November 10, 2021
Survival Sims
Humans go for athletics, poker, puzzles, and video games. Cats chase and paw yarn. Young animals tussle. Beings seem universally inclined towards play and games. But why? The answer isn’t obvious.
Attributing the appeal of games to fun undershoots. “Fun” is a dopaminergic sensation conjured by the mind in response to an event, not an intrinsic property of that event itself. What lies deep in the essence of a game that is so irresistible?
In my view, it is that games simulate survival. By playing games, animals can practice survival without the risks associated with the real thing. Being able to run many simulations will increase the likelihood of actual survival and thus passing on one’s genes (fitness). A tendency that increases fitness, such as a predilection for games, is reinforced. And so, the innate reward systems primed by the vagaries of survival are triggered by, or are maybe tricked by, games.
The cat paws yarn to hone her hunting skills such that she can eat. The young animal tussles to hone his combat skills such that he can defend and attack. Man invents and plays games constantly, updating his maps to track the ever-changing territory that he survives within.
--------------------------------------------------------------------------------------------------
“There are only three sports: bullfighting, motor racing, and mountaineering; all the rest are merely games,” Ernest Hemingway once said
--------------------------------------------------------------------------------------------------
Intelligent (Game) Design
Consider the objectives of these games and the skills that they reinforce:
Hunting
Football
Settlers of Catan
Charades
(Game) hunting has only recently become a game for the well-fed—an explicit survival skill. Football is geared around the evasion of and pursuit of an enemy. In Settlers of Catan, settlers make economic decisions vis a vis scarce physical resources. Charades is a translation game—ineffective communication brings demise. Each of these games hone a survival skill set without actual risk of loss.
Combat, adventure, and escape, blunt allusions to survival scenarios, dominate the ranks of video game titles. Players collude, strategize, pillage, share, build, destroy, war, and govern. The reward that a player derives from a game is often rooted in overcoming challenges that feel right at the edge of his or her competence—the colloquial “flow state”. Flow rests just at the edge of human competence, nested between fight and flight.
So far, the premise I have laid out is that games are derivatives of real survival challenges, but not “real” in and of themselves. After all, little Billy’s parents still worry that he may develop a knack for gaming at the cost of never developing “real world” skills. One world is authentic, the other is counterfeit. Right?
At what point is a game no longer an ersatz version of the real thing? Is a simulation still just that if the thing it simulates is no longer a reality? Might virtual worlds become simply an extension of the human condition?
The Game of Life
When environmental resources are scarce, combat, adventure, and escape are realities of human life. To the contrary, much of the contemporary world is plagued with problems of abundance rather than those of scarcity. The privileged are post-survivalist. Unlike our not-too-distant ancestors, our lives are predictable, stable, and even boring.
The “challenges” that punctuate our existences are thus largely self-contrived. Of course a minimum threshold of resources (money) is required to get on, but we know that returns to satisfaction beyond that level diminish marginally. Humans push well beyond sustenance, perpetually malcontent, to create challenges for the sake of challenges. We are simply playing an MMORPG (Massive Multiplayer (Off)line Role Playing Game), with success denominated in status, at a societal scale.
Settling The CyberWest
As people increasingly socialize, exchange, and express themselves in cyberspace, the rituals and challenges that give our lives meaning will migrate into the cloud as well. We conduct work meetings and family check-ins on zoom, farm clout on Twitter, attend class asynchronously, and collect digital art on blockchains. The pandemic accelerated a transition towards an all-consuming Metaverse, causing individuals to seek engagement, culture, and community in their keyboards. Whether you define the Metaverse more austerely or loosely, everyone I know has at least a toe in it already. Couch your judgement about the migration and recognize that it is occurring.
It is my opinion that virtual worlds offer an immersive progression to our digital lives. Digital avatars, land, buildings, and flora are the skeuomorphic anchors of cyberspace that will help ease a settling that is neither easy nor natural for human beings. Humans are equipped for physical environments, not virtual ones. While virtual environments are less than a century old, the human genome is two thousand centuries old. The social media environment accelerated far too quickly for our genes—much of the world is anxious as a result. To layer physical features into digital environments is to make the uncomfortable slightly less so.
“Real life” will occur in virtual worlds simply because people believe it is real. The earliest settlers migrate for economic mobility—Play-To-Earn (P2E) can be extremely profitable for those in the developing world. As the virtual world looks and feels more and more like the physical one, a broader range of folks will migrate. Consensus shifts as technology and incentives do. Games, once simulations, become primary sources from which humans derive meaning and purpose.
--------------------------------------------------------------------------------------------------
“Show me the incentive and I will show you the outcome” - Charlie Munger
--------------------------------------------------------------------------------------------------
Scarcity Bootstraps Realism
Virtual worlds haven’t yet achieved this legitimacy. They lack life. The more obvious (and to me, less interesting) driver of this is visual. High-fidelity gaming engines, better user hardware, and innovations in AR/VR will squeeze this gap in due time. But graphics, appeasing the sense of sight, are only half of the puzzle. What is alive is necessarily impermanent. Life feels real because it ends. Part of why digital worlds feel like simulations is because they are infinite.
A key difference between physical and virtual worlds is that of scarcity. In the physical world, most resources are finite—namely life, land, and capital. Economic decisions, or choices vis a vis those scarce resources, have consequences. A poor decision can result in a catastrophic loss while a wise one can result in significant gain. The thrill of risk, whether through bungee jumping, proprietary trading, or starting a business is embedded in the scarcity of the resource at stake.
Programmatic Scarcity: How Blockchains Make URL IRL
With skin in the game, players turn into survivors. A virtual world that can embed scarce and in-demand resources can accommodate genuine risk-taking and thus vitality. All of a sudden, frivolous enjoyment turns into engaging competition. To me, value-at-risk unlocks a tier of immersion invaluable to any crystallization of a “metaverse”.
Artists and entrepreneurs are now incentivized to create. Innovation and commerce proliferate, resulting in new assets, goods, and services. Arbitrageurs enter the fray. Factions, stratification, norms, lore, and culture emerge. A depth of content is borne of a demand for scarce resources.
Blockchains help enable this transition. By building game economies on blockchains, all in-game assets, whether virtual land or avatar accessories or currencies, can be represented by tokens. These tokens live within player wallets and cannot be removed without permission. A game developer no longer plays god with regard to value. Players are a sovereign collective—they’re owners.
The public ledger, which acts as a universal source of truth, brings trust and legitimacy to virtual economies. Non-fungible tokens bring verifiable authenticity to virtual goods. Fungible tokens bring predictable monetary and fiscal policies to virtual currencies. Token standards represent new protocols for value that operate across digital worlds. This common standard acts as the bedrock for the digital resource matrix.
Digital goods are infinitely reproducible. The marginal cost to copy a song, a picture, or an in-game asset is trivial. In most legacy games, the game developer can at any time unilaterally flood the market with or deprive the market of currency or in-game items. Players have been effectively without property rights. Economies, whether virtual or physical, fail to flourish when property rights are neglected. Banning a player account or overly inflating an in-game currency are violations of property rights. The former is seizure without recourse and the latter is simply a masked tax on an unrepresented obligor. With the looming risk of seizure and inflation, players had no guarantee that their participation was worthwhile.
Borderless Virtual Economies
Blockchains legitimize and internationalize game economies. An Afghan cannot speculate on Manhattan real estate nor buy Australian bonds. He wants to speculate on risk assets within open financial markets but cannot. He is rendered upwardly immobile by random geographical misfortune. Sure he can speculate on broader crypto. But his desires are not only financial. He may want to contribute to a thriving digital cosmopolis flush with the opportunity that his physical surroundings are not. Virtual societies like those of Eve Online bring community and meaning to millions of people.
It is parochial to consider the appeal of immersive virtual worlds only via our privileged positions. Exchange, barter, and the desire for opportunity are built deeply into the human condition.
Blockchain gaming is not about forcing every in-game activity on-chain. But rather about taking the training wheels off of game economies. Infusing virtual worlds with real risk breaks the simulation.