WEBVTT - Can the Blockchain Have a Good Use Case for Gaming?

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<v Speaker 1>I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News,

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<v Speaker 1>and this is Bloomberg Crypto, a daily Bloomberg I hard podcast.

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<v Speaker 1>It's Monday, August eighth. I used to argue, I still

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<v Speaker 1>sometimes argue, that you could divide folks into two categories,

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<v Speaker 1>people who play video games and everybody else. Gaming is

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<v Speaker 1>bigger in revenue terms worldwide than the film and television

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<v Speaker 1>industries combined. It's also a complex universe that's dealing with

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<v Speaker 1>hard and necessary conversations about things like who benefits from

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<v Speaker 1>those record breaking profits, whose work and whose labor, and

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<v Speaker 1>under what conditions are these profits being made? And as

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<v Speaker 1>always there's tough questions about things like intellectual property. And

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<v Speaker 1>that's before you even add blockchain and n f t

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<v Speaker 1>s into the mix. Joining me now is Bloomberg Reports

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<v Speaker 1>to Cecilia Donastasio, the bigger question is do gamers want

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<v Speaker 1>their teams to look like capitalism. She's going to discuss

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<v Speaker 1>why and how crypto is showing up in video games

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<v Speaker 1>and why much of that gaming community isn't necessarily a

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<v Speaker 1>big fan of either technology. Cecilia, thank you so much

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<v Speaker 1>for joining us on the podcast today. Thank you so

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<v Speaker 1>much for having me. You are a video games reporter

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<v Speaker 1>at Bloomberg, And once I got over my jealousy of

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<v Speaker 1>the existence of a video games reports at Bloomberg doing

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<v Speaker 1>jobs that I was not doing, I started asking the question,

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<v Speaker 1>what is the intersection of crypto and n f t

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<v Speaker 1>s and video games? Yeah, it's a huge question. So

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<v Speaker 1>over the last couple of years, people who have been

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<v Speaker 1>involved in both the video game industry and the world

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<v Speaker 1>of crypto have looked at games and thought to themselves, well,

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<v Speaker 1>games have virtual currency and games have virtual items. Crypto

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<v Speaker 1>is a virtual currency and n f t s are

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<v Speaker 1>technology underpinning virtual items. What if these two things were married.

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<v Speaker 1>And it's been very interesting to see how that has

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<v Speaker 1>and has not played out. How has it played out? Yeah,

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<v Speaker 1>So we have seen crypto games for several years. People

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<v Speaker 1>say Crypto Kitties was one of the first ones in

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<v Speaker 1>two thousand and seventeen. Basically, um, there are these virtual

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<v Speaker 1>cats that were sort of symbolic of real life value

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<v Speaker 1>through crypto. And one of the things that was pretty

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<v Speaker 1>interesting with crypto Kitties was that despite the fact that

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<v Speaker 1>one pet might self for a hundred thousand dollars, the

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<v Speaker 1>equivalent of that in Crypto, players really bled out of

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<v Speaker 1>Crypto Kitties because, and we've seen this several times since then,

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<v Speaker 1>there was an increasing division between richer players who had

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<v Speaker 1>enough money to buy high value assets early on in

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<v Speaker 1>the game, high volume, high value cats, calling cats assets

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<v Speaker 1>people too. Yeah, and these poorer players, though, who also, um,

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<v Speaker 1>who were not able to kind of scale the ladder

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<v Speaker 1>and have as much fun with the game. I want

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<v Speaker 1>to kind of go into a little bit more detail

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<v Speaker 1>here because I think it's fair to say we both

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<v Speaker 1>play a reasonable amount of video games, or perhaps an

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<v Speaker 1>unreasonable amount. I was about it depends on your perspective really, um.

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<v Speaker 1>And one of the things about video games is, you

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<v Speaker 1>know a lot of them involve some kind of grind, right,

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<v Speaker 1>some kind of not fun, repetitive activity that you do

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<v Speaker 1>over and over again in order to get the loots

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<v Speaker 1>that lets you buy the swords, that lets you do

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<v Speaker 1>the thing that you want to do. With Crypto, there's

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<v Speaker 1>a dynamic in there that is also that also already

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<v Speaker 1>exists in traditional video games, which is the idea of

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<v Speaker 1>or you could spend money and buy the sword and

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<v Speaker 1>skip the grind. So you know, there's there's an existing

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<v Speaker 1>dynamic of the haves and the have nots in traditional

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<v Speaker 1>video games. Are you saying that it's it's worse in

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<v Speaker 1>crypto or that it's like more aggressive in some way.

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<v Speaker 1>I love this question because I think that a lot

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<v Speaker 1>of gamers feel that are attracted to video games because

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<v Speaker 1>of this egalitarian element where you know, everyone bought the game.

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<v Speaker 1>People you know, go in with various skill levels, but

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<v Speaker 1>you know, if you spend enough time trying to grind

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<v Speaker 1>for gold in World of Warcraft, you're gonna get golden

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<v Speaker 1>in World of Warcraft, regardless of how how good you

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<v Speaker 1>are at the actual fighting in the game a lot

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<v Speaker 1>of the time. Um Crypto is a little bit different

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<v Speaker 1>because you do need that initial financial buy in a

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<v Speaker 1>lot of the time. So while there are people who

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<v Speaker 1>play Axie Infinity who are able to grind their way

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<v Speaker 1>into more and more valuable axes, people who start out

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<v Speaker 1>with a lot of money upfront do automatically have a

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<v Speaker 1>head start. But I think it's worth noting that people

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<v Speaker 1>have been purchasing high value assets in selling them inside

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<v Speaker 1>of video games for like a decade. So if that

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<v Speaker 1>is the case, and we we both know that to

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<v Speaker 1>be true, I will not confess which online video games

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<v Speaker 1>I may have spent too much time and im possibly

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<v Speaker 1>too much money and in a prior life, Why then,

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<v Speaker 1>do we need things like blockchain based economies and games.

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<v Speaker 1>What are the arguments that these developers are making. There

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<v Speaker 1>are some really interesting arguments out there that you know,

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<v Speaker 1>because micro transactions have become such a prominent business model

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<v Speaker 1>for video games, particularly ones where there's no initial buy

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<v Speaker 1>in free to play, you know, free to play exactly.

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<v Speaker 1>Players love these in game cosmetics. I too, am unwilling

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<v Speaker 1>to admit um what games I spend what money in

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<v Speaker 1>in this regard. But ultimately there's this argument that you know,

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<v Speaker 1>you don't really own your those cosmetics. You don't own

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<v Speaker 1>the really awesome dragon mount in, for example, of Final

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<v Speaker 1>Fantasy four tea, and that you might have, for example,

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<v Speaker 1>spent some money on in this store. So if you know,

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<v Speaker 1>Square Annex the publisher which one day say all right,

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<v Speaker 1>we're done here with this game, like your mount disappears

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<v Speaker 1>even though you spent fifteen dollars, which has happened. Yes.

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<v Speaker 1>The idea of the blockchain technology is that it would

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<v Speaker 1>allow you to own the assets somehow, and maybe you

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<v Speaker 1>could even transfer that asset into another game. So if

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<v Speaker 1>you have your cool dragon mountain Final Fantasy fourteen, maybe

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<v Speaker 1>you could play with it in World of Warcraft. I

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<v Speaker 1>have also seen some game developers, and particularly people who

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<v Speaker 1>draw assets for video games, pulling their hair out on

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<v Speaker 1>Twitter over this argument, because God, what an ownerous thing

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<v Speaker 1>to do to redraw everything. Let's just take a completely

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<v Speaker 1>not related to something I may have done in my

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<v Speaker 1>own life example, and let's say you had spent some

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<v Speaker 1>large amount of time building an extravagant apartment complex in

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<v Speaker 1>you know the sims on desktop PC, and later in

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<v Speaker 1>life you spent some similarly extravagant amount of time customizing

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<v Speaker 1>your island on animal crossing on switch. In the idealized

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<v Speaker 1>version of the world pitched by these pro blockchain FLU

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<v Speaker 1>and f T developers, I would be able to move

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<v Speaker 1>to buy that real estate and move it between games. Right,

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<v Speaker 1>Nothing should stop me from being able to move these

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<v Speaker 1>things between each other. In reality, those are totally different platforms,

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<v Speaker 1>they're totally different game publishers, they're totally different art styles,

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<v Speaker 1>they're completely different ecosystems. There's just no practical way that's possible. Yes,

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<v Speaker 1>and there is an argument that some gamers, do you

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<v Speaker 1>want things that they work for in video games since

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<v Speaker 1>they grind for it to be redeemable for real life money,

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<v Speaker 1>and so I could sell my island, so you could

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<v Speaker 1>sell your eye end, and there is the argument that

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<v Speaker 1>that end is worth those complicated means. I haven't seen, however,

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<v Speaker 1>a lot of gamers be particularly excited about that. There

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<v Speaker 1>have been big publishers who have launched initiatives along those

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<v Speaker 1>lines that have received um as. My colleague Jason Shire

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<v Speaker 1>puts it more vitriol than anything he's seen in the

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<v Speaker 1>games industry since he started reporting on it, which is

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<v Speaker 1>a very high bar. So here's here's the thing about that, though.

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<v Speaker 1>If you do something that is hard, labor intensive, time consuming,

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<v Speaker 1>and then you make money at the end, typically that

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<v Speaker 1>is considered work. And I played video games to be

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<v Speaker 1>the opposite of work. I don't want to monetize my

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<v Speaker 1>video gaming because then it becomes a job. And if

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<v Speaker 1>I'm in an escapist universe US in which I'm spending

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<v Speaker 1>dozens of hours on a building houses, it's because I'm

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<v Speaker 1>not trying to work. So what is going on with

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<v Speaker 1>this mechanic here where everything is just becoming label? That's

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<v Speaker 1>a really awesome thing to bring up. You know. I

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<v Speaker 1>think it's worth noting that there are a lot of

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<v Speaker 1>gamers out there who do approach video games very seriously

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<v Speaker 1>as if they were work. When I go on a

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<v Speaker 1>raid in Final Fantasy fourteen and I'm with seven of

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<v Speaker 1>my friends and we're trying to be the same fight,

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<v Speaker 1>you know, like eighty times, that does require a kind

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<v Speaker 1>of like work approach, but it's for fun. I think

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<v Speaker 1>you're right, and people really do attach monetary compensation to

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<v Speaker 1>the idea of labor. I think the bigger question here

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<v Speaker 1>isn't do gamers want to approach their games as if

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<v Speaker 1>their jobs, because I think a lot of gamers really do.

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<v Speaker 1>The bigger question is do gamers want their games to

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<v Speaker 1>look like capitalism? There are in these block handing games

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<v Speaker 1>and particularly Acts in Affinity, there have been these guilds

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<v Speaker 1>that have sort of spawned where players who have more

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<v Speaker 1>resources and higher value axes or assets are able to

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<v Speaker 1>farm out the actual gameplay of these games. Two players

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<v Speaker 1>who don't have as many monetary resources, particularly in countries

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<v Speaker 1>like the Philippines that were hit quite hard by the pandemic,

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<v Speaker 1>and those players kind of sharecropper style will increase the

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<v Speaker 1>value of the richer players assets by playing video games.

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<v Speaker 1>And I think, you know, that's a different kind of

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<v Speaker 1>work relationship that is exacerbated by the fact that do

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<v Speaker 1>you think that this is a fact that a lot

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<v Speaker 1>of these blockchain based games right now aren't very fun yet.

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<v Speaker 1>We'll be right back with more on video games from

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<v Speaker 1>Bloomberg Report to Cecilia Denistasu. I want to go back

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<v Speaker 1>to something that you said earlier about you know, folks,

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<v Speaker 1>we've been doing this for a long time. So Second Life,

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<v Speaker 1>which is you know, much like much like Eve, one

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<v Speaker 1>of the very earliest online spaces. The folks who take

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<v Speaker 1>Second Life very seriously, and there's still a lot of them,

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<v Speaker 1>would argue it was never really a game. It was

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<v Speaker 1>much more metaversey than necessarily video gaming. But you interviewed

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<v Speaker 1>there the executive chairman of Linden Labs, which is the

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<v Speaker 1>developer of Second Life, for the a tech summit hosted

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<v Speaker 1>by Bloomberg in San Francisco, and he was, you know,

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<v Speaker 1>less than convinced that blockchain and crypto had a role

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<v Speaker 1>not even justin video games, but also in the metaverse.

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<v Speaker 1>I'm just gonna play that clip really quickly, right the

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<v Speaker 1>whole point of blockchain is that everybody knows everything. It's

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<v Speaker 1>a huge word document. Um So, if you if you

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<v Speaker 1>talk about an n f T and you put that

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<v Speaker 1>by definition and mt is on the blockchain, we've got

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<v Speaker 1>two point two billion items we transact. We can transact

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<v Speaker 1>in a one fifty of a penny that does not

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<v Speaker 1>work on the blockchain. So, and the other thing about

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<v Speaker 1>blockchain is it is it dovetails with crypto, which we've

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<v Speaker 1>talked in the past, which, as you know, i'll use

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<v Speaker 1>the word because I ask permission, is the apocalypse and so,

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<v Speaker 1>um So when I start thinking about metaverse, blockchain, crypto,

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<v Speaker 1>I see that as a future, but I think it's

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<v Speaker 1>as much of a risk as it is a positive.

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<v Speaker 1>I do want to just talk about that idea of

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<v Speaker 1>the metaverse a little bit more because when Microsoft announced

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<v Speaker 1>that it was going to try to buy Activision Blizzard,

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<v Speaker 1>one of the very first things that they said was like,

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<v Speaker 1>this is a big play on the metaverse. And you're like, how, like,

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<v Speaker 1>what is what is the relationship from your perspective between

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<v Speaker 1>video games and the metaverse, even if you ignore n

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<v Speaker 1>f t s and crypto. That's a great question. So

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<v Speaker 1>we have seen articles for publications like the New York

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<v Speaker 1>Times that will for two metaverse and virtual world kind

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<v Speaker 1>of interchangeably. There was, um notably, a New York Times

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<v Speaker 1>article in which two individuals got married in a so

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<v Speaker 1>called metaverse. Never mind those individuals happened to work for

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<v Speaker 1>the company. It was a real estate company that created

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<v Speaker 1>the virtual world. Details. It's in details, you know. This

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<v Speaker 1>really great book by venture capitalist named Matthew Ball came

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<v Speaker 1>out just called The Metaverse, and he has the definition

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<v Speaker 1>of like the most a metaverse is a persistent virtual

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<v Speaker 1>world that is connected to other virtual spaces, that has

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<v Speaker 1>an economy, and also is able to be kind of

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<v Speaker 1>immersed in in some way. So whether that's through you know,

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<v Speaker 1>operating an avatar, or maybe we're walking around it in

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<v Speaker 1>virtual reality. That's that's how he defines a metaverse. And

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<v Speaker 1>by that definition, there is no metaverse. Not yet. Tech

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<v Speaker 1>companies don't really aren't really making moves to kind of

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<v Speaker 1>partner with each other as equals, to kind of hitch

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<v Speaker 1>their different virtual spaces together, or what we see more

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<v Speaker 1>of is, of course, consolidation, one big tech company kind

0:14:06.760 --> 0:14:09.560
<v Speaker 1>of absorbing a smaller one. Metaverse right now is a

0:14:09.559 --> 0:14:12.120
<v Speaker 1>way for a lot of tech companies to describe their

0:14:12.160 --> 0:14:17.560
<v Speaker 1>sprawl of digital and physical apps, hardware that they used

0:14:17.600 --> 0:14:21.960
<v Speaker 1>to construct their virtual spaces, and their technological products that

0:14:22.040 --> 0:14:24.480
<v Speaker 1>they sell. And I would be really excited to see

0:14:25.000 --> 0:14:28.360
<v Speaker 1>if that ends up advancing into a true metaverse at

0:14:28.400 --> 0:14:32.040
<v Speaker 1>any point in any future, hopefully not a dystopian one,

0:14:32.320 --> 0:14:35.560
<v Speaker 1>just as a as a closing thought, games that get

0:14:35.600 --> 0:14:40.960
<v Speaker 1>described as metaverses are often like Fortnite, which has you know,

0:14:41.320 --> 0:14:43.520
<v Speaker 1>the consumables and the cosmetics that you described. You can

0:14:43.560 --> 0:14:45.560
<v Speaker 1>buy skins, you can buy suits, you can buy cool stuff,

0:14:45.560 --> 0:14:49.160
<v Speaker 1>you can create spaces, you can have a persistent character

0:14:49.200 --> 0:14:51.080
<v Speaker 1>that represents you, and then you could like party and

0:14:51.120 --> 0:14:56.280
<v Speaker 1>listen to real world DJs, um Minecraft Roadblocks similar sorts

0:14:56.280 --> 0:14:59.160
<v Speaker 1>of things, and those are also often the games that

0:14:59.200 --> 0:15:01.080
<v Speaker 1>are held up as well. What if you could take

0:15:01.120 --> 0:15:04.240
<v Speaker 1>your Fortnite outfit or the things you made in micraft

0:15:04.360 --> 0:15:07.320
<v Speaker 1>or roadblocks and you know, import those into other places.

0:15:07.600 --> 0:15:11.240
<v Speaker 1>What I'm hearing from you is those might have metaverse

0:15:11.400 --> 0:15:15.800
<v Speaker 1>like elements, but they don't fully fit the description yet,

0:15:16.000 --> 0:15:20.920
<v Speaker 1>they're not like fully realized entities in that way. Absolutely. Actually,

0:15:20.920 --> 0:15:23.760
<v Speaker 1>Minecraft developers came out really recently to say that they

0:15:23.760 --> 0:15:25.960
<v Speaker 1>will not be allowing n f t s in in

0:15:26.000 --> 0:15:28.800
<v Speaker 1>that game at all. That is a metaverse element to it,

0:15:28.840 --> 0:15:33.640
<v Speaker 1>the connecting video games in virtual worlds through assets that

0:15:33.680 --> 0:15:35.960
<v Speaker 1>you can kind of share for them. I would be

0:15:36.720 --> 0:15:38.720
<v Speaker 1>more curious to see. And this is more of like

0:15:38.920 --> 0:15:42.040
<v Speaker 1>this is more of a vestige of a truer metaverse.

0:15:42.480 --> 0:15:45.920
<v Speaker 1>Whether people will be able to bring avatars across different

0:15:46.040 --> 0:15:49.240
<v Speaker 1>video game properties. That feels a little bit unlikely, just

0:15:49.280 --> 0:15:53.640
<v Speaker 1>considering the fact that everything from art styles to video

0:15:53.680 --> 0:15:58.240
<v Speaker 1>game engines that provide the kind of software infrastructure for

0:15:58.320 --> 0:16:04.359
<v Speaker 1>video games to exist aren't necessarily synonymous between these properties.

0:16:04.440 --> 0:16:08.000
<v Speaker 1>But you know, people really believe in this thing. True.

0:16:08.600 --> 0:16:11.400
<v Speaker 1>Great place to stop. Thank you so much, Ceilia, thank

0:16:11.400 --> 0:16:15.960
<v Speaker 1>you for having me on the next episode of Bloomberg.

0:16:16.000 --> 0:16:19.840
<v Speaker 1>Crypto venture capitalists and certain people in the music industry

0:16:20.200 --> 0:16:23.120
<v Speaker 1>seem to be enthusiastic about the potential for artists to

0:16:23.160 --> 0:16:26.320
<v Speaker 1>benefit from crypto technologies like the blockchain and n f

0:16:26.360 --> 0:16:31.360
<v Speaker 1>t s, but there isn't universal agreement, especially among musicians themselves,

0:16:31.880 --> 0:16:35.880
<v Speaker 1>that any of this is necessarily a good idea. Bloomberg reports.

0:16:35.960 --> 0:16:38.320
<v Speaker 1>Lucas Shore will join me from Los Angeles as we

0:16:38.360 --> 0:16:43.240
<v Speaker 1>continue our discussion about the decentralization of the music industry.

0:16:46.040 --> 0:16:49.200
<v Speaker 1>This is Bloomberg Crypto, a daily podcast from Bloomberg and

0:16:49.240 --> 0:16:52.200
<v Speaker 1>I Heart Radio. For more shows from I Heart Radio,

0:16:52.440 --> 0:16:55.560
<v Speaker 1>visit the I Heart Radio app, Apple Podcasts, or wherever

0:16:55.600 --> 0:16:59.160
<v Speaker 1>you get your podcasts. Send us your comments, questions, or

0:16:59.160 --> 0:17:02.200
<v Speaker 1>suggestions for the show to Crypto at Bloomberg dot net

0:17:02.760 --> 0:17:10.480
<v Speaker 1>or find us on Twitter. We're at Crypto. The supervising

0:17:10.480 --> 0:17:13.879
<v Speaker 1>producer of Bloomberg Crypto is Vicky very Galina. Our senior

0:17:13.960 --> 0:17:18.520
<v Speaker 1>producer is Janet Babin. Our producer is Mohammed Farup. Our

0:17:18.560 --> 0:17:22.960
<v Speaker 1>producer is Sharon Barrier. Our associate producers are Zanam Sidiki,

0:17:23.040 --> 0:17:26.359
<v Speaker 1>Thai Buffalo and Moses and um Desta wonder At is

0:17:26.359 --> 0:17:33.440
<v Speaker 1>our engineer. Original music by Leo Sidrin. I'm Stacy Maria Shmaal.

0:17:33.720 --> 0:17:34.680
<v Speaker 1>We'll be back tomorrow.