Malcolm CasSelle, William Quigley interview, contains excerpts from August 18, 2017 article, “Gaming The System” By: Bruce Haring
Recently William and I did an interview with Bruce Haring, who drilled down on our plans for the Worldwide Asset eXchange™ (WAX). It was a good opportunity to discuss the big picture, as well as get more into the details of a $50 billion dollar industry that very few seem to know about.
The team at OPSKins invented exchanges for virtual items from video games and there is no group of more knowledgable or successful people in the industry. What they have done with prior companies (IGE, IMI and now OPSkins) is show that each iteration can grow faster than the previous ones and be more profitable. But what no one foresaw until recently, is that the blockchain would provide a capability to marketplaces that will dramatically increase its growth rate and overall market potential.
BIG PAIN POINTS: Payment processing, security
“Security is always a very serious concern because there is no safety blanket. If somebody steals your items, there’s no FDIC, there’s no insurance company.
If they steal them, they’re lost and lost forever. There’s a pretty big barrier to entry for an exchange to be created. One, it has to set up a security mechanism, payment mechanism.” — Quigley
The amount OPSkins has spent to develop and maintain inoculation from the fraudsters is massive. Besides the monetary costs, institutional know-how that makes all the investment work. The fraudsters are always trying new angles. WAX gets a tremendous benefit from OPSkins’ investment into this area.
BIGGER PAIN POINTS: Escrow, liquidity
Without someone in the middle as a trusted intermediary, these trades just can’t happen. Today that intermediary is an entity (typically a brand) you can trust. So how does a start up do it? It’s not easy, for sure because trust takes time to build.
Liquidity is the other big problem. Not enough items to sell? Buyers lose interest. Not enough buyers? Prices aren’t optimized and sellers go away. It’s either a death spiral or perfect harmony. That is a tall order. That’s why many have said, marketplaces are the hardest kind of businesses to build and scale.
BIGGEST PAIN POINT: Microtransactions
How do you exchange between two currencies for an item less than a dollar? The answer is: you can’t.
“As we have been doing this for now 20 years in the virtual item trading world, we finally believe that there is a technology platform, and this is really what cryptocurrencies are about, in particular, ethereum. Using a technology platform like ethereum to create smart contracts that will bypass the need for an exchange and allow people to conduct a transaction themselves.” — Quigley
Ethereum would allow for a $0.50 item to sell between two people with a smart contract, even if one is in Poland and another in Brazil without any costly intermediaries. This kind of commerce creates brand new multibillion dollar markets that just were not possible before.
BUILDING A BUSINESS TO DISRUPT YOURSELF
I have a lot of respect for any successful group that is willing to build their new spaceship while flying in the old (yet comfortable) supersonic jet. That’s what’s going on here because a decentralized exchange, though it would not necessarily displace OPSkins entirely, would be a serious competitor.
“There will always be people who like the additional services of large formal exchanges, and then they’ll be people who are happy enough with a distributed exchange that does the job they need and maybe at a more affordable price.” — Quigley
The more important idea is that in tightly knit gaming communities, there is a tendency to connect with others who play on the same servers or country, etc. If those communities can buy and sell with each other using all the marketplace capability WAX would offer, that would enable a lot more people to transact who wouldn’t bother going to a centralized exchange.
To build something so directly competitive just because the technology is there and demand for it is large, is courageous. But it means that WAX can expand the market — and take some marketshare from OPSkins. Yet both WAX, OPSkins and many millions of gamers would also benefit from that expansion. So net net, a good thing for everyone.
WHAT IS THE WAX TOKEN?
“BLOCK TRIBUNE: You’re planning a token distribution. Walk me through how your system is going to work once that goes into effect.
The idea is that the tokens will represent two things. One, stored value for the items that they will represent in the trading process. Then they’ll also be the mechanism for the smart contract that will move the item from a seller to a buyer.” — Malcolm CasSell
The ability to compress the many steps that go into a buyer and seller completing a transaction is why WAX is so exciting. It can manage the escrow, the payments to all the parties, prevent fraud, and use cryptocurrency for payment.
PAYMENTS TO LOTS OF PARTIES
The fastest way to grow a market is to share the wealth. Affiliate marketing where site owners made small percentage off of a sale they referred is how Amazon grew its online book business. And that affiliate marketing model forever changed how eCommerce works. WAX institutionalizes that same approach by building the ability for sites that attract buyer or sellers to get paid. And the transactions can happen on the site using all the power of an OPSkins-like platform, without the buyer or seller having to click away and go to a centralized exchange. And moreover, WAX allows for automatic participation and payment by escrow agents, appraisers, and other transaction facilitators that may emerge in the future.
“For example, if there is a site that attracts you to list your item for sale, they can get a piece of the listing fee. If there’s a site that attracts a buyer who ultimately buys your item, they would get a piece of the transaction fee. There is a mechanism for an entity to act as a transfer agent that’s actually moving the item from a seller to a buyer.” — Malcolm CasSelle
And the most important thing to keep in mind…
SIMPLE IS BETTER
“Currently, the process for buying or selling an item is relatively complicated. You have to understand quite a bit about the system and what you’re doing. I think the idea is we want to simplify the process and we see that gamers have a high degree of tolerance for complex things, which is a certain barrier to entry for people who are not in that ecosystem. We do understand simpler things spread faster and so our goal is to make the process really easy and we’ll show people how to do it.” — Malcolm CasSelle
One click makes all the difference and so with every step removed and intuitive choice make available, more transactions will occur. WAX is the opportunity to make the buy/sell where you want to transact (on your favorite website or social channel) and directly with the party who has the item when you want it.
This article summarizes the true power of the decentralized exchange with an escrow agent that does the hard work behind the scenes. With the know how of OPSkins and its million of users, we are looking forward to a radical transformation of the industry.