, who are willing to pay a gaming company, enough money so it can run for free.

Castranova argued that based on general trends, there will not be much of an additional cost when it comes to paying players to join the game. The deep pockets will enjoy the virtual society that they can dominate and control.

As the number of real-world, low-skill and unemployed individuals increases, the incomes of the high-skill technological elite will increase as well. Both ends of the extreme spectrum will grow as technologies like automation, AI, and machine learning continues to develop.

Playing video games for money will, therefore, be seen as a legitimate career choice and will become a new way for income to be distributed to the low-skilled population.

Further to Castranova’s thesis, blockchain technology enables players to have actual ownership in their virtual worlds. The innovation of NFTs allows true ownership because it provides clear property rights and the ability to create “smart” social contracts.

Having ownership and the ability to create without the need of a third party is vital if people are to commit, dedicate, and earn money from participating in an online virtual economy.

Blockchain Ownership

When it comes to property rights, blockchain technology enables true ownership to be tracked in real-time. It allows a person to not only prove they have rights, but also have complete ownership over the property or asset.

It’s interesting to note that the existing approach to defining property is in terms of rights rather than ownership. Most of our legal documents are written in a way to identify, describe and explain how people can consume, alter, share, redefine, rent, mortgage, pawn, sell, exchange, transfer, give away, or destroy a piece of property.

Chris Robinson, the community manager at Hoard, mentioned on Medium that if someone owned an asset, they should not require a legal document to define how they own the property or asset.

A great example is our online identities on social media. Most people may have online identities, but when it is hosted on a third party social media website like Facebook, we naturally agree to their terms and conditions if we want to use the site. The terms and conditions, unfortunately, state that they have certain rights to our profiles and while it may be an individual’s profile, they don’t own any of it.

This caveat also rings true in video games. Playing video games as a form of universal basic income can only work if gamers can commit themselves to an entirely virtual world. While game studios can hire players directly, it would be a significant operating expense for the studio.

Granting a player property rights to the individual content in the game would also be expensive. The goal is to leverage the blockchain network to provide players with in-game property ownership so the game designers and studio could focus on creating the virtual world, while the players could concentrate on operating within the world.

Social Contracts

A distributed ledger technology (DLT) is also great for the creation of social contracts in a virtual economy since it provides limitless potential without the need for a third party.

Castranova predicted that in twenty years, existing social norms and dynamics will move onto the virtual online world such as in video games. Examples of such social dynamics include political uprisings, strikes, and boycotts. Virtual worlds, therefore, require protocols and mechanisms where individuals can freely organize and negotiate with one another.

Unfortunately, in a traditional centralized game, it does not securely support these additional functionalities. However, with the blockchain network, when it comes to negotiating specific social arrangements, a user could quickly create their smart contract and roll it out in the game. The lack of limitations and complete freedom also means that designers could also participate in the smart generation process. For example, when it comes to a unique item, designers could include vital information like the unique features, distribution model, and degree of scarcity.

If we take it a step further, the blockchain can also keep track of a player’s identity and profile in the virtual environment. With this data and their gameplay records, an individual profile could be selected for a specific request. While this is a specific in-game example, it would also be a very fundamental idea for a virtual UBI. Players could apply for subsidies and their profile ranking in comparison to others to see how certain funds would be allocated.

Games made on the blockchain have no limitations when it comes to complexity and creativity without the need for a third party. For video games to provide a UBI for the unskilled who play, they need to know that they have full ownership over their assets and can design their virtual world however they please.

Unbanked population

While the situation of a low-skilled workforce earning money by playing video games is something to test and see in the future, there are already many communities in a very similar situation. These include the unbanked and impoverished. Approximately 1.7 billion, or 22 percent of the world’s population, currently do not have access to a bank account. 5.5 billion or 71 percent of people live than less than $10 a day, while 15 percent live less than $2 per day.

Unlike the traditional banking system, anyone from any background, country, race, or socioeconomic standing, can create a blockchain wallet. The beauty with blockchain is that banking infrastructure is not required.

Individuals in developing nations could, therefore, run their business mining online gold and earning virtual loot. Instead of mining farms, gaming farms may emerge instead. When it comes to the unbanked, the smart contract and property rights system could mitigate any potential of exploitation, to ensure that everyone has the equal share of profits.

While blockchain technology cannot outright provide a form of UBI to the low-skilled workforce, it is a great tool that can help society define and develop true ownership of property and resources. It allows players to play and create their game however they choose, and an excellent opportunity for the unbanked to jump onboard. While gaming is not often associated with income, in the future, with innovative free-to-play models and blockchain technology, video games can very much become the new universal basic income for low-skilled populations.

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