Weekly Overview: Crypto And Blockchain News

PwC Switzerland Partners With Chain Security

Smart contract auditing team ChainSecurity partnered with the Swiss branch of Big Four auditing firm PwC to enhance the services the global auditor provides.

In an email sent to Cointelegraph, a PwC spokesperson explained that no acquisition took place and multiple ChainSecurity teams joined the firm.

According to a press release published by the firm on Jan. 5, PwC hopes that, with ChainSecurity’s team, the firm will become “the world’s leader in smart contract auditing.”

FTX Launched Bitcoin Option Trading

Cryptocurrency derivatives exchange FTX has launched Bitcoin (BTC) options trading on Jan. 11.

FTX CEO Sam Bankman-Fried announced in a tweet on 11th January, that options were listed on the trading platform. Furthermore, later the same day he also claimed that options trading volume on the exchange reached $1 million in about 2 hours.

Student Wins Satoshi Nakamoto Scholarship

Bitcoin SV (BSV)-promoting Bitcoin Association has awarded a PhD student at Cambridge University with its Satoshi Nakamoto Scholarship, designed to support the development of blockchain applications.

Per a Jan. 9 press release, Robin Kohze, a second-year human genomics PhD student at Cambridge University, became the first to receive the scholarship following a series of blockchain competitions within the Bitcoin SV Hackathon last fall. With his project dubbed, Hive, Kohze took second place. The scholarship is set to allow further development of Hive into a fully operational platform.

Block.One Released Major EOS.io Blockchain Software Update

Blockchain software development firm Block.One released EOS.io 2.0, the software underlying the EOS blockchain.

In the release announcement published on Twitter on Jan. 10, Block.One claimed that the update makes the blockchain “faster, simpler, and even more secure.”

The official blog post on new software explains that it includes a purpose-built WebAssembly (WASM) engine on which the EOS smart contracts run. According to its official website, WASM is an instruction format designed for deployment on the web and servers.

This change is expected to improve the performance of smart contract execution, given that it is supposedly up to 16 times faster than the engine used in the previous version.

Introduction to Web 3.0

Web 3.0is slated to be the new paradigm in web interaction and will mark a fundamental change in how developers create websites,

You have probably heard the term “web 3.0” floating around the internet. Simply put, web 3.0 is the new phase of the internet’s evolution. The changes that web 3.0 is bringing to the internet is going to take it to a whole new level. Computer scientists and Internet experts believe that these changes are going to make the internet smarter and our lives easier. So, to understand these paradigm-shifting changes, let’s first look at the evolution of the internet as we know it.

Web 1.0

Believe it or not, there used to be a version of the internet that existed before social media and video streaming! This was a time before Google in the mid-to-late ’90s. The internet used to be dominated by AltaVista and Netscape. Back then the internet existed to only advertise their brick-and-mortar companies. These websites were “read-only web,” meaning you were only allowed to search for information and read it.

Most e-commerce websites are still web 1.0 in nature since the concept behind them is simple. Present products to the customers and take money from the ones who are interested. These websites are usually very smooth and fast, however, the level of user interaction is minimalistic.

Web 2.0

The next iteration of the internet was called the “web 2.0” or the “read-write” web. Now, users were not just idle visitors, they could create their own content and upload it to a website. Starting roughly around 2003 when the term was coined by Dale Dougherty, Vice President at O’Reilly Media, web 2.0 has taken over the world by storm. In just over a decade, it has completely redefined marketing and business operations.

Instagram Influencers can make or break a brand by posting one single photo, Yelp reviewers can destroy a restaurant by one single negative review. Audience reviews are critical when it comes to buying decisions. According to a survey, 90 percent of customers reading online reviews before purchasing and 88 percent of them trusting them as much as a personal recommendation.

Web 2.0’s main aim was to make the internet more democratic and make it as user-accessible as possible.

Web 3.0

Every time you buy something on Amazon, the website’s algorithm will look at the other items that people who have purchased your product went on buy and then recommends that to you. So, think about what is going on here. The website is learning from other users what your preferred choices can be and then use it to recommend to you what you may like. In essence, the website itself is learning and becoming more intelligent.

That, in a nutshell, is the very philosophy behind web 3.0. Web 1.0 was primarily driven by content that came from the business or the institution for its customers. Web 2.0 took things a little bit further by allowing users to upload and share their content on the website itself. Web 3.0 allows online applications and websites to receive information that’s on the Web and give new information/data to the users.

The 4 Properties of Web 3.0

To understand the nuances and subtleties of Web 3.0, let’s look at the four properties of Web 3.0:

Semantic Web

Thanks to semantic metadata, Web 3.0 will help in greater connectivity between data. As a result, the user experience evolves to another level of connectivity that leverages all the available information.

Artificial Intelligence

AI will allow websites to filter and present users the best data possible. Currently in web 2.0, we have started taking user opinions to help us understand the quality of a particular product/asset. Think of a website like Rotten Tomatoes where users get to vote on a list of movies. Movies with a higher rating are usually considered “good movies”. Lists like these help us get to the “good data” without going through “bad data.”

3D Graphics

Web 3.0 is going to change the future of the internet develops from the simple 2D web into a more realistic three-dimensional cyberworld. The three-dimensional design is being used extensively in websites and services in Web 3.0 such as online games, e-commerce, real-estate industry etc.

Ubiquitous

Ubiquitous means the idea of existing or being everywhere, especially at the same time i.e., omnipresent. We have already got this feature in Web 2.0. Think of social media websites like Instagram, users capture images on the camera and they can upload and distribute it online where they become their intellectual property. The image thus becomes accessible everywhere aka ubiquitous.

In the next blog we will look at the advantages and disadvantages of Web 3.0 and the various challenges that it has to overcome.

Will Blockchain Security Issues Be Dealt With, In 2020?

The past few years have been a crisis for security in crypto. As the asset class has increased popularity, more and more security breaks have been highlighted and more institutions targeted.

The burgeoning industry is ripe with opportunity, but also with risk. Two incidents that highlight this lapse in security spring to mind.

Back in January 2018, Coincheck Japan was targeted, with attackers succeeding in stealing $530 million worth of NEM tokens from the crypto exchange. It is one of the biggest crypto exchange heists in the relatively short history of the industry and stands alongside the infamous attack on Mt. Gox, when around 800,000 BTC was stolen — a sum worth over $6 billion today.

Further back in February 2016, the Bangladesh Bank was targeted. Thieves tried to steal a total of $850 million via properly authenticated transactions in ordering the Federal Reserve Bank of New York to transfer the money through the SWIFT network. While “only” $101 million was transferred to final beneficiaries in the Philippines and Sri Lanka, this ended up resulting in a whopping total of $81 million successfully stolen during the incident.

What do these incidents have in common? The complacency of the victims — central banks and top crypto exchanges — and their management of security credentials (be it passwords or private keys) in giving access to the transfer of fiat money or cryptocurrencies.

The SWIFT network used for the Bangladesh Bank and other similar heists was not hacked, the users of the network were. The blockchains utilized to transfer the NEM out of Coincheck and the BTC out of Mt Gox were not hacked, the exchanges — i.e., the users of these blockchains — were. Their systems and credentials were so poorly protected that hackers were able to take control and impersonate their victims with ease.

The SWIFT community reacted to these events by reinforcing cybersecurity controls, by identifying the weakest players and by ensuring hackers’ modus operandi were shared among the community to prevent further incidents. Has the crypto industry done the same and learned from its mistakes? Probably not at the level this issue deserves. Will 2020 see more collaboration to prevent these incidents or to enable the recovery of stolen funds in case of successful hacks? The jury is still out.

In 2020, more education and awareness will be required. Exchanges, funds, projects, foundations, and all the other crypto players servicing underlying customers must put in place the proper transparent and secure processes around the safekeeping of the assets of their customers. Most will rightfully opt for the outsourcing of that critical task to third-party custodians whose job is to do precisely that.

This year will hopefully also be the year when digital asset service providers such as crypto exchanges and custodians will not only collaborate about the implementation of the Financial Action Task Force rules but also about the exchange of information on hackers’ modus operandi and blacklisting of addresses.

By the end of the year, the cashing out of hacked funds should be so difficult — thanks to a more formal collaboration between players — that thieves will be discouraged from targeting cryptocurrency organizations.

Beyond the adoption of the right established technology, it is only when common-sense operational and business practices — those of segregation of duty, focus on core activities and established risk management — are put in place that the digital asset industry will become mainstream. Today, it is not, and now you know why.

Dark Pool Explained

Dark pools are an ominous-sounding term for private exchanges or forums for securities trading. However, unlike stock exchanges, dark pools are not accessible by the investing public. Also known as “dark pools of liquidity,” these exchanges are so named for their complete lack of transparency. Dark pools came about primarily to facilitate block trading by institutional investors who did not wish to impact the markets with their large orders and obtain adverse prices for their trades.

Dark pools were cast in an unfavorable light in Michael Lewis’ bestseller Flash Boys: A Wall Street Revolt, but the reality is that they do serve a purpose. However, their lack of transparency makes them vulnerable to potential conflicts of interest by their owners and predatory trading practices by some high-frequency traders.

Why Use a Dark Pool?

Contrast this with the present-day situation, where an institutional investor uses a dark pool to sell a one million share block. The lack of transparency actually works in the institutional investor’s favour since it may result in a better-realized price than if the sale was executed on an exchange. Note that, as dark pool participants do not disclose their trading intention to the exchange before execution, there is no order book visible to the public. Trade execution details are only released to the consolidated tape after a delay.

The institutional seller has a better chance of finding a buyer for the full share block in a dark pool since it is a forum dedicated to large investors. The possibility of price improvement also exists if the mid-point of the quoted bid and ask price is used for the transaction. Of course, this assumes that there is no information leakage of the investor’s proposed sale and that the dark pool is not vulnerable to high-frequency trading (HFT) predators who could engage in front-running once they sense the investor’s trading intentions.

Types of Dark Pools

Broker-Dealer-Owned

These dark pools are set up by large broker-dealers for their clients and may also include their own proprietary traders. These dark pools derive their own prices from order flow, so there is an element of price discovery. Examples of such dark pools include Credit Suisse’s CrossFinder, Goldman Sachs’ Sigma X, Citi’s Citi Match and Citi Cross, and Morgan Stanley’s MS Pool.

Agency Broker or Exchange-Owned

These are dark pools that act as agents, not as principals. As prices are derived from exchanges — such as the midpoint of the National Best Bid and Offer (NBBO), there is no price discovery. Examples of agency broker dark pools include Instinet, Liquidnet and ITG Posit, while exchange-owned dark pools include those offered by BATS Trading and NYSE Euronext.

Electronic Market Makers

These are dark pools offered by independent operators like Getco and Knight, who operate as principals for their own account. Like the broker-dealer-owned dark pools, their transaction prices are not calculated from the NBBO, so there is price discovery.

Dark pools provide pricing and cost advantages to buy-side institutions such as mutual funds and pension funds, which hold that these benefits ultimately accrue to the retail investors who own these funds. However, dark pools’ lack of transparency makes them susceptible to conflicts of interest by their owners and predatory trading practices by HFT firms. HFT controversy has drawn increasing regulatory attention to dark pools, and implementation of the proposed “trade-at” rule could pose a threat to their long-term viability.

Weekly Overview: Crypto News

05-January- 2020

Ethereum Block Time Reduced By 25%

The average block time on the Ethereum blockchain reduced by almost a quarter after the mining difficulty was eliminated.

Data stated on Ethereum block explorer Etherscan demonstrates that from Jan. 1 to Jan. 4, the daily average block time on the blockchain reduced from 17.16 seconds to 12.96. This translates to a 24.48% shorter block time.

06-January- 2020

Bill To Study The Benefits Of Implementing Blockchain In The Election System

The United States Virginia State’s legislature is looking into studying Blockchain to improve the election and voting systems. The bill to look into the study of blockchain was prefiled on the 27th of December, 2019 and was up for offering on the 8th of January, 2020, the House of Delegates and the Senate concurred that the Department of Elections is requested to study the use of blockchain technology to protect voter records and election results.

The department will also have to determine whether the costs and benefits of using blockchain technology outweigh those of traditional registration and election security measures. The department is also expected to make recommendations on how to implement the technology.

07- January- 2020

Binance Charitable Foundation’s Donations to Australian Bushfires

In a January 7th blog post, Binance Charitable Foundation announced the launch of a new charity project aimed at addressing the aftermath of the Australian Bushfires.

The Binance Charity Foundation (BCF) is donating $1 million worth of Binance’s native currency — BNB tokens to the Australia Bushfire Donations project.

Since the Australia Bushfire Donations is a blockchain-based initiative, it ostensibly ensures that all BNB donations and distribution will be open to the public for verification. BCF has stated that it intends to reach out to multiple local organizations that are working towards the cause, in order to pass on donations received.

08-January-2020

Directors Of An Alleged Pyramid Scheme Stand Trial

Two directors of an alleged pyramid scheme– Dunamis Coins, appeared before a court in Uganda on Monday the 6th of January, 2020 to face 65 counts of obtaining money under false pretences.

The Observer reported on 8th January, 2020, stated that the prosecutors had logged over 4,000 complaints against Dunamiscoins Resources Ltd., a suspected fraud that ran its course between Feb. 2018 and Dec. 2019, before collapsing. Inquiries are reportedly still ongoing.

The suspects reportedly plead not guilty and both directors have now been remanded in Luzira prison until the 22nd of January, 2020.

09-January-2020

Bitcoin’s Bull Bias Intact Despite 6% Pullback

Bitcoin has pulled back from multi-week highs, but is still soaring in bullish territory above key support near the $7,600 mark.

The number one cryptocurrency is currently trading at $7,910 — down 6.5 percent from the seven-week high of $8,463, based on CoinDesk’s Bitcoin Price Index (BPI).

The pullback commenced during the U.S. trading hours on Wednesday with gold and other safe havens trailing ground on easing of geopolitical tensions.

10- January-2020

Canada’s DMG Blockchain Installs 1,000 New Bitcoin Mining Rigs

As Per a Press Release on the 6th of January, 2020, the tech company has bought 1,000 new miners from a Chinese mining giant, that have been installed in Christina Lake mining-as-a-service facility in British Columbia, for one of its US clients.

11- January-2020

North Korean Hackers Modify Crypto-Stealing Malware

Lazarus Hacker group, of North Korea has doubled down its efforts to affect both Mac and Windows users’ computers. The group had been using a modified open-source cryptocurrency trading interface called QtBitcoinTrader to deliver and execute malicious code in what has been called “Operation AppleJeus,” as Kasperskyreportedin late August 2018. Now, the firm reports that Lazarus has started making changes to the malware.

Leading Vs Lagging Indicators

Lagging indicators use past price data to provide entry and exit signals, while leading indicators provide traders with an indication of future price movements, while also using past price data. When faced with the dilemma of leading vs lagging indicators, which should traders choose? The answer to this question ultimately comes down to individual preference after understanding the advantages and limitations of each.

Lagging indictors

Lagging indicators are tools used by traders to analyse the market using an average of previous price action data. Lagging indicators, as the name implies, lag the market. This entails that traders can witness a move before the indicator confirms it — meaning that the trader could lose out on a number of pips at the start of the move. Many consider this as a necessary cost in order to confirm to see if the move gathers momentum. Others view this as a lost opportunity as traders forgo getting into a trade at the very start of a move.

Leading indicators

A leading indicator is a technical indicator that uses past price data to forecast future price movements in the market. Leading indicators allow traders to anticipate future price movements and therefore, traders are able to enter trades potentially at the start of the move. The downside to leading indicators is that traders are anticipating a move before it actually happens and the market could move in the opposite direction. As a result, it isn’t uncommon to witness false breakouts, or signs of a trend reversal that just land up being minor retracements.

SHOULD YOU USE LEADING OR LAGGING INDICATORS?

There are no perfect indicators. By their very nature, indicators will help traders discover likely outcomes as opposed to a sure thing. It is up to the trader to conduct thorough analysis, with the aim of stacking the odds in their favour.

To further illustrate this point, below is an example of leading vs lagging indicators in EUR/USD, where the leading indicator appears to provide a better signal. Keep in mind that this is purely for demonstration and that the lagging indicator is equally as important.

The market sold off aggressively before retracing to the significant 61.8% level. Using a simple moving average (21, 55, 200), it is clear to see that the faster blue line (21) has not crossed below the slower black (55) line and therefore, this lagging indicator has not yet provided a short signal.

However, upon further analysis traders would be able to see that the market failed to break and hold above the 200-day moving average. The 200 SMA is widely viewed as a great indicator of long-term trend and in this example, is acting as resistance. This supports the short bias for traders eyeing a bounce lower off the 61.8% level.

Traders looking for fast signals will tend to favor leading indicators but can also reduce the time period setting on lagging indicators to make them more responsive. This however, should always be implemented with a tight stop loss to in the event the market moves in the opposite direction.

Traders seeking a greater degree of confidence will tend to favor lagging indicators. These traders often trade over longer time frames looking to capitalize on continuing momentum after entering at a relatively delayed entry level, while implementing sound risk management.

Explained: The Wyckoff Method

One of the most helpful tools I’ve discovered for trading is The Wyckoff Method, created by Richard Demille Wyckoff, a pioneer in the studies of technical analysis, and one of the five “titans” of TA, along-side Gann (Gann Fans/Squares), Dow (Dow Theory), Merrill, and Elliot (Elliott Wave Theory). Below is a summation of what I’ve gathered and factored into my trading.

The Wyckoff avoidance method means to trade only the best assets in the leading market sectors.

Crypto is an emerging asset class, but there are already ways of determining which cryptocurrency has fundamental value. Focusing on the opportunities in those markets makes your decisions process much clearer:

You want to buy/hold a fundamentally valuable asset when its price is not reflecting its value yet.
You want to take profits and abandon an asset that is appreciating in the short term because of things like tiny market inefficiency or news hype.

FINDING THE MARKET WEAKNESS

You can use any of your favourite technical analysis tools that are good for spotting the weakness of a market — divergences would be a very early sign (and possibly a misleading one) but combined with a three-push formation and lower highs when seen relative to the Bollinger bands would be more reliable.

The general technical gist is that this transition is a substantial one, you should be looking for it on longer timeframes (daily, 3D or weekly charts). The market structure will be similar in all assets in the group you are looking at, but the weakening leader would display the crumbling more strongly.

Another important point in Wyckoff avoidance is to select assets that move in harmony with the market. The bigger picture and relations between different assets of the same class is often overlooked, but it is incredibly useful for market timing.

Assuming we are in a broad crypto bull market, if you can find cryptocurrencies that are performing consistently strong and if you can also find their counterparts, you have your best candidates for your long and short positions:

Strong crypto assets rally quite easily. After the rally comes a retrace, but some of the gains remain.
Weak crypto assets don’t rally consistently. If they do, the retrace kills all the gains.

On legacy markets, it is easy to compare an asset against a composite index: In a bull market, if an asset trades still well below a known resistance line and gains more than the index, it’s typically the strong performer.

The play there is to buy this particular asset, avoiding all the rest of the assets in its group.

The technically suggested time to sell comes when the price approaches a resistance area. Then you can look which stock was performing poorly in the rally: It’s is going to be the one that should drop the most in the coming retrace and therefore it is technically the best candidate for a short.

We now also have composite indexes in cryptocurrency markets, but the information you can get from them is still fairly questionable. Remember, the crypto markets are still very new.

Wyckoff’s insights are keenly relevant right now, and used well will help you make a good entry point as the bear market plays out its final stages. Add it to your toolbox

Introduction To Cryptoeconomcs

We often see Bitcoin and other cryptocurrencies like the Wild West: no rules, no social norms, only greed, selfishness and mining. This professed lack of law and order makes the crypto world scary to many people. Nevertheless, in reality, there are rules that govern decentralized peer-to-peer (p2p) networks such as Bitcoin. These rules are coded into procedures and deliver the framework for how contributors of a network interact with each other. They help us create a secure, trustworthy and valuable system, just like laws deliver a framework for a better society. Cryptoeconomics asks the question of how we can design these rules and incentives, so that the networks stay secure and create value for everyone. Cryptoeconomics uses cryptographic tools, game theory and economic incentives to achieve this goal.

The Two Pillars of Cryptoeconomics

Cryptography: techniques that keep messages secure

Economic incentives: rules and rewards that encourage you to add value to the network

In this blog we will specifically be talking about the economic tools of Cryptoeconomics.

Economic tools are incentives that encourage and discourage certain behaviour amongst network participants.

The most basic economic tool is the use of tokens and consensus mechanisms.

Tokens

Tokens are exchangeable goods within the decentralized p2p network. The most famous token in the crypto world is Bitcoin.

Beyond Bitcoin, tokens can be exchanged for a variety of goods and services. For example, you can rent out your excess CPU/GPU cycles via the Golem Network and get paid by the GNT (Golem Network Token) as a reward for your service. The presence of tokens creates a shared value amongst network participants, which makes decentralized p2p networks more like separate economies or ecosystems.

Now let’s see how tokens are used to incentivize desirable behaviour in the Bitcoin network.

Block rewards

Let’s say you are a node that creates a new block to be included in the Bitcoin blockchain. You are rewarded for your work by being allowed to include a special transaction (coinbase transaction). This transaction allows you to send a block reward to your own address. Currently (June 2018) miners receive a block reward of 12.5 bitcoins.

You will only be able to reap the reward if the new block is accepted by the rest of the network. Other nodes express their acceptance by including your new block’s hash in the next block they create. This incentivizes them to only include blocks with valid transactions. Because you believe they won’t accept your new block if you include faulty transactions, you are incentivized to include only valid transactions if you want the block reward.

Transaction fees

As I mentioned above, the block reward for creating new blocks decreases at a set rate, which means that there is a finite amount of bitcoins. But what incentivizes participants to continue building the Bitcoin blockchain and to execute transactions if they don’t get rewarded by being able to mine new bitcoin? Simple: they receive transaction fees for each transaction they include in their block.

Transaction fees also disincentivize participants from slowing down the network by sending transactions from and to their own accounts.

Consensus Mechanisms

Participants in a decentralized p2p network need to agree — they need to reach consensus — about the state of the network and about what blocks and transactions to include on the blockchain. We need a mechanism that helps eliminate issues that arise from decentralization and the possible presence of adversaries.

A consensus mechanism is a protocol on top of the blockchain that takes each node’s proposed block as an input and selects a valid block as an output.

Let’s take a look at Bitcoin’s Proof-of-Work consensus mechanism. Simply put, miners must expend a great amount of computational power to prove they have “skin in the game” and then they are allowed to propose a new block. They expend this computational power by solving hash puzzles that are based on the properties of hash functions I’ve mentioned earlier. I’m not going to dive into the technical details of these hash puzzles but you can read more on pages 64–67 of the Princeton Bitcoin book. From a cryptoeconomics perspective, it is important to note that miners must expense fiat currency to buy computing power (nowadays in the form of highly specialized and high-performance ASIC chips). With that, they have expensed significant resources that they would lose if their block wouldn’t be included on the blockchain.

Another popular consensus mechanism is Proof-of-stake. Generally, this consensus mechanism works by having a set of validators take turns proposing and voting on the next block, and the weight of each validator’s vote depends on the size of their staked deposit. They lose their stake if the block is not included in the blockchain and are therefore incentivized to vote on blocks that include only valid transactions. If you want to read more about Proof-of-Stake, I suggest perusing the writings of Vlad Zamfir and Vitalik Buterin, who are championing PoS for Ethereum (which currently runs on PoW).

Blockchain Use-Case: Gaming

Blockchain technology arrived with numerous blessings and promises for almost every industry on the surface of the earth. In this blogpost, we’ll be looking at its application in the gaming industry and how ambitious players like DAO.Casino are making a mark in the emerging industry.

New decentralized technologies, game developers have found themselves a thriving ecosystem to build upon. Blockchain enables a protocol that allows developers to create decentralized games for users across all industries, particularly in the underserved gambling industry.

Blockchain gaming promises many benefits for the gaming industry, but most of all it benefits the players themselves.

True ownership, decentralized games, provably fair gameplay, acquiring crypto through gameplay (play-to-earn), global leaderboards, censorship resistance, and no infrastructure to manage for the developers, are just a few of the touted advantages.

While all of that is great, the evolution of blockchain gaming hasn’t been so pretty. Several issues that weren’t anticipated have affected the growth of blockchain games, and they threaten to stifle the evolution of this important aspect of the blockchain space as a whole. In short Blockchain Games have just not lived up to their mainstream cousins so far, but there is hope.

Speed

When it comes to blockchain for gaming, perhaps one of the most significant problems so far has been speed. These days, everyone wants a quality, state of the art gaming experience that doesn’t lag or provide any issues with speed and pacing. However, blockchain games that we have today are usually restricted to activities such as trading and creating assets.

Take Crypto Kitties, the most popular blockchain game, for example. The game makes it possible for players to grow and trade virtual cats on the Ethereum blockchain. While it shows a great deal of minimalism, the issue of speed still exists. The Ethereum blockchain is quite fast, but with a block time of 17 seconds, games built on the blockchain are essentially restricted to progressing at least three times per minute and that is assuming the blocks are not full causing even more delay.

User experience (UX)

Onboarding mainstream gamers into a blockchain game and then actually playing the games is certainly not a smooth process.

In the majority of cases players must download the Metamask Chrome extension wallet, generate an address, sign up with an exchange, buy ETH, send ETH to their wallet, and then they are about ready to play, after they have backed up their wallet.

Computational scalability

The advent of smart contracts was revolutionary. Code could be run on the blockchain. This has massive implications for many industries, not the least of which is finance.

However, code complexity is a bigger issue for games. Where financial smart contracts can be relatively small, video games are far more complex. As it turns out, calculating checkmate in a smart contract on the Ethereum blockchain is too complex and impractical. The gas fees would be astronomical just for a simple game of chess, much less MMORPGs.