The Blawkchain Guy

A blog to help web3 game developers navigate blockchain and law.

What the Hell is a DAO and Why Should I Care?

By The Blawkchain Guy on

DAOs are at the core of what makes blockchain a technology worth exploring. As a game developer, you might wonder whether you should form a DAO and what benefit that would bring to you or your players. We’ll get to that, but let me introduce you to the idea first.

What the Hell it is:

DAO is an abbreviation for Decentralized Autonomous Organization.

  1. Decentralized because no one person or board of directors sits at the helm. Governance emerges from the participation of multiple members in a set of decision-making protocols.
  2. Autonomous because it can communicate and take action automatically via smart contract, as opposed to being directed by immediate human input.
  3. Organization because it is formed for a purpose by a group of people, can hold assets, and may be recognized as an independent, legal “person.”

Creating a true DAO is a high bar. In practice, people call things DAOs even when they don’t meet the strict definition. For instance, you might come across an organization that is decentralized, but not fully run by smart contract. An organization might be coded to run autonomously but keep a group of insiders entrenched in decision-making roles, excluding lower-ranking members from governance.  For the foreseeable future, the number of companies that should be considered true DAOs is likely to remain a tiny fraction of those claiming the title. Yet, as long as people continue to try and build true DAOs, each of these “governance experiments” will bring society closer to learning how people can govern themselves without resorting to a centralized authority.

Why You Should Care:

There are two primary situations in which a game developer should consider using a DAO:

  1. When an LLC or C-Corp cannot accomplish the vision for the game’s development.
  2. When the game is designed to be run by its community, not just its developers.

Sometimes, an LLC is just not enough

For most games, an LLC or C-Corp can accomplish everything a developer needs to reach their goals. After all, most games in history have been published by companies using such structures. So unless you’re certain you need a DAO to make your game work, you most likely don’t. Those old corporate forms are limited, though.

LLCs and C-Corps are formed when a sovereign (generally a state like California or Delaware) gives legal recognition to a new entity (the game company) formed by a person or group of people. These people become the rightful owners of the new entity which can now sue, be sued, own assets, receive mail, etc. From the beginning, ownership and control over the company is centralized in the hands of those who formed it. Bylaws can specify that governance should be handled by a set of protocols, but the ultimate enforcement of those rules is up to the sovereign that granted the company recognition in the first place. In other words, if something goes wrong while running the game company, grievances will have to be addressed by the state and legal system.

Obviously, this is not going to work for developers that want control of the game to be decentralized and automated. If you want your game to be run by protocols, smart contracts, and collaborative decision-making, giving a nation-state power over the foundation of your company accomplishes the opposite.

A game run by the players, for the players.

               Creating a DAO can give players of your game a way to participate in governance and development decisions. Tokens generated by the DAO can incentivize gameplay mechanics and afford interoperability with other games that recognize that token in the open market. Under appropriate circumstances and with full appreciation of the risks and benefits under securities law, DAOs can offer investment opportunities to early players.

               DAOs unlock the potential to allow games to live beyond the efforts of their creators. Once the gears are set in motion, DAOs can be more responsive to evolving community desires by giving players the power to contribute without being part of the original or core development team. The autonomous nature of a DAO, combined with its existence as a digitally native organization, primes this new entity type to address what gamers find lacking in corporate productions.

What the Hell is an NFT and Why Should I Care?

By The Blawkchain Guy on

An NFT is a Non-fungible Token

Fungible means replaceable, indistinct. Like a grain of sugar, you’d never know or care which one is which so long as your tea is sweet. Non-fungible is the opposite. It very much matters what happens to the thing you have because there aren’t any others. Pets are non-fungible—they’re unique. [1]

Tokens are representations of things. That is, something real exists, and something else is used to represent the real thing. Imagine a live hippo for example. There’s the hippo himself (let’s call him Hank), and a coin with Hank’s face on it. The coin represents Hank. If you owned Hank, you could use the coin as a token of your ownership. That way, when you show up to the hippo owners club and demand admission, instead of bringing Hank you could simply bring your coin. But what if someone could make a coin just like yours? Their token of ownership would become equally valuable, and the two coins would become interchangeable—fungible. The point of non-fungible tokens is to prevent that.

Non-fungible tokens (NFTs) are a way to represent and prove peoples’ unique relationship to something important. For a given blockchain, “people” are digital addresses and “something important” is data. “Uniqueness” is enforced through cryptographically-secured, consensus governed ledgers—aka blockchain. [2] So an NFT is a unique token that represents a relationship between data and an address on a blockchain.

Why Should I Care?

Whoever can prove that they own an NFT can thereby prove their relationship to the data at hand. If the data is an image of Nyan Cat, the NFT could prove ownership. If the data is a certified record of a livestreamed lecture, the NFT could prove attendance. [3] If the data is a list of names published by the Video Game Association, the NFT could prove membership. In a world increasingly governed by our relationships to data, knowing what you can prove about those relationships is limitlessly valuable.

Just as with other economic technologies, NFTs are a building block to more complicated interactions. As digital asset marketplaces become universal, virtual worlds grow in popularity, and digital identity substitutes for real-world identity more and more often, the technology behind those changes will be crucial to understand.

[1] Except for Fido, who is immortal and reincarnates in the fish bowl every time he’s flushed.

[2] For the basics of blockchain, see What the Hell is Blockchain and Why Should I Care?

[3] These NFTs are called POAPs.

How is Crypto Not a Scam?

By The Blawkchain Guy on

NFTs are better thought of as technology than as a “thing.”

Anyone saying “crypto is a scam” needs to recognize that they’re taking a verbal shortcut to avoid spelling out their full reasoning — “crypto is a technology predominantly used to scam people, and therefore I don’t want to be involved.” People are entitled to their opinions, but if everyone rejected technology because it had been used to scam people, no one would use email thanks to the many Nigerian Princes out there.

The right approach is to evaluate the costs and benefits of the technology. Understand its potential. See if we can craft solutions from it. Create guardrails to prevent its misuse. Then, after due consideration, if a technology hurts more than it helps despite our best efforts to control it, we can reject the tech.

Crypto, or more formally blockchain, is a revolutionary technology the implications of which society has barely begun to explore. Being a subpart of blockchain, NFTs float in the same boat. Have NFTs been used to scam people? Of course! But that fact is only one part of the calculation serious thinkers should contend with.

  • What is the true potential of NFTs?
  • What solutions can they help create?
  • Can we guard adequately against their harms?

Only after answering these questions and more can we come to a reasonable conclusion on how the technology should be treated. To arrive anywhere near an answer, we’ll first need to understand What the Hell an NFT is and Why Anyone Should Care.

Constraints and Freedom

By The Blawkchain Guy on

Games are an expression of freedom.

Paradoxically, people need boundaries to play. Consider soccer.

Soccer requires little investment. All you need is a ball, feet, and a couple of sticks for the goal. Some structure goes a long way in making the game more fun, though.

Add a net and the vertical dimension of a shot is constrained—scoring is a little tougher. Add a penalty box and there’s a new mechanism for scoring if the game ends up tied. Add the offsides rule and the challenge of getting the ball down the field, past a defender, explodes.

Each of these constraints makes the game better.

In the same way, law and code can make life better by constraining behavior and data. But we’re so used to bemoaning limitations that we fail to recognize their benefits. Instead, we should search for the places where behavior and data are wholly unbounded—where life could be made more fun with thoughtful constraint.

Games are everywhere, if we look. Grab a ball, grab some sticks, put up a net and let’s go.

The Casino

By The Blawkchain Guy on

Money and winning are a powerful incentives. That’s why companies are obsessed with finding ways to pay players to keep playing.

Casinos were first to master the art. They understood that the price of admission is nothing compared to the drive to win. The problem is that casinos are expensive and relegated to physical spaces. Video games are the opposite—cheap, fun, and available everywhere. So games became the new casinos…and players hated it.

Earning points and unlocking boxes was one thing, but straight up gatekeeping content was infuriating. Diablo Immortal, Battlefront, and infinite microtransactions pissed players off so much that corporate strategy actually changed in response. Yet developers had sipped from the accursed fountain and its allure was too strong to resist. Since then, the race has been on to find the perfect balance between gaming and gambling, and blockchain has emerged as an unlikely force both players and developers can agree on.

Web2 virtual currencies feel completely arbitrary. Gold earned in WoW isn’t worth any real money unless you’re willing to risk getting banned. On the other hand…

Web3 currencies feel closer to cash. Maybe it’s the $ symbol next to the token name. Maybe it’s the lofty promises of cross-chain bridging. Maybe it’s that $BTC and $ETH are so legitimized as mediums of exchange that brand new tokens no longer seem preposterous.

Whatever the reason, players holding on-chain tokens have greater faith that their stash is worth something real. Combined with in-game reward mechanisms, players are more ready than ever to pour hours and dollars into accumulating victories and riches.

Especially if they enter the casino unwittingly.

The Favorite Idea of Crypto Anarchy

By The Blawkchain Guy on

The favorite idea of crypto-anarchy is that once code is sufficiently autonomous, it will become ungovernable. That the enforcement mechanisms keeping ordinary folk in check in ordinary times will fail to rein in AI, especially if a decentralized protocol generated the AI in the first place.

But by using tools that have worked for thousands of years, we will always be able to hold people responsible.

If it’s simply a question of whether we can stop a given person or group of people from doing something, the answer is yes. At the end of the day, the real question is whether humanity will design kill switches effective enough to halt the activity of rogue intelligence once it is set loose upon the world.

I believe that the world is so modular, disconnected, and intermediated that while rogue AI may do plenty of damage before it is stopped, we will always be able to enforce laws against the people behind the intelligence or those allowing it to progress through the modules of society.

The world is physical after all, and humanity existed long before the transistor. If it gets that bad, we may just end up hammering the damn thing.

Why Blockchain Remains Confusing

By The Blawkchain Guy on

Let’s admit it: blockchain, Bitcoin, and Ethereum are catchy names, but terrible descriptors. Blockchain comes close to meaning something; it refers to the way data is arranged in these networks. Trying to understand the technology by focusing on the term blockchain is inefficient, however. What’s missing is the foundation, the concept that gives rise to the reason for using blockchains in the first place. That concept is distributed ledgers.


A ledger is a record of transactions between parties. Just imagine a piece of paper where it’s written: “Alice paid Bob $20. February 18th, 2022.” Add another transaction: “Charles gave Bob and apple.” Record enough transactions, give Alice, Bob, and Charles (ABC) three identical copies of the paper, and the three of them can agree on the transaction history between themselves. In other words, they agree upon a shared ledger. Instantly, ancient troubles arise: who keeps the ledger? How can we trust that no record was altered between transactions? The historical solution is the centralized model — trust an entity to hold the ledger instead. Whether it’s Big Banks, the New York Stock Exchange, the U.S. Government, or Google, goliath entities of this sort provide a convenient place to store records of transactions and have some degree of certainty that those records can be trusted.


Civilization depends on that bedrock of trust. Much of humanity’s progress would never have been made without entities facilitating trust in transactions. Unfortunately, those entities don’t have our backs. When the hard times come, they take the money and run. If the playing by the rules turns against them, they break or change the rules. The problem is that when society decided to hand the reigns over to these ledger holders, we traded away transparency and control over the process of conducting transactions.

Decentralization restores control and transparency by returning to the question of “who keeps the ledger?” and answering “no one.” If you’re wondering how “no one” can keep the ledger, the answer is blockchain. By building the transaction history between Alice, Bob, and Charles into a series of cryptographically secured blocks, chained together in an immutable sequence and made accessible to all parties to the transaction, the “ABC” blockchain allows each person to independently verify their records against the blockchain rather than relying on a separate entity. Because the ledger is distributed to each person, some shortfalls of centralization are addressed.


There are limitations and considerations to be had, of course. Yet blockchain as a technology stands to uproot if not revolutionize the way transactions are structured. Get creative; imagine what that means. It’s not just (crypto)currency morphing our traditions; that’s only the most obvious application. Legal systems, political systems, real estate markets and others, all rely on keeping records of transactions with entities besides the transacting parties. The potential implications are voluminous so we’ll end here for now, but keep those gears turning and you may notice applications spring into view as you navigate our centralized world.

Why people are wrong about NFTs

By The Blawkchain Guy on

If you ask a handful of people today for their opinion on NFTs, the responses will range from outright rejection to bemused indifference. For many people, NFTs represent a new, nonsensical format for monetizing that which does not need to be monetized any further — digital content. The impression is justified. After all, one of the most visible examples of NFT use to date involves a gif of Nyan cat selling for about $580,000 USD; that’s nonsense, you might think. But those who would scoff and immediately write off such a result as bizarre and unworthy of attention may be missing two crucial pieces of the puzzle: first, the rapidly approaching confluence of two technological streams that will, in my estimation, form a raging, inescapable river. Second, a reframing of monetization into the more familiar and sympathetic territory of property rights.

               Let’s start with the reframe. Monetization is a dirty word that can turn even noble ventures into despicable behavior. It’s the difference between a sweet child collecting donations for cancer patients by building a stand to sell homemade lemonade and underage labor marketing overripe, liquefied fruit. Rather than dressing NFTs up in snap-judgment jargon, each of us should evaluate the technology for its merit or lack thereof. If NFTs can’t hold up to scrutiny after being stripped of extraneous labels, then it will make sense to reject their adoption in society. On the other hand, if the core concept is sound, maybe a few people could lower their pitchforks. So what are NFTs?

               NFTs are the future of ownership. Delving into the technical details won’t help us here; it’s the properties of NFTs that matter, not their exact science. Ownership of digital assets is the cornerstone upon which NFT value is built. Forget absurdly priced digital art, forget the vain stumblings of this wild west emerging from a confusing and uncertain landscape full of scheming opportunists and idealistic world-builders. The early internet was the same way. When the dust settles, what will remain is an individual’s capacity to own that which exists in digital space. So what? Own all the pictures or videos you want; you’re left with only bragging rights as people copy and paste ‘your property’ to their folders. Enter, virtual and artificial reality.

               We’ve become so accustomed to screens in our palms and on our desks that people have forgotten the dreams of digitization. I’m talking holograms, exploring cyberspace, and meeting your friends in a virtual lounge. Those visions of the future are no longer prophecy, they’re the present. Whether Meta or another company becomes the dominant player in the industry, billions of dollars are being invested in migrating society from doom scrolling to traversing digital space. Before long, this new realm of operation will be virtually (ha) universal. But what does this have to do with NFTs?

               NFTs will allow people to exclude others from their property in the metaverse in a way that makes no sense in Web 2.0. By generating a virtual space people can explore and layering artificial realities on top of the world as we know it, the metaverse will powerfully trigger the human desire for personalization and along with it, the desire for exclusion. In other words, if you give a mouse a virtual cookie, they’re going to want some milk to go with it. Take fashion as a simple example. Suppose you design a T-Shirt with your best friend’s face on it. Suppose you post the design to your favorite blog. When you see the image circulating as a meme on Reddit a few days later, you’ll hardly be surprised. On the other hand, if you designed the T-shirt, made one for yourself, and walked around Times Square, you’d be shocked and offended to see half of your hometown wearing an identical copy in the following week. The point is, physical assets make things far more personal than digital assets ever have, so far. But with the proliferation of digital space, I predict that people will demand greater protection for their digital assets than was previously necessary or possible.

               NFTs offer a framework for that protection. To be continued…

Purpose — The Zeroth Block

By The Blawkchain Guy on

The purpose of this blog is to explore the implications of blockchain for society and help communicate the legal aspects of those implications to an audience. I expect to build up gradually from a cursory explanation of relevant topics in short posts, to more in-depth evaluations in long form, well sourced essays. If id. is used, it may be used with humor.

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