Mostly Money Review - eSports and the Blockchain

FirstBlood caught my attention back in June when they made a proposal for funding to TheDAO. It was the first time I considered how powerful an integration of blockchain and eSports could be.

THE PROBLEM

ESports is a fast growing market with a serious following. Millions of players compete both casually and professionally around the globe. While there are existing platforms for bringing players together, they fall short in two aspects:

1) Game results are usually verified by a centralized mechanism or based on the honor system. This often leaves them open to dispute.

2) Peer-to-peer wagering on matches is cumbersome or non-existent.

THE OPPORTUNITY

FirstBlood is developing a new type of gaming platform that aims to solve these problems.

Market Research

According to SuperData Research, the eSports market size in 2016 is an estimated $892M, with estimates reaching $1.1B by 2018. That represents a total estimated growth rate of over 23% within the next 18 months.

There are virtually no pure blockchain-based participants in the market. Similar projects such as BreakoutPVP and SOLOme exist, but they fall short of fully shedding their legacy design.

Platform Design

What I like about FirstBlood is their focus on building a from-scratch platform on the blockchain. This is different than many other efforts that simply integrate cryptocurrency as an afterthought.

Also, they are working specifically on competitive games like LoL, DOTA2 and CS:GO. They aren’t diluting their efforts in other area of eSports or games of chance.

Their stated plan is to leverage Ethereum smart contracts to fully automate the gaming process. Players will be able to join a queue and select their game and stakes. The system will either allow players to invite others into a game or match them automatically. When the game completes, a blockchain oracle will retrieve the results and settle the bets.

Any player disputes are solved by another system taken directly from Augur’s playbook. A mechanism known as the Jury Voting Pool can call upon randomly selected live witnesses to make a final decision based on game results and screenshots. These individuals, acting as disinterested third parties, will render a binding decision. Jurors will then be compensated with the system’s cryptotoken similar to Steemit’s curation process.

All users will earn a reputation score to protect the service from bad actors and create a more enjoyable gaming experience.

THE RISK

Here are several big things I’m considering before rushing into this investment.

Timeline

The team is still in an early development phase. The software is in pre-alpha and not yet accessible to the public.

As the market develops, competition is sure to arise and the company may have to pivot in a different direction. This means the current published timeline is just a projection. Plus, there is a possibility that the project will stall and never be completed.

Legality

According to the company, wagers can be placed on the outcome of matches and winners are paid rewards. I am not a lawyer, but my understanding is that there is a distinction between games of chance versus games of skill when it comes to betting.

Because this platform seems to reside firmly in the realm of skill-based wagering, I presume online gambling laws do not apply here. However, there are always legal and regulatory risks which may interfere with development or execution.

Security

This software relies on the security of the Ethereum network and its smart contract system. Even with professional security auditing, TheDAO catastrophe taught us that just because we believe something is secure, doesn’t mean it really is.

These recent experiences have shown the need to exercise more caution before giving the final blessing on a product. So in my view, the larger risk here is the development delay that may come from testing for security weaknesses, rather than an outright failure of the smart contract.

CONCLUSION

Overall I'm excited about what I see. I believe we're witnessing the development of the next tier of functionality on the blockchain with end-user services like Steemit and FirstBlood. Whether this particular one goes big is anyone's guess, but it does seem to have an early advantage.

More Information

According to the whitepaper, the token sale is set to begin on 9/26/2016 and run until 10/24/2016. Details can be found at FirstBlood.io.

Coin Interview is live streaming a live interview with Marco Cuesta on YouTube tomorrow (8/16/2016) at 1:00 PM CST (6:00 PM UTC).

Disclaimer

I am not affiliated with FirstBlood in any way. I simply find it interesting and would love to see a platform like this created. I do not hold any financial interest in the company. I do, however, plan to participate in the token sale.

I am NOT a professional investor or financial advisor. I am not offering investment advice. I put my own money to work in ways that make sense to me. You should not blindly follow anything I say.

If someone has to tell you what to do with your money then you aren’t doing it right.

Educate yourself and be independent.