Bringing transparency and trustworthiness to loot boxes with blockchain and smart contracts

Abstract

The ever-increasing reliance on loot boxes by the video game industry has attracted scrutiny from consumer groups and regulators. For example, this practice of selling random assortments of virtual items for a price has been criticized for its lack of transparency since, before purchasing a loot box, players do not necessarily know the possible items they can win and the associated probabilities. Even in the rare cases when the list of items and probabilities are available, there are no guarantees that a game is actually using that information when randomly drawing an item, which naturally results in a trust problem. We draw from decision theory to explain the transparency and trust issues faced by loot boxes, and from a recently proposed decision model by Pedersen et al. (2019) to motivate the use of blockchain technology in this context. Following the design science research framework (Peffers et al., 2007), we then explain how loot boxes can be coded as smart contracts running on a blockchain network, and why this solution effectively tackles the transparency and trust problems we mentioned above. We illustrate the use of the proposed smart contract by developing a decentralized application (DApp) that mimics the process of purchasing and opening a loot box. We carefully analyze our solution by considering its computational complexity, accuracy, security, and cost aspects. We further discuss topics related to governance and deployment so as to help the video game industry with a potential real-life implementation of our solution.