A 14-year-old wakes up on a Monday morning, gets dressed, grabs a packed lunch, and heads out the door. But instead of catching the bus to a traditional school, she visits a computer lab outfitted with pods containing VR goggles, speakers, and haptic gloves. She will in nearly every sense travel for today’s history lesson to the dawn of time and witness humans discovering fire in a cave. She will smell the fire, touch the ashes, and hear the wind — except she won’t actually leave the lab.
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While she’s in school, her mother “attends” church while sitting on the couch in the living room, and makes a donation by sending digital currency from her online wallet to the church’s.
Her father picks up a new suit before his “visit” to the Beijing headquarters of a manufacturing company, without leaving his town in the suburbs of Chicago. The suit is made of pixels. It doesn’t stain, rip, or need to be dry-cleaned, because it only exists inside of an online virtual world.
The virtual world this all describes could soon become very real.
If this sounds familiar, that’s likely because this describes the OASIS virtual game and world that’s depicted in the record-breaking Steven Spielberg movie and best-selling Ernest Cline novel Ready Player One.
Worldwide Asset eXchange™ (WAX) is the global platform and currency that will power this virtual reality-dominated future, and let’s just say that we have some predictions about it. Ready Player One’s OASIS may appear sensational, but the reality is that it shows us a future that is not far from what we have and do today.
Is it possible to imagine that this world will become next generation’s reality? We think so.
First, Some Definitions:
Before we dive in, let’s define a few things:
Ready Player One: Sci-Fi novelist Ernest Cline wrote Ready Player One in 2011. In 2018, the Steven Spielberg-directed movie hit theaters and in four weeks grossed a worldwide total of more than $523 million. The sequel, Ready Player Two, is in progress.
OASIS (Ontologically Anthropocentric Sensory Immersive Simulation): is the fictional Massively Multiplayer Online Simulation Game that serves as the location for most of the plot in Ready Player One. The game has massive communities inside of it as well as other embedded games. Real humans on Earth interact with the OASIS via virtual reality headsets and other simulation-creating devices such as haptic gloves and chairs.
Avatars: The graphical representation of the user or the user’s alter ego or character. An icon or figure representing a particular person in a video game, Internet forum, the OASIS etc. Avatars can be outfitted with virtual items and customizations, sometimes referred to as “skins” (depending on the game).
Skins: Skins are digital files in video games that modify the appearance of an avatar or other item. Skins are are often strictly cosmetic, but other digital in-game items can sometimes have function depending on the game and item. OASIS contains both non-functional skins and functional in-game digital items.
Cryptocurrency: a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. Essentially, digital money that’s pegged to standard money’s value and which can be traded from one online wallet to another.
WAX: Worldwide Asset eXchange is a decentralized platform that enables anyone to operate a fully functioning virtual marketplace with zero investment in security, infrastructure, or payment processing. Developed by the founders of OPSkins, the world’s leading marketplace for online video game assets, WAX is designed to serve the 400+ million online players who already collect, buy and sell in-game items.
Harnessing the power of blockchain technology, WAX Tokens are utility tokens that allow virtual goods — and not just for use in video games — to easily be tokenized and exchanged for cryptocurrency. The smart contract underlying the transaction acts as the mechanism that permits trustless trading between buyers and sellers. The WAX Platform will allow millions of traders to create their own virtual stores on one decentralized platform, providing instant payments, security, and trust services that will bring millions of new participants into a growing ecosystem.
The Future of “Real Value” is in Virtual Items
Hundreds of billions of dollars worth of digital items exist in the world today. Their value can be measured both financially and in terms of their benefit to the item’s owner.
Digital items, such as songs on your iTunes account, transcend physical form. Unlike CDs, records or tape cassettes, an iTunes library is accessible across various platforms, even if a phone or computer containing those files breaks down. Cross-platform accessibility, which promotes greater ease of use, is the key to virtual items’ heightened value.
Makes sense, right?
But what about items that never existed in a physical form prior to their digital counterpart? Do those have value?
Of course they do. For example, in-game digital items for games such as Fortnite, League of Legends, Counter-Strike: Global Offensive, World of Warcraft and others, is a $50 billion global industry with more than 400 million participants.
Ask a CS:GO player if his $500+ Factory New Karambit Marble Fade has value, and you are sure to get an earful. He can show off the item to his friends. He can list it for sale and when someone purchases it, make a profit if the item’s value has risen. He can play with it in the game. He can take screenshots of his avatar holding the knife and share them on social media. He can gift it to a friend on his birthday.
Cryptocurrency takes the idea of virtual items with real value a step further. It only exists on the internet, and although this is an industry in its infancy, the total market cap of all cryptos to date is more than $400 billion (with bitcoin accounting for about 38%).
With several hundred billion dollars worth of digital items in existence — perhaps even in the trillions — it’s understandable how OASIS’s depiction of virtual items having equal or higher value than physical items is becoming reality.
Given the future ubiquity of virtual items, technology must exist in support buying, selling, renting, trading, and creating them. There are some key requirements to equip digital item marketplaces, such as trust intermediaries, speed, payment immutability (can’t be reversed), item authentication, and fraud prevention. Platforms like WAX are powering this future by offering plug-and-play decentralized solutions that enable marketplaces to support digital items trading via smart contracts, while offering a single currency that will be used to support all item transactions on the platform.
So for example a user of the WAX Platform could sell an in-game weapon for his favorite video game and instantly use the proceeds from that sale to purchase a digital movie download, without needing to convert currency. Because the transactions are based on smart contracts, there’s no risk that the seller may not get paid for their item. Since all items are listed for sale in real time, the item can be viewed and purchased by an user of the WAX platform. And since the marketplace where the seller listed the item for sale is powered by WAX, the marketplace gets a percentage of the transaction fee and don’t need to rely on cumbersome marketplace infrastructure.
Digital Identities are Already Here, and their Reach and Influence is Mainstream
Altering your identity online is hardly limited to the video game industry. Its mass-market ubiquity extends to other spaces such as social media. Ever used a Snapchat filter? If you haven’t, you’re not only missing out on the fun of seeing how you would look with dog ears and a snout, but you are also unlike the 187 million daily active users of the social media platform worldwide. Instagram, which has similar filter features, boasts 800 million monthly active users.
As the reach of digital identities permeates more and more online experiences, publishers and platforms are finding ways to monetize the trend among their partners and audiences.
For example, Warner Bros. promoted the launch of its Harry Potter Hogwarts Mystery game through a sponsored Snapchat filter. Snapchat users could not only snap themselves wearing Hogwarts robes, but also take the Harry Potter experience a step further in the app by playing an in-filter game. In the top left corner was a badge with an integrated “Install Now” button on the lens. Warner Bros. is hoping that Snapchat users who want to alter their identity online using their interactive filter will download the game.
And unlike Snapchat filters, which are free for users, some audiences are more than willing to pay to alter their digital identities themselves. Game publishers such as Epic Games, which developed and published the wildly popular game Fortnite, are creating free-to-play games with secondary markets that are the backbone of its business model. Game publishers are encouraged to create secondary markets because it can lower the barrier of entry for new players of the game by reducing the price or even making it free, while taking profits on the in-game item and skin purchases. Players are encouraged to purchase skins to alter their digital identities in the game, and their ability to do so has made Fortnite one of the most popular titles of 2017–2018.
Why are people spending real-life money on digital variations of their online identities (and why are companies spending their marketing budgets to sponsor it)?
For the same reasons that humans choose to spend money to alter their real-life identities: to express their individuality and separate themselves from the masses.
For the same reasons that people get tattoos and piercings to distinguish themselves, or purchase luxury shoes or pocketbooks when less expensive ones have the same function.
It’s not the functionality of the bag that matters, it’s the originality, prestige, and story behind the bag that makes it far more important and interesting than its basic function.
Caption: Digital items, like physical items, vary significantly in price and value
The same concept applies to online identities and items. Video games act as a form of self-expression. A standard-issue CS:GO gun might help a gamer win the match as much as a gun with a $30 skin on it, but the skin enables the player to separate their gaming experience from the rest of the players in the match.
The result is a $50 billion and growing in-game items trading industry, with more than 400+ million players around the world trading these items to affect the appearance of their digital identities in the games. OPSkins™ is the world’s largest marketplace for trading these items and has created a cryptocurrency and platform called the Worldwide Asset eXchange (WAX) which is designed to maximize the industry’s potential — currently limited by barriers to entry for both marketplaces and consumers.
Skins and Digital Items are Valuable — For Good Reasons
Why are skins and digital items valuable? For the same reasons that traditional “valuable” items are.
The ancient concept of value is based on usefulness or importance from worth. Centuries ago we measured the value of many things based on how much time or energy it took to acquire or make them. Salt was more costly than gold in Venice, Italy in the 1500s because of the cost of manufacturing, shipping, tax and profit for merchants. The unit of measure fundamentally rested in the amount of labor, i.e. the time and effort it takes for a human to produce or acquire something.
Rare items and intangibles (such as experiences) don’t always align with this ancient idea of value. Instead, the value is in the “eye of the beholder” in many ways. An item is worth what a buyer or collector is willing to pay. Where does that perception of value originate for an intangible?
Positive experiences stimulate neurotransmitters such as dopamine, serotonin, oxytocin or endorphins. We value happiness, so these positive experiences (and the items that can create them) have worth. If an item gives you a sense of happiness plus it’s rare or difficult to acquire (maybe even one of kind), it can be worth many times more than another item that looks the same. Why is a Leonardo da Vinci’s “Salvator Mundi,” worth $450 million? It is the most expensive painting ever sold, but you could put a print or digital representation of it on a wall or screen for almost no cost comparatively. The most expensive diamond, a 24.78-carat Graff Pink, sold for $46.2 million. How about the most expensive CS:GO skin? In January, a Dragon Lore skin sold for a record $61,052. Owning any of these items equates to status, prestige, and acceptance. Our brain gets the benefit from neuro chemicals — and rationalizes the value.
A recent study shows Americans are getting close to spending the majority of their waking hours consuming interactive entertainment:
As virtual experiences become ever more important, our internal view of “value” is shifting. How much will an online virtual experience be worth when we spend ⅓ of our waking hours using interactive devices? The answer is likely a lot more than we see today.
Millennials, a generation that may not have had phones until their teens, check their phones more than 150 times per day. Our younger generation’s increasing dependence on the latest technology suggests a future that’s bending towards virtual worlds, virtual items, skins and the commerce that surrounds them. It will only continue to grow as the next generations, who have never known life without interactive screens/devices, shape the world.
Meanwhile, not only has VR gone mainstream with the movie Ready Player One, but also with many other projects in development and a long list of future uses for VR outside of gaming. Let’s not forget Pokémon Go, the 2016 hit mobile game that brought augmented reality — virtual reality superimposed with the real-world environment — to the mainstream. With 750 million downloads just a year after its release, this game brought the idea of augmented reality to the palms of mobile users around the world.
Today, we see numerous great projects akin to the OASIS such as Decentraland and Second Life creator’s new project, High Fidelity. These ecosystems contain games within games and vibrant communities of players who trade items. Decentraland sold 70,000 pieces of real estate in its game before it was complete! The excitement for this new area of VR is just beginning and we can’t wait to see what comes next.
The WAX mission is to empower the people who create, share, and love these emerging virtual worlds, enabling them to make a living by operating marketplaces to buy, sell, trade, and rent virtual items without having to invest in expensive tools.
We envision the “OASIS of our future” powered by WAX.
Written by: Malcolm CasSelle, CIO of OPSkins, President of WAX