Bitcoin & Data Science
Since the early days of organized E-Sports in the mid 2000’s, the audiences and stakes have grown significantly. Today, top prizes for large events such as the Electronic Sports World Cup and World E-Sports Games are in the millions of dollars. But what about for the average gamer at home who is competing with peers online? They can only play for bragging rights and not earn any money for winning? Bitcoin fixes this.
Games and gambling platforms have always been a part of Bitcoin culture and were some of the earliest businesses to use Bitcoin. Satoshi Dice, launched in 2012, allowed users to gamble Bitcoin on an odds-based random number generator. The platform was wildly successful and was many early Bitcoin adopters first touch with the technology.
Eventually, as Bitcoin became more popular, transaction fees on the network got too expensive for Satoshi Dice to stay profitable and they ceased operation. If Bitcoin is to be successful long term, network fees must remain high enough to incentivize miners to keep machines online, securing the network. High fees are great for the security of the network, but bad for commerce – especially on a small scale. Satoshi himself knew this and wrote about payment channels, a solution to settle a list of layer two or “off chain” transactions between two parties with one settlement transaction. Essentially, the two parties would keep a ledger between themselves, keeping track of who owed who what, and eventually would settle the difference with one Bitcoin transaction. The ideas around payment channels have been built out significantly into what we today call the Lightning Network.
The Lightning Network allows for both public and private channels. The graph above shows the total amount of Bitcoin locked up in public channels – the only ones publicly observable. We can see that most of the coins (orange line) came onto the network in 2019, but their value in US dollars (blue line) has continued to grow. Transactions on the Lightning Network are settled instantly and can be sent almost for free – making them perfect for low value commerce. Many Lightning bulls have long advocated for their use in gaming and E-Sports and we are finally starting to see that come to fruition.
Lightning Gaming startup Zebedee has just released a toolkit allowing developers to easily implement Lightning Network features into existing games. To showcase how it works, they built a plug in for Counter Strike Go (CS Go), a popular first person shooting game. Players can now earn Sats by winning matches or collecting special items, and viewers can bet Sats on the outcome of games. This new technology is very exciting as it gives gamers financial incentive to win, and observers skin in the game on their bets. We hope to see game developers pick up on this trend and implement Lightning payments into all sorts of games, bringing wider adoption and normalization of the Lightning Network and Bitcoin in general.