Keynote: Powering Real Economies: How Programmable Money Unlocks Monetisation & Activity in Games

[Music] [Music] so um ben is going to be coming up and talking about one of the things we love talking about in blockchain land programmable money so uh just for the benefit of everyone here my name's ben cousins uh i lead business development for zebedee i've got a background in uh video games development originally um i moved into the world of finance in about 2014 and i worked on video games m a for about six years probably most notably uh softbank's acquisition of supercell subsequent sale to 10 cent uh giants acquisition of platika an epic games fundraiser in 2018. i moved from there into venture capital where gaming investments for lake star uh including zebedee which uh having worked

with the team i became so convinced by the mission that i joined last may but what i'm here to talk to you about today is money and games and the relationship between money and games because i think there's a lot of noise out there and it's very difficult in this environment to get to the actual signal about what we're discussing when we talk about value transfer and ownership in virtual environments because really from the beginning games have always involved money if you go back to the late 70s and the early 80s when we had arcade machines people were inserting coins into the machine to get entertainment there was a value track there was an active value transfer there and also games themselves have always involved money internally intrinsically it ranges from uh mario on the nez when you ran around collecting coins to mmorpgs like elder scrolls which revolve around a gold based economy in grand theft auto your objective is to become the city's kingpin but really it's about being the wealthiest individual in that city and of course

there's warcraft and it's gold but that's extended into mobile as well and we have representations of money that now turn into multiple kind of faceted layers where you have in-game currencies premium currencies fiat currencies all trying to work together to represent some sort of value transfer or abstraction of value in virtual environments but crucially money itself does not actually work in games and to to think about that coin-op machine when you insert 25 cents into a machine you don't have 25 cents of value inside that game you just have access to play equally on grand theft auto if you pass a mission and win 400 you don't actually have 400 land in your bank account and really the missing link we we took this quote from bill gurley he's a vc at benchmark and we we've modified it slightly he said that the the real issue here is that gaming is a world that thrives on credits and points the vast

majority of which have no real value or are locked in a controlled ecosystem imagine a credit or token that is not just freely liquid but might also appreciate in value well they might also appreciate in value is speculation speculation is a game in and of itself what if that token also inherently had value what if it was just money so why hasn't why haven't games got usd or euros or pounds flowing through them natively what what's been stopping that from happening despite the inherent link between video games and money well critically money has never been digital i took this meme from the you know files or in the computer to try and explain it but you can't put money in a computer you can't walk up to a laptop and pull out a five pound note and insert it in the machine and have five pounds represented in that computer what's more handling money itself and games developers will know this is a very expensive thing to do if you want to send a small amount of value to one of

your players to reward them for their you know in this case excellent questing what you actually find when you deal with banking infrastructure is that the cost per transactions mean that nano payments are unfeasible they cost the cost to actually send the money is more than the money itself but even more puzzlingly you're challenged as to whether or not you have a license to send money in games and as to whether you know that gamer as a person and whether you know that they're not a criminal this all sums together to effectively make money a burden this this is why games have not integrated money you need money transmitter licenses you need a compliance team you have to maintain records for tax you have to monitor transactions on top of that the check the legislation changes all of the time that was until money became digital and yes we're talking about bitcoin here but i want to step back from social media and actually think about what is really happening in the world what are

we seeing happen well we're seeing in the us that the banking regulator has allowed retail banks to offer bitcoin products to their customers this means that if you're a regular person and you have a wells fargo or a us bank account but you can now open a bitcoin account alongside your regular checking and savings account if you're a corporation critically you can now also open a bitcoin account and you can process payments using bitcoin and receive your revenue in bitcoin you cannot yet do this with other cryptocurrencies but this is fundamentally a very very important thing to grasp about dealing with internet native money digital money what's more its adoption in countries where their currencies are collapsing is rampant with africa and latin america leading the way there's nothing there's no ulterior motive here other than people trying to retain value in their lives they try their grasping for a money that doesn't collapse in the wake of the dollar money's also become as a consequence of becoming digital programmable this is a

snapshot from our own api that demonstrates how for a software developer you can now make money behave as you would imagine dealing with money should be you don't have to go to your bank get a license etc etc etc no you can just trigger a payment command and then you can send money and critically bitcoin has the fastest adoption curve in history there is an existing user base to which you can market there are 130 million users it's growing faster than the internet in terms of the pace of adoption and as mentioned previously the regulatory environment around it is becoming crystal clear globally bitcoin is becoming money it is a steady and slow process it won't happen overnight don't listen to people who tell you otherwise but this is happening it is real and so now what we do at zebedee is we make money work in games we provide all of that compliant infrastructure that you need as a games developer to send value to and from players to enable

bi-directional value transfer and we do it with a very simple api if any of you are familiar with stripe it's a good analogy to think of us the connection to between us and your game is happening at the game engine level but fundamentally anything that speaks http will speak zebedee and this enables any developer to bring player known mechanics for want of a better word into their game but more critically think about it as putting money in your game and enabling value transfer that's the core of what we do but i think it sounds very abstract so we've got a quick video here that i want to show you and that really highlights the breadth of our product suite and what's possible when you use money in a game inherently and natively [Music] [Applause]

[Music] i saw oh well we got an active guard so well we've got more than 20 power-ups so that'll kind of mess everybody up it literally makes it chaotic we have like tornadoes and things and the drivers hate it but it only lasts about 20 seconds and have lightning bolts so what we're trying to do here is just trying to kind of show how the audience can interact with the game through bitcoin [Music]

so [Music]

oh [Music] all right so that's us and the product suite that we bring it's only there's actually a fair bit more we develop that's even more exciting um but as if in case it isn't clear we're powered by bitcoin here is a hyper casual developer building on our platform you can see the process of winning game winning bitcoin

in a mobile game and withdrawing we use bitcoin because it's open source money let that sink in it's like linux and it's going to be here for a while we actually use a software update that came to bitcoin in 2018 called lightning it enables bitcoin to be transferred instantly with near zero fees it's actually so fast you can stream money in real time it radically alters bitcoin's energy profile for those who are concerned about that it is programmable it's secure and safe bitcoin's never been hacked it's widely recognized and it's widely accepted this enables developers to power entirely new experiences yes for players you can now have plan and economies but also crucially you can have in in-game transaction and economic activity i can meet you in the virtual world and i can buy something off you with real money the audience can also participate in the games you saw a clip of that in the video but really it the when a payment goes through a twitch stream it can go directly into the game itself and cause

things to happen whether that's changing the weather or giving a player some money to buy something because his fans want to support him and then for developers i guess the part that you're all interested in is the monetization we're a payment processor we take a cut one percent on every transaction but you can come into that transaction activity too it's a variable rate we guide to five percent but you could raise it higher than that if you want you can now monetize the economic activity going on in your game the the developers of eve online ccp they've said that if they could monetize their economic activity that that would be a 10 billion dollar economy they sold for 400 million dollars because the only way they can operate today is with a subscription-based economy think about what being able to monetize economic activity offers you as a developer we provide everything a developer needs we've got an open rest api that's what i mean by if it speaks http it speaks zebedee and we provide a developer dashboard including analytics about what is going on in your game it lets you query player transaction activity you

can spot and identify whales for example and you can connect it to your own analytics stack to form a holistic view across cohorts and you know optimizing for ua spend etcetera we've also built for those of you who might not be familiar with these kind of back ends a pre-built game server that is basically a you know plug it in and you can go and it's built for best practice um so we've tried to provide developers with everything that they could possibly need on the consumer side we've we've built a bitcoin wallet that is optimized for gaming it includes a browser extension and it connects to twitch and discord and we use a system called gamer tags to enable payments and value to flow through games without qr codes and other points of friction that are common to cryptocurrencies this really is the process of pairing your wallet with a game and then value can be transferred it's very very simple and it works these are some of our players in brazil who have been earning bitcoin playing counter-strike and i particularly like the middle chap here who has actually earned enough to be

able to pay his bills in these currency in these countries where their currencies have collapsed even earning nominal amounts of bitcoin in the range of 50 cents to one dollar can actually be transformational for people's lives and critically because bitcoin is regulated and understood and has deep liquidity i.e exchanges every market it's possible to actually transact with this without having any bridges or friction you don't have to go through a dex to get to a stable coin to cash out on an exchange you just go straight from either bitcoin to a store where it's accepted or to your local bank account and we connect those rails like i said the implementation is simple you apply to us for api access we perform a quick kyb check because we're a regulated payment processor and then you can start using it in your game we have seen developers get api access and have a game in the app store in as little as five days it really is very simple to integrate you do not have to rebuild your game stack or do anything new you just change the reward mechanic

or you change your payment rail and it works for developers too we have 10 developers building on the platform today we've got about eight or nine games live in the app store we've seen retention double through to at least day 45 you're talking at literally a 2x improvement in retention because players can now pull value out of the game from a user acquisition standpoint we've also seen return on ad spend jump significantly one of our developer partners is a studio called vika they have the who wants to be a millionaire ip and a suite of hyper casual games they've seen their roast improve anywhere from 20 to 125 so those of you in the audience who will understand what this means you'll know that an 8 improvement is staggering for this to be double digits demonstrates the power of putting real value into video games here's a few games for those of you who are curious i'm i'm sure that after covert we're all good with qr codes so scan one of those if you'd like to get a link to a game and play it hopefully it'll work um but otherwise i'm here you can talk

to me we're happy to talk to developers exchanges partners of all kinds we are we're growing very fast this year thank you [Applause] good very succinct four minutes for questions as well good job done right questions if there isn't i've got some so uh oh i've got the i think the mic something well otherwise coming i'll ask one so so obviously you're showing their um stats which for people who don't know i just checked actually about two 2 500 stats is about a dollar so that's a lot of range you are talking definitely micro transactions yeah is is is there a sort of limit can people start sending bitcoins through your system or does that stop uh hit regulation so we prov we put limits in place to stop kind of bad behavior or abuse of the platform but there's no technical reason you wouldn't have a limit there but there's an illegal reason why you uh no there's no legal reason either we're just trying to make sure that this is above board and safe so we don't want you know like a 17 year old coming and yellowing a bitcoin on something like the idea is here most transactions are around a 30 cent range and it's supposed to be

thousands and thousands of high volume micro payments because that's how most games work in when they're free to play or have iap good no can you just wait for the mic so we can get it recorded uh hi there thank you for that um just a quick question on the um on the income received uh do the users are they informed about receipt and pin tax on their um income and anything that they gained from playing the game yeah so like in exchange we provide csv exports of the transactions that are occurring on the platform but frankly these these payments are tiny they're micro payments you're talking about less than a cent in some cases it's it's going to take a while for any user to trigger any kind of tax threshold and does the wallet work in natives in the game itself in the game itself so how are there any app store charges et cetera be paid so most of these

mechanics are actually paying out as a as a reward mechanic so in hyper casual for example they're taking their ad revenue and they're converting a fraction of that into bitcoin which they're returning to the player but that's offset by the massive increases in engagement that they see if you want to do iap of course you're going to run into apple's problems i mean this i don't like to guess about the future but it's quite clear to me that the payment infrastructure that apple has a control over right now is collapsing and that's you know epic is going to keep needling there so we're bullish on that you know in the medium term but you can link out to payments and we use this is slightly geeky but we use a protocol called that we use a thing called ln url and that enables like the actual request to a website itself can be a payment so as a user you would see you flip into a browser page and flip back to the game immediately and the payment's been done that doesn't break apple's rules but i'm sure they won't like how that works interesting thanks do you have an official answer from

apple and google if this is allowed because they're very fast at blogging accounts yeah so we've uh yeah we've spoken to apple and google on both fronts it's absolutely fine the thing that they take issue with is something called cash for tasks so you can't explicitly say to someone do this for bitcoin they don't like that but if it's the chance to win bitcoin in a gaming environment that's totally fine you talked about a few use cases with the games you've worked with but some games are more complex for example mmos like worlds of warcraft or anything else really have multiple digital assets multiple currencies inside the game yeah so do you think integrating bitcoin or other cryptocurrencies with them could sort of ruin the economy like what sort of conversations have you had with maybe game economist or something like that do you work with the with your clients or gamers yeah and some of our investors have been behind mmos themselves and they're very familiar with these economies i think um you know it we're not games designers that's important to understand we're providing a payment rail that allows

money to flow natively in games but in mmos a lot of the time the actual the variation in currencies is just because you can't get fiat currency into the game so they use abstractions and proxies for value to kind of get around that so you create a premium currency and a soft currency well you can just do away with the premium currency and have that be real money and you but you then the problem becomes balancing the game but that's uh that's something we leave with developers one last one just a quick one you mentioned the other verticals that your payment rail is going to be integrated into can you give us a couple of examples uh yes so you know a lot a common question we get is where does the bitcoin come from and the truth is it's a lot of the time it's provided by advertisers but what's going on in the background there is a manual exchange to bitcoin so the advertiser's providing the revenue the developer is turning some of that revenue into bitcoin but why don't we automate that so why don't we just connect to ad exchanges and then bitcoin

flows natively through the ad into the wallet and then you've solved that so that's one example of you know how we think about it but the great thing about bitcoin frankly is that it plugs into everything and so you can connect it to open banking i could withdraw bitcoin to my bank with one touch there's no exchange process that goes on and that's because the liquidity is now there globally lovely well thank you very much ben thank you [Music] [Music] you