Hilmar Veigar Pétursson provides a short lesson in “Digital Physics”

When Richie Shoemaker wanted to broaden his understanding of web3 and geMt ay 2020 MCV/a balanced and reasoned argument for its potential benefits and dangers, he went to CCP CEO Hilmar Veigar Pétursson for enlightenment. Here is what was said.

When it comes to the soap opera of web3 – the metaverse, blockchain, NFT’s and the like – there appear to be two types of protagonists. Those that think the metaverse is regurgitated bull crap, the blockchain utterly unnecessary and NFT’s the embodiment of pure capitalist evil, and those that insist that web3 will save us, if not from ourselves, then at least from overreaching big tech. And if the latter group gets rich waiting for the rest of humanity to catch up, so much the better.

A slight generalisation for comic effect there, but my point is that much of the discourse around what are collectively labelled as web3 technologies is polarised to say the least. You are either dead set against it, or a signed up member of the crypto bro fraternity. It would appear gamers, rank-and-file game makers and environment-sympathisers occupy one side, while investors, game execs and John Terry line up on the other. And never the twain shall meet.

As for myself, I lean slightly towards where the cool kids hang out and the arguments seem to make more sense, but I try to stay as close to the centre ground as possible if only to maintain a veneer of professional impassivity. It’s not easy. As I’ve said on the subject previously, take away the money-grubbing, eliminate the environmental concerns and at least try to explain the tech without being condescending or patronising and I might shift over a little more in my acceptance. Alas, rarely have I seen or heard anyone make the case for the blockchain to take a greater role in our lives, at least not by someone who doesn’t have a vested interest in some early stage business venture reliant on pushing decentralised tech.

Which is why I sought out Hilmar Veigar Pétursson, the CEO of CCP Games, who I know has been taking an interest in web3 and all its associated technologies and buzzwords for many years. While he recently ruled them all out in terms of any immediate or medium-term adoption into CCP’s venerable MMO EVE Online, he wrote in a recent blog post that blockchain tech had ‘a lot of untapped potential’ and that he remained ‘intrigued by the technology’, which though hardly a ringing endorsement, is perhaps the closest you’ll find to such a thing from a games company CEO who doesn’t want to be hounded out of the job by a baying pitchfork-wielding mob.

Let’s start with the so-called metaverse. Is it just a repackaging of what we read about all those years ago in Snow Crash?

I don’t really think it’s repackaging. I think the metaverse has existed for 20 years. When I was doing VRML back in the late 90s, we were talking about the metaverse in cyberspace while doing it. So I don’t think it’s repackaged, I think it’s just completely the same thing. When I see what Mark Zuckerberg is all about, I have PowerPoint presentations which are word for word the same thing from the late 90s.

What do you think of Facebook rebranding itself as Meta and pushing it as some kind of corporate utopia?

It’s very familiar. And you don’t really have to dig into it. Sometimes it’s good to listen to people talk about the same thing, as I have been working on for decades, and just listen if there’s nuances that open up new doors of understanding. Right now I’m not hearing much. It’s just a lot of the same thing presented as discoveries by people that are now making a big deal out of it. But it isn’t necessarily adding a lot to the understanding so far. Maybe it will.

What about the VR/AR angle?

I think what is important are the emotions you have on the inside, not the peripheral you have on the outside. So whether you’re using a screen or a VR device, or a mobile device, doesn’t really matter. The technology’s not very important.

No one seems able to get across what the big deal is about the blockchain. Can you?

Blockchain tech is a very small implementation of cryptography. That’s ultimately what it is. It’s a fairly innovative wrapper – which is the consensus mechanism – around the core concept, which is fundamentally deeply useful – which is cryptography.

You could debate whether blockchains are a useful application of cryptography the way they exist right now. And you will have good arguments to say no. Some of those arguments are due to the fact that our understanding and commercialisation of cryptography is fairly basic. That is because it’s hideously complicated.

But coming out of the push that blockchains are providing, we are getting things like ‘zero knowledge proofs’, ‘secure multi party computing’, and the holy grail of everything, which is called ‘indistinguishability obfuscation’. These are extremely powerful computing concepts to build meaningful virtual worlds that can aspire to have a degree of autonomy beyond their creators.

Proponents of the blockchain in gaming forever focus on ownership. Are you suggesting that it’s about agency before ownership?

It’s about agency and autonomy of the creation. Distributing the ownership is a way of creating a multi party incentive framework for the economy to arise.

What about the counter argument that everything the blockchain can do – in relation to games – can already be achieved without resorting to the technology?

That is true and not true. Let’s take Bitcoin. It’s a very simple concept, but then it’s the most evolved and proven. You could argue about its elegance, but you can’t argue about its autonomy. Bitcoin is autonomous from its pseudo-named creator Satoshi Nakamoto. You can’t even pin it on anyone. It is an elegance in and of itself. But it autonomously exists through a network effect of its community. That is interesting. We don’t have many examples of that.

We mostly have countries and currencies that have some degree of autonomy. And I guess you could say the US dollar has autonomy beyond its borders, maybe the Euro, maybe the Pound to some extent, but for sure the Dollar. I think if the US were to disappear, the dollar might remain. Maybe not. But you could say that about Bitcoin. It has existed for 13 years and it’s autonomous from its creator. You could argue about its centralisation, decentralisation, or the miner coalitions, or the core dev team – those are interesting aspects, but any attempts to end it have not been very successful, so it has a degree of resilience and it has autonomy beyond its community. And it is a form of decentralisation that brings that. You could call the technology that enables it quite primitive. And it is. I mean, it’s largely cryptography from the 90s, with a pretty good innovation when it comes to this consensus idea, which is pretty neat.

What about the advocates for blockchain that cite greater ownership and fewer gatekeepers as benefits?

There are people in the blockchain space that are deeply, genuinely, trying to do something valuable and meaningful for the evolution of the human condition. And a great amount of them, by the way. But they’re hidden under a froth of people that just see profit opportunities. It takes a fair amount of interrogation to see their motivation. It maybe takes less if you have been doing this for 20 years, like myself. So, people use a lot of these kinds of second-hand phrases, phrases they have heard, like ‘gatekeepers’, ‘ownership’, some of these kinds of things, and while in isolation these things are true, maybe they are not what is important about this. Or at least maybe not in the context of what they are preaching, which might just be a rationalisation for their own motivations to make a profit. Which I’m not against either. I mean, it’s fine. It’s the game design we live in, but often it is some post rationalisation of a different core motivation.

What needs to happen for blockchain gaming to be adopted by the mainstream?

I think what needs to happen is a killer app that people care about, beyond the monetary value of it. And I think that’s largely true for anything really, if you look at this as a platform – it isn’t really, it’s more like a protocol than a platform – then you need a killer app that people care about and are inspired by. And I think everyone is kind of waiting for something like that to emerge. And I think eventually it will happen.

So it’s inevitable would you say?

I wouldn’t say it’s inevitable. I think it’s possible. The technology in its current incarnation is relatively primitive. We did have games built on top of Bitcoin before there were games built on top of smart contract chains. And the games that are built on top of Etherium, or Etherium clones, are richer than the Bitcoin games. The Bitcoin games were very primitive, but there were some cool bits to them, just like mods before there were 2D MMOs before they were 3D MMOs. There might be more core innovation needed, at the base level, before we see something truly inspiring arise from it. But I think you can do quite interesting things already that are extremely hard to do.

I mean, the reason why there’s only one EVE Online is because this is just an extremely hard topic to grapple with. And a lot of that has to do with the human condition, not so much with technology; like community governance, third party development, all these things we’ve been doing for 20 years. This is hard stuff. And there is no panacea of just ‘we use web3 methods and voila, now it’s easy’. No, it just becomes harder. It’s actually harder to do it web3-style then do it web 2.0-style. Show me the web3/blockchain project that is doing governance, third party development, autonomy at EVE Online levels, and you have shown me something I haven’t found. Most of the Web3 kids I meet aspire to be something like EVE Online.

Can you give an example of a blockchain benefit to a game that doesn’t currently exist?

Okay, I’ll give you a use case, which is somewhat inspired, as always, by EVE players. So we’ve had massive warfare in EVE Online over the past two years. It kind of started in the lockdown and raged on until everyone won, in their own words. And the warfare was largely funded by the issuance of war bonds. So EVE alliances were raising [in-game] money, mostly from their own alliance members, to fund their coffers, to build weapons of war, to fuel their warfare. They used the trust dynamic that exists between leadership of an alliance and its members to fund their efforts, under the promise that if they won, they would share in the outcome. Classic war bonds. In a fictional world, we could imagine an alliance, not just going to its members, but going to crypto investors and speculators and saying, ‘I am raising funds to increase our territory, which will bring us investable returns. So hey, you web3 investor community, come and invest in my alliance for world domination, rather than speculating on these simple little tokens that nobody cares about.’

That’s interesting. But obviously, if you pitched that right now, there might be some complaints. Yeah, of course. Obviously. A lot of players are extremely savvy and they do connect the dots and see this world. It is just not very popular right now to be talking about it, because the mainstream dialogue is at such a level that taking these kinds of sophisticated use cases requires an understanding of so many concepts.

But adoption surely requires understanding. How do you address that? How do you explain the vast sums of money in the blockchain ecosystem?

There is an outsized – which is both a problem and an opportunity – amount of liquidity in the blockchain world that is looking for opportunities that are feeling similar to how it came to be in the first place.

So, when you looked at Second Life, there was nobody really looking to invest in a character in Second Life, because people had plenty of opportunities to use their fiat money to buy real estate in the real world. That is not so much the case with cryptocurrencies. They don’t have a good recourse to invest in investable things. So they’re looking to reinvest themselves in something that still exists in the ecosystem, because then you still exist in the domain of being a crypto asset class. And you have to understand the motivation of investors and motivation of liquidity to understand why that is meaningful, and why that is also dangerous.

Nobody really knows this, because they just have a very basic understanding of economies, investments, asset classes, jurisdictional taxation, and returns, all these things. They just don’t know them very well. But you need a borderline PhD in economics to get them. It’s actually more like physics than economics. ‘Digital physics’ is the term I sometimes use.

That kinda makes sense. So why can’t advocates for web3 explain it without being broadly condescending or arrogant?

The definition of understanding is to be able to flexibly explain it to people at varied levels. If you can’t explain it to six year olds, you probably don’t understand what you’re talking about. I asked my son, who I discuss these things with … maybe not exactly these things, and he’s 11. I overheard him talking to his friend on Discord. And I asked him, ‘What are you doing?’ He says, ‘Well, there’s this guy on Reddit and I’m just telling him to stop crying about it and just make an NFT.’ He’s 11. And I asked him, who I have never discussed any of this before with, ‘So, what are NFTs?’ And he says, ‘Ugh, Dad. It is like art you can bet on.’ And right there, the clearest definition of NFT’s I’ve ever heard! From an 11 year old!

That makes me feel old and a bit dim.

You can carry a conversation on these topics with anyone. It’s just like we’re talking here. Like you just need to connect to people’s understanding. And in your case, you know so much about EVE Online that it’s easy to draw on your understanding. You understand all of the concepts of emergence, all of the concepts of autonomy, all of the concepts of community governance, for all its opportunities and issues. Like, you come from an extremely unfair advantage into this conversation. And if somebody cannot explain to you what this is about, well they don’t understand it.

It’s like the Dunning-Kruger effect. You think you know it. And then you find out you don’t. It’s only when you go through that bump that you reach enlightenment. And I can speak to it! It took me an embarrassing amount of time to wrap my head around it. Like, I’m a computer scientist. I’ve been around EVE Online for 20 years. It took me like six months of pretty deep, tactile, hands on, to come away with ‘Wow, okay, now I can see through all the obfuscation what we’re really talking about.’

I have no hope.

This element of cryptographically locking away assets, such that nobody can interfere with them – is a fundamentally interesting concept. It just is.

I have the ability to interfere with things in EVE Online and it makes me lazy to come up with elegant solutions, when we can just take the shortcut and just compensate assets and freeze them and undo them and whatever. Having the pressure of not being able to do that makes you do your job better. Because if there’s no way to address a mistake, you will just think a lot more carefully about it. It’s powerful. But with great power comes great responsibility, of sorts. It can be paralysing. It’s a powerful thing. It just is.

Then you have the network effect … that starts to create these kinds of data physics, where there are actual immutable unbreakable laws to this universe. Nobody can break them. And that is a standard to aspire to. It has vast and deep and wide-ranging implications. Which makes me a little daunted in it because I understand those implications. … That’s why the web3 kids just throw shit at the wall and hope it sticks.