Using blockchain for in-game asset trading

Using blockchain for in-game asset trading

Counter-Strike: Global Offensive (CS:GO) is one of the world’s most popular multiplayer first-person shooter games developed by Valve. Despite the advances in blockchain, CS:GO developers have not yet developed a system that would enable CS:GO players to sell their skins (cosmetics that change the appearance of in-game assets) for real money…in fact, they still do not support it. It is evident that Valve is trying to maintain the circulation of money exclusively inside Steam (Valve’s storefront).

Players can sell CS:GO skins on the Steam Community Market for Steam Wallet funds which appear as real money but are nothing else than an in-game currency. They have no real value outside of Steam and are not exchangeable for real money. Players who wish to sell their CS:GO skins for real money must do so OTC or on third-party marketplaces.

One method is to sell a skin for real money on the Steam Community Market via a guarantor (intermediary). First, the money (from the buyer) and the skin (from the seller) are transferred to the guarantor. Then, the guarantor transfers the money to the seller less the commissions that the guarantor charges (usually 5-10%). Lastly, the guarantor transfers the skin to the buyer. Neither party must register anywhere and share their Steam account details. However, it attracts a lot of scammers who impersonate verified guarantors. Whether the deal goes through is entirely in the hands of the guarantor who at one point in the deal gets his hands on both the seller’s in-game asset and the buyer’s money which will leave the seller and the buyer on the edge of their seats. The worst part is that if the guarantor “runs away”, the buyer and the seller can do nothing about it. Valve can only permanently ban accounts suspected of fraud but cannot return scammed items to their original holders. Steam keeps repeating that it is the users’ responsibility to secure their Steam accounts.

Using blockchain for in-game asset trading

Another method is to sell a skin on a third-party marketplace such as SkinBaron, developed by a famous CS:GO YouTuber and player Anomaly. In this case, the trading system is the same as in the first method, but a bot administered by SkinBaron replaces the guarantor. The seller transfers his/her skin from his/her Steam Inventory to his/her SkinBaron Inventory via the bot. From there, it can be offered up for sale on the SkinBaron marketplace (by the seller) and purchased with deposited money (by the buyer). Upon purchase, the skin is transferred to the buyer’s Steam account by a SkinBaron bot, and the money is added to the seller’s SkinBaron account (from which it can be easily withdrawn using popular payment systems). Skins transferred to users’ SkinBaron Inventories can be transferred back to their Steam accounts free of charge at any time. The disadvantage is that users must link their Steam account to SkinBaron to trade on it. Sharing Steam account details on any third-party site unaffiliated with Steam is, of course, risky. Third-party marketplaces also charge high commissions (SkinBaron charges a sales fee of 15%).

Third-party marketplaces are, in fact, marketplaces where sellers can offer their skins for sale to many prospective buyers and wait before one does not show interest. Steam is not a marketplace but sellers use it as a trading instrument to sell their skins to already-found buyers.

Using blockchain for in-game asset trading

While third-party marketplaces appear to offer CS:GO players an easier and more secure P2P trading experience than the Steam Community Market, the deal is only as secure as the marketplace. Traders moving from the Steam Community Market to third-party marketplaces are, in essence, just moving from one dangerous place to another.

It is important to note that all items traded on the Steam Community Market are mere license rights. When you purchase an item there, Valve is technically licensing you the right to use that item for playing, trading, and selling but only on the Steam Community Market. This means that users don’t own the skins, Valve does. At the end of the day, if Valve servers permanently shut down or get hacked, users are in danger of losing all their money (steam wallet funds and/or monetary value in the skins they purchased). On top of that, Valve has the power to retain the rights anytime without any further notice. Effectively a player might lose all of his/her worthy gaming possessions in a matter of minutes without any possibility to stop that from happening. This means that years and years of players' in-game achievements and investments (many spent thousands of USD to purchase skins) could instantly vanish. The security and rights to ownership on Steam, therefore, constantly induce fear into users’ minds.

Blockchain-based marketplaces and gaming assets enable players to truly own their skins and remove the intermediary. This results in minimum fees and enhanced security as the players do trade the assets through automatic, cryptographically secured smart contracts. Generally, blockchain and blockchain-based marketplaces for in-game assets are safer and cheaper for several reasons, including:

  1. Reduced Fraud: Traditional marketplaces for in-game assets are often plagued by fraud and scams. Blockchain-based marketplaces use smart contracts to enforce the rules of the marketplace and ensure that transactions are transparent and secure. This reduces the risk of fraud and increases the trust between buyers and sellers.
  2. Lower Transaction Costs: Traditional marketplaces often charge high fees for buying and selling in-game assets. Blockchain-based marketplaces can eliminate the need for intermediaries and reduce transaction costs, making it cheaper for buyers and sellers to transact.
  3. Greater Accessibility: Blockchain-based marketplaces can provide greater accessibility by removing geographical barriers and enabling anyone with an internet connection to participate. This can increase the pool of potential buyers and sellers, leading to greater liquidity in the market. Thanks to interoperability, blockchain-based marketplaces can also offer in-game assets from different game developers on the same blockchain.
  4. Ownership and Authenticity: Blockchain-based marketplaces use non-fungible tokens (NFTs) to represent in-game assets. NFTs provide a unique digital ownership certificate for each asset, ensuring its authenticity and making it difficult to counterfeit. This enhances the value of in-game assets and allows buyers to feel more secure in their purchases.
  5. Secure Storage: In-game assets stored on blockchain-based marketplaces are stored in a decentralized manner, meaning that they are not held in a central server or controlled by a single entity. This reduces the risk of hacking and loss of assets due to server crashes or other technical issues.
Using blockchain for in-game asset trading

Author: Matěj Kmoch, Venture Investment Analyst

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Martin Kodýdek

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