“Gaming is the first application, but it’s not the last,” Coase Co-Founder Kathleen Breitman tells Jumpstart.
When it launched in 1993, ‘Magic: The Gathering’ was the first of its kind as a collectible card game. In the years that followed, it became pretty much a template for all other collectible card games that have since emerged. And since its pioneering launch, the collectible card game industry has exploded into an asset class worth billions of dollars.
A few weeks earlier, one of Pokémon’s most valuable trading cards — a first edition shadowless Base Set Charizard — auctioned for US$300,000. The card had a Professional Sports Authenticator (PSA) grade of 10, one of the highest numerical ratings a card can get from the PSA.
The auction reflects just a fraction of this industry’s value. In January this year, for instance, a 1952 Topps Mickey Mantle PSA 9 sold for a staggering $5.2 million to become the most valuable trading card ever to be sold.
Moreover, last year was historic for ‘Magic: The Gathering.’ It earned $581.2 million in revenue in what was its best-selling year ever. The digital collectible card game arena is also heating up with Hearthstone, the most popular game in this space so far, facing up to competition.
A new challenger entering the field is Emergents, a blockchain-based card game developed by Coase. Jumpstart caught up with Co-founder Kathleen Breitman at Collision 2021 to get a behind-the-scenes look at what Coase is building.
Why Coase is using blockchain to build a collectible card game
Named after British economist and Nobel laureate Ronald Coase, the company developed Emergents as a digital collectible card game integrated with a blockchain. But the company, Breitman notes, is not a gaming company — it’s actually focused on digital transactions.
“Gaming is like the first application, but it’s not the last,” Breitman says. “If we do our jobs right, what Coase will do is eventually build software that lowers transaction costs on the internet writ large… The overarching thesis is making commerce on the web easier and better for people.”
Coase is starting with collectible card games, which is backed by a massive secondary market where cards are traded between players. This is what enabled the trading of the 1952 Topps Mickey Mantle, the shadowless Base Set Charizard, and many other cards that have become assets.
Breitman identified collectible card games as a suitable early application for her thesis because the digitalization of these games has not been very successful. As the philosophy paper notes, for instance, Magic: The Gathering’s online version has a complicated interface that can make trading a cumbersome affair.
What Coase aims to do is build a convenient online marketplace that can serve the needs of the gaming economy, and improve upon current approaches to digitalizing this economy. Blockchain acts as a building block for them to do that.
“A lot of times, [the gaming economy struggles] with the same tensions that traditional economies struggle with,” Breitman says. “…if you think about cryptocurrencies as something that can improve traditional finance, it makes sense to try to test out some of those theses in a gaming economy to prove them at a scale, before endeavoring to do something in the ‘real world.’”
Developing Emergents using blockchain is Coase’s way of testing out its blockchain-based trading model in the gaming economy as a kind of simulation.
The tradability of these cards creates a thriving economy for Coase to test out its blockchain thesis. The fact that each card is unique further makes it more suited to the tokenization model. These cards act as “fully tradable digital objects” with a “well-functioning smooth and efficient marketplace,” the philosophy paper points out.
It’s not the first to do this. A philosophy paper by Coase highlights several other competitors in this field, including Gods Unchained, Baeond, and Skyweaver, which offer their own use-cases for blockchain in trading cards.
The recent boom in NFTs only further validates her theory that, “collectibles will transition better to digital using a blockchain than traditional approaches.” Breitman’s previous venture, cryptocurrency Tezos launched in 2018, provides the blockchain protocol on which Emergents is built.
What’s in the pipeline for Emergents
Coase’s main approach to monetizing Emergents is by selling the cards. However, instead of selling them in a pack, as is done in the traditional collectible card game industry, the company plans to auction each card individually.
This, Breitman explains, removes the friction of having to buy an entire deck just for the probability of getting one or two cards that you actually want for your deck.
“What you would want in an entirely rational world is for the information to be free, and for people to just buy the cards that they want and just sell the cards that they don’t want anymore,” Breitman says.
“There’s a lot of friction introduced to this process, because basically, there was no way for Richard Garfield to do that with the original physical Magic model,” Breitman goes on. “But with the internet, obviously you can sell, you can buy, and look up as many cards as you want.”
To sell the cards, the company has entered into a licensing agreement with Interpop, a collectible products platform built on Tezos, and focused on pop culture-based NFTs. Brian David-Marshall, seasoned comic book and gaming executive, and a founding member at Coase, heads Interpop. Other members at Coase, including Breitman, also feature on Interpop’s team.
Breitman reveals that Emergents will also have a digital marketplace for trading, although players will be free to trade outside the marketplace if they wished to. The marketplace will use bonding curve contracts (where supply determines price), so the rarer the card, the costlier it will be.
Further, Coase will publish a software development kit for Emergents so that players can modify the rules of playing if they wished to do so.
Apart from Breitman and David-Marshall, the Coase team also features Zvi Mowshowitz, a member of Magic: The Gathering’s Hall of Fame, and Alan Comer, who has developed AI and rules engines for franchises such as Pokémon and Magic: The Gathering’s online edition. Emergents is set to release later this year.
Header image by Wayne Low on Unsplash
