The financial services industry should keep a close eye on esports to understand the impact of blockchain technology, according to a Gartner analyst. 

David Furlonger, Distinguished VP Analyst at Gartner, writes in his book The Real Business of Blockchain that gaming has long served as a testing ground for digital experimentation. 

The book specifically calls out esports as a hotbed for blockchain innovation thanks to the confluence of high tech, entertainment, and economics. The nascent technology is being used to tackle problems such as fraud, high switching costs, long delays before designers or players get paid and high fees charged on digital platforms. 

Gaming also offers insights for other industries. 

“This particular industry has a lot of insight as it relates to how we see the financial services industry developing. So if you are in the financial services industry look at gaming because this can be how you evolve over the next few years,” Furlonger said during a presentation at Gartner Symposium this week. 

In particular the industry is pioneering tokenisation and decentralisation technology which offer an alternative to the closed ecosystems being established by big tech giants. 

Apple, Amazon, Google, Amazon, Tencent are “trying to establish walled gardens around the gaming space,” Furlonger said. That essentially means the tech giants get to set the rules. 

“You’re on our platform. We will pay you and we feel it’s appropriate or not at all. We will determine all the access gates for how you engage in these games. Nothing that you use is fungible, [for example if] you have a big magic tank here and you can’t take your magic tank over here and kill monsters with it.” 

Then there’s a different cohort of companies who believe, “the whole ethos of gaming is participation, collaboration, decentralisation, and want to use tokens of value to blow apart these walled gardens.” 

In essence, “using tokens of value to represent tanks that can move between different games because their value to the individual gamer.” 

Source: Gartner

For example DMarket is a blockchain-based gaming token designed to be used across games and platforms, so assets associated with one game can be purchased or traded for assets associated with another. 

Another example is Enjin, a platform that allows users to create their own tokens to support their games. “To limit fraud and double-counting, the Enj coin uses a design element to validate that gamers own the items they purchase. 

“The tokens of GameCredits, DMarket, and Enjin are more decentralised than past gaming tokens and more programmable. Their level of decentralisation is a direct response to the attempts by digital giants to control the industry and diverse requirements of gamers, fans, and developers,” Furlonger writes. 

“These more decentralised tokens enable gaming networks to create value during the transformation of an emerging industry.” 

Breaking up centralised control

According to Gartner there are five elements for a true blockchain solution, outlined in the image below. The elements of decentralisation and tokenisation play a crucial role in unlocking the full potential of blockchain. 

If a solution only covers the first three elements — distribution, encryption, immutability — it is “basically DLT, that is not really blockchain” Furlonger said. 

He warned organisations will need to carefully consider which DLT technologies they use.

“I think there is a huge risk that if we focus on DLT. In other words, distribution, immutability and encryption, that will reinforce the walled gardens that they’re creating in the marketplace, we will be forced to adhere to their platform with their data rules and their standards. Which means they will set the contractual terms and conditions and we will not be able to escape.”

Source: Gartner.
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