In game and on-chain: guilds can become companies

tl;dr: blockchain technology will allow in-game organisations to become real companies that exist on-chain.

It is with great excitement that I started type out this new piece just moments after hitting publish on my previous post, but it has taken me a week to find enough time to finish it. In the morning of finishing the previous post, a wild idea came to me:

Blockchain technology will facilitate a future where games and their guilds can exist entirely on-chain. With the advent of security tokens, guild ownership can be bought and sold at ease. Should the participants of the group work cooperatively to harvest resources then they can generate wealth like a company.

I don’t think this will be possible without blockchain technology!

Clans and Guilds — a loose structure of friends

In the older days of online gaming player groups were informal with little in way of in-game functionality that supported organisations. Players could play together and even work cooperatively to achieve something greater, but such activities were lacked formal structure and so required a lot of trust.

One of the first groups I joined was in CounterStrike, which I think were called ‘clans’. You simple styled your name with your handle plus the name of the clan. When I joined RuneScape back in 2001, there was a similar informal system for showing that you were part of a guild (most players didn’t bother). Guilds essentially were ‘friends’ that congregated on a shared forum.

I remember spending far too much time mining in RuneScape (image source)

Arguably real economic activity was possible in CounterStrike, but less contentious is the real economic activity present in RuneScape. Players could work together to mine iron and coal to create steel armour. Do this on a large enough scale and you have something that looks like a business.

People even ran ‘businesses’ (making real money) in Ultima Online which launched in 1997. Naturally, we can look at games like EVE where a lot of real world value is created and transacted via player guilds (look back to my older post: putting the state on-chain).

The main problem in the early days of MMOs was the lack of an in-game mechanism to formally group players together. Ultimately, it was all sole traders working together and trusting each other. Later games made it possible to associate with each other using dedicated in-game chat channel, but also the ability to share a bank account, manage permissions to guild building, and more easily pull resources.

The earliest game I played where this was possible was Star Wars Galaxies (SWG), which launched in 2003. The guild that I helped to form in SWG established a town early and was one of the first to have a starport!

Here is a idea of the housing in a player run town in SWG (source)

Loss of value: time and effort

Like many online games, eventually people get bored and leave. It’s a natural part of the any game’s lifecycle. In the gaming world you don’t own your character or your assets, so all of the sunk time and effort is (generally) non-recoverable. This is due to lack of true ownership. This problem is magnified by the considering the additional time and effort spent in running a guild.

Certainly, some games do allow you to sell your account and items, but these games are the exception. These factors represent a huge risk to running a company in an older MMO, but these risks are essentially mitigated in a game where everything is on-chain.

When guilds can become companies

Let me dream about how this could change in the future. Guilds in future blockchain games will be registered on-chain: smart contracts can maintain a list of members and what their associated permissions are. Both the tracking and enforcement of privileges can be done on-chain.

As guild members can have the ability to manage shared assets, then by implication, it would be possible to manage guild income too. One thing that I think is necessary is the ability to keep this information secret, and to that extent we really need to see further work on privacy in smart contracts.

From the description of how a guild works you can see the resemblance to a company. Whenever gaming assets have real value then the income generated by guilds can also have a real meaning. This aspect of is possible right now without blockchain technology, but given the lack of ownership of gaming assets plus the highly distributed nature of individual players around the globe, we are not seeing guilds become companies because of the difficulties with trust.

Guild management tools became more advanced and this made life easier (game: SWTOR, source)

Will guilds be some of the earliest on-chain securities?

I think it is possible and it would even be a good test case of securities that exist entirely on-chain. Gaming guilds are naturally managed online and players are used to doing everything electronically. This make them ripe candidates.

Blockchain technology will improve the efficiency of trading any asset. This is due to the reduction in the need for intermediaries (less trust required) and hence settlement times are reduced. Creating a stock exchange based on blockchain technology seems sensible, but what about having companies that exist entirely on-chain?

This is the realm of security tokens: i.e. tokens that represent ownership in companies. This differs from asset tokens that exist on-chain but represent an underlying share certificate. With security tokens, there is no need for a separate share certificate as the company would exist only on-chain.

For such on-chain securities, the tokens can earn dividends and be easily traded to other market participants.

Security tokens + guilds

Mesh these two ideas together and you get gaming guilds that can become on-chain companies (“securities”). Ownership of the guild can be easily transferred and with true ownership, the income generated can be distributed fairly among the owners without the developers being able to interfere.

This will only be possible with blockchain technology.

How to neatly manage these globally distributed people via an on-chain entity? This question is essentially what DAOs are trying to solve. Guilds can become for-profit DAOs where ownership is distributed globally.

To that extent, we may expect to see guilds use something like Aragon for management which has a nice UI for managing membership, permissions, and expenditure.

The future of interoperating on-chain guilds where members can earn real income and seamlessly trade their income or ownership for bitcoin, ether, or dai will be an interesting one! 🚀 🚀 🚀

Visualising cross-chain interoperability (Source)

About me

Currently, I work at the Web3 Foundation, covering numerous responsibilities (such as grants, communications, and collaboration). This blog is of a personal nature. It just so happens that my hobby aligns with work.

One of the main projects of the foundation is the Polkadot network. A next generation blockchain platform. To read more about the innovation that Polkadot is bringing to the blockchain industry I invite you to read the following blog post: link.

Questions / Comments?

You can create a reply to me here on Medium, or reach out to me on Twitter: @EAThomson.

Blockchain, Gaming, Web 3. (previously: