Moving Towards a Digital Economy-the Beginning of the End

This is the way the world ends 
Not with a bang but a whimper

-T.S. Eliot

“Some online games have become the new opium to poison the growth of teenagers,” said Yu Xinwen, a vice president of Guangzhou University and delegate to the Chinese People's Political Consultative Conference (CPPCC) recently convened in Beijing. Ms. Yu is urging the Chinese government to a establish classification system for online games.


Ma Huateng, Co-founder, Chairman and Chief Executive Officer of Tencent Holdings Limited (TCEHY $56.29 3/6/18) held a news conference outside the Great Hall. Mr. Ma, who is a delegate to the National People’s Congress (NPC) and the richest man in China, plans to introduce digital contracts, which will allow parents, and children to negotiate limits on video game play time. Tencent Holdings is the world’s largest investment corporation. Tencent is also the publisher of “Honor of Kings,” a role-playing fantasy game for smartphones that has more than 50 million daily users. The game is considered so addictive that last July, Tencent imposed a curfew and daily playing time limits.


While China’s video game industry is stressed by too much success, Australian politicians are considering stepping in to support their video game industry. The Green Party will announce its plan for a Games Investment and Enterprise Fund. Australia has over 1000 video game publishers, most of them located in Melbourne. The Australian gaming industry’s disadvantage lies in its high labor costs and competition with countries that provide government subsidies. Australians spend over $3 billion per year on video games and gaming gear. They also lead the world in gambling losses with nearly $1000 per person, more than double that of the United States.


China succeeds by tolerating the inherent contradiction of a totalitarian government and an economy that is coming to dominate markets established by western capitalist societies. China’s Tencent Holdings is the world’s largest publisher of video games; double that of Sony its closest competitor. Yet with its latest announcement of parent-child digital contracts, Tencent seeks to discourage the use of its product by Chinese people.


Digital contracts may have a future in online and video gaming, not only between parents and children but also between individual gamers. Game Protocol proposes using secure escrow smart contracts in order to eliminate corruption and third-party tampering in online gaming. Developed by Malta-based Gamytech, Game Protocol users will hold a “crypto-wallet” funded with Ethereum cryptocurrency, which will allow purchase and exchange of Game Protocol tokens (GPT). Before a wager can be placed on Game Protocol, a player’s “bet limit” is established. Players are then matched via search algorithm with a suitable opponent with a similar bet limit. During play betting funds to other players are held by the secure escrow smart contract in order to assure fair play. Just as boxers are matched by their bodyweights, so are bettors matched by their bet limits.


Game Protocol intends to create a digital economy for the gaming industry with smart contracts as one of its Developers Tools. Game Protocol will be funded by its upcoming GPT token sale and intends to create a crowd-funding platform (GameStarter) for video game startups within its Coworking Community of developers and gamers. Community members will share their skills, talents and resources as well as be able to monetize their work through a Decentralized Game Store.


As robotics replace non-skilled workers and those unemployed workers spend their time playing games online, the digital economy is already replacing the industrial, just as the industrial economy replaced the agrarian at the beginning of the last century. Farmers gave up their acres of cropland and moved to cities in order to support themselves and their families. With robots and autonomous vehicles replacing non-skilled workers at major employers, many of the unemployed (mostly men) may have nothing better to do than play video games.


The most common job in 29 states is a truck driver. As automated vehicles are paid no wages, labor costs are zero. For owners and employers, the change will be welcomed as soon as the technology is available. Uber autonomous big rigs are now moving freight for customers in Arizona. An Embark self-driving truck just drove from Los Angeles to Jacksonville. The US Army is testing a self-driving 'Wingman' truck equipped with a machine gun that can identify and shoot targets on its own.


The Wall Street Journal opinion page pointed out that the recent imposition of a tariff on imported steel may very well help the steel industry, but it will be unlikely to increase employment for steelworkers. Referencing Bloomberg, the Journal presented the case of Voestalpine AG’s steel plant in Austria, which produces 500,000 tons of steel per year and employs 14 workers.  In the 1960’s, that same plant would have required 1000 steelworkers.


What will the mostly male unemployed and otherwise unskilled workers do with all the time they suddenly have on their hands? In 2015, 22% of men in their twenties did not report working in the previous year. According to Edward Castronova, Professor of Telecommunications and Game Design at Indiana University Bloomington, “Within five years, some game companies will be paying players in some way to play their games.” According to Dr. Castronova, there will increasingly be fewer people with money and many more without. But the people with money will need human beings with whom to form intimate and vibrant communities. The rich will not want to play by themselves. What good is it to be king if there are no subjects to rule? Dr. Castronova further opines that unemployed non-college educated workers mostly play video games anyway.


So why not let children play video games as much as they want. Perhaps children can see clearly where their world is heading and intend to get their first. Except for those few gifted or affluent, they may be developing the skills they will need to survive in the coming digital economy.