Everyone knows about crowdfunding, right? But what about crypto-crowdfunding? South African game developer Augmentors is looking to raise a cool $1 000 000 through an Initial Coin Offering (ICO). Wannabe players have until the end of the month to purchase in-game assets with Bitcoins, and so far it’s doing well. Almost half of the total wanted was raised in the first 24 hours.
Perhaps it’s the novelty value. Augmentors (the game, not the developer) is a Pokemon Go-style augmented reality (AR) game in which players buy creatures using a currency called Databits. Databits and creatures are bought and sold using the Blockchain that underpins Bitcoin and there’s only a limited number of Databits and creatures which will be made available.
So Augmentors is part pet-fighting game, part crypto-currency.
If you’re a little confused, you can be forgiven – but the unusual prospect caught the eye of investors when it appeared on South Africa’s Shark Tank last year. The ICO funding follows on from investments into Augmentors madee by Gil Oved and Vinny Lingham.
Lingham, of course, is best known at the moment for his other Blockchain venture, Civic, and his partner at VC firm Newtown Partners is Llew Claasen, the executive director of the Bitcoin Foundation. Clearly they’ve seen potential in Augmentors, so we caught up with Claasen to find out what that is.
htxt.africa Augmentors is unusual in many ways, but is generating interest primarily because of its ICO and blockchain foundation. Are you confident that the game itself is a strong enough product it would succeed had it been funded and launched in a conventional manner?
Llew Claasen Yes, absolutely the game will be able to stand on its own. The team behind Augmentors have experience in game development, including for augmented reality. The Blockchain ICO was first proposed by us, the investors, as as we saw it as an innovative way to crowdsale the development of what is actually quite expensive and complex technology.
htxt.africa We’ve not see the huge rush of successful AR games that even Tim Cook seemed to think would follow Pokemon Go. Why do you think this is, and what makes Augmentors different?
LC Building an AR game is very expensive and the skills needed to bring it all together quite scarce, which is one of the reasons why we chose the ICO route and didn’t fund the game entirely ourselves. We expect the Augmentors game to use some of the same gameplay dynamics which made Pokemon Go successful, while also bringing something very different and exciting to AR gaming. It’s still very early days for AR gaming despite Pokemon Go hitting a (well targeted) consumer sweet spot early on; we’ll no doubt see more successful AR games over the next few years.
htxt.africa Where do you think AR and VR is going (especially in light of the judgement against Oculus Rift)? Is it first and foremost going to be a technology for entertainment or will they find their real audience in business and productivity applications.
LC I think the $600m Zenimax judgement against Oculus is largely irrelevant to the tech adoption trajectory of VR. The story of VR & AR adoption is the classic case of disruptive technology adoption – at first the technology is not good enough compared to alternatives, then it solves a problem for a category largely underserved by existing technology, then the tech gets better and better and starts eating everyone’s lunch from below with better performance at lower prices.
AR arguably still has to figure out some form factor and social etiquette issues (recall the consumer backlash against “Glassholes”), while VR is struggling with price point driven by high technology costs, which will come down over time according to Moore’s Law. I think the most compelling use cases for VR are in business applications initially, not consumer entertainment. The first big consumer categories in VR will be gaming and pornography.
htxt.africa Can you explain a bit more about the “Initial Coin Offering” concept? Where did it come from, and how well has it been received?
LC The ICO concept originates in pre-mining token or coin issues associated with alt-coins & decentralized technology platforms, in order to fund their development. Probably the biggest & most successful bitcoin-based ICO so far was the $18m raised to create the smart contract platform Ethereum.
In the case of Augmentors, the ICO provides gaming & cryptocurrency community members an opportunity to fund the development of the game by purchasing Databits tokens that can be used later to purchase items inside the game, with the added benefit that the value of these Databits are determined in a secondary market post-ICO.
Many early ICO participants see this as an opportunity to buy game tokens at a relatively low price early on in the game development process at higher risk, so that they can sell the tokens to game users later at a premium. An ICO token is not a security – it doesn’t confer ownership and it is not part of a governance structure.
htxt.africa Blockchain is a tricky thing to explain to a layperson. Will projects like Augmentors help to “humanise” it and increase the profile of Bitcoin/Blockchain in general?
No, Blockchain technology is arguably best utilised when users don’t know that it exists. In the context of Augmentors, the blockchain enables an immutable token ownership record for Databits, creatures and other in-game assets without the need for a central authority, enabling the trustless ownership and transfer of digital assets. Game players will not need to know how that happens and won’t need Bitcoin to play the game.
htxt.africa Do you see “databits” becoming a currency that’s used outside of the game itself?
LC No, but Databits will be exchangeable for other crypto- or fiat currencies and even other game tokens like Spells of Genesis Bitcrystals, in secondary markets.
htxt.africa Have you been involved with the game development since investing in it, or has the team been left to its own devices?
LC We are very involved in the game development process & we take very seriously the responsibility we’ve been given by the Bitcoin community to deliver a phenomenal gaming experience in Augmentors.
htxt.africa What does success for this game look like? Have you tasked the developers with a targets for subscribers?
LC Our initial KPIs for Augmentors are related to creating the best possible gaming experience for alpha & beta releases in 2017. Subscriber numbers are not an important early predictor of success.
htxt.africa On Bitcoin specifically, we’ve seen a lot of price volatility again (as a result of certain unnerving political events, maybe…). With the price again heading towards $1 000 do you think this will help confidence in the currency or will it make people wary that another crash is on the way?
LC Bitcoin volatility will reduce significantly in 2017, since it’s more difficult to trade on margin or with BTC derivatives in the biggest market, China, after industry guidance from the Chinese central bank (PBoC). There is a lot of support at the $1 000 BTC price point, but Bitcoin is still a very risky investment. Bitcoin is not a stable short term store of value and is not ready for consumer adoption as a medium of exchange. We’re busy changing the world and that takes time to get right.