Online gambling has long been a driving force behind the bitcoin economy, though one that remains both shrouded in secrecy and hampered by a lack of regulatory clarity.
However, an attempt to launch one of the first major regulated bitcoin-powered gaming platforms is struggling to alter this narrative, despite backing from a slew of international gambling stars.
Breakout Gaming, announced on 16th September, boasts former World Series of Poker champions Johnny Chan and Huck Seed as marketing partners and will be powered by its own decentralized cryptocurrency, breakout coin (BRO). Gaming pros Jennifer Harman, Ted Forrest, Todd Brunson and Vladimir Shchemelev have also signed on to support the platform.
The project completed its first initial coin offering (ICO) period this week, raising just 387 BTC (roughly $136,000 at press time) toward its 1,000 BTC ($350,000) goal. The ICO began on 21st October and formally ended at midnight on 19th November.
Speaking to CoinDesk, Breakout Gaming's head of marketing Gian Perroni and CEO Billy Chung framed the struggles as being more indicative of poor market timing than a disinterest in the project itself.
Perroni and Chung said:
Breakout Gaming said it views its ICO and its gaming platform as complementary services and that, should the ICO fail to reach its goal in another planned fundraising round, private sources could be tapped to bring the project to fruition.
Both Perroni and Chung remain convinced of the project's ultimate success. Unlike past cryptocurrencies aimed at specific verticals, like potcoin for the marijuana industry or titcoin for adult entertainment, Perroni suggested that the Breakout Gaming ecosystem will add value to its preferred currency by providing a built-in marketplace.
The platform will accept breakout coin, bitcoin and fiat currencies for breakout chips – the individual tokens that enable gaming on its platform.
Emphasis on gaming
These games, Perroni argues, would give the platform an edge, even if it wasn't focused on promoting the platform through an online currency.
"There's no one who's running the traditional poker and casino and also blending that in with fantasy e-sports," he said.
The platform will also feature a unique 'fantasy crypto' property that will allow players to pit whole lineups of cryptocurrencies against one another.
The firm's 7m BRO will be distributed to customers over two years, Perroni explained, through a series of giveaways and guaranteed prize pools that he hopes will entice new players into Breakout Gaming and, by extension, the digital currency space.
"Breakout coin will give a lot of people the opportunity to being able to use a cryptocurrency, people who may not have had the opportunity or the trust to find out what this is all about," he added.
Though many forum members have expressed interest in the platform's planned gaming options, other aspects of the project have been greeted with less fanfare or with skepticism.
Breakout coin uses a unique mining functionality called 'Proof of Bergstake', a form of proof-of-stake mining that ensures only individuals who participate in the initial coin offering will be able to mine the currency in the future.
Investors who participate in the ICO earn bergstakes, which allow them to earn more coins, even if they sell the original coins they purchase.
The community has been less enthusiastic about the Breakout Gaming pre-sale, with some criticizing the many changes to its ICO terms and conditions. Breakout Gaming argues it has been transparent about the alterations, and even asked the community for advice on how to make the offer more appealing.
The platform is offering its ICO investors the option to refund breakout coins purchased during the ICO, but said that only one participant has so far elected to take advantage of this offer.
Poker stars back bitcoin
In statements provided to CoinDesk, Breakout Gaming illustrated that the poker stars it has recruited for the project all have a familiarity with bitcoin and digital currency, as well as an interest in their first project in the space.
The gaming pros reported that they all are sponsored gamers for the platform, though a few are considering direct investment.
Some like Huck Seed were more deeply familiar with the technology. Seed cited his background in computer programming as the key to his early interest, but reported that he has become more engaged as the ecosystem has evolved.
He described his 'a-ha' moment with the technology, one that speaks to the wide appeal Breakout Gaming is seeking to achieve:
Others such as professional poker player Ted Forrest hinted at some of the complications that may have so far prevented the project from reaching its ICO goal.
“Unless people are familiar and comfortable with how to buy cryptocurrency, they are finding the process of first buying bitcoin and then buying BRO coin somewhat cumbersome to the point that too many just give up in frustration,” he said. “As we all know, the attention span of most gamblers is not the longest.”
In defense of altcoins
Forrest hints at yet another complicating factor for the platform, its native currency. When asked why Breakout Gaming elected to introduce its own coin, Perroni said the decision was made in the interest of enabling the platform to best entice new users.
Describing the altcoin as his firm’s “competitive edge”, Perroni said breakout coin and its pre-sale were ways to ensure the gaming platform had a loyal and incentivized user base.
Perroni also indicated that he saw an inherent way to add value to breakout coin: since it is a decentralized currency, Breakout Gaming must purchase the coins it needs from the open market.
“We’re required to make sure that we have enough coins to cover any chips that are in play. If someone buys $100-worth of breakout chips, we then have to buy $100-worth of breakout coin ourselves from the decentralized market in order to cover that,” he explained.
The limit on the number of coins mined per year, along with this built-in market for the altcoin, are supporting factors, Perroni suggested.
Project future uncertain
Issues with the ICO aside, Breakout Gaming's team is still refining its global market strategy.
Perroni voiced Breakout Gaming’s intent to pursue licensing in Kahnawake, Canada, which he said would allow it to position its gaming properties differently in its target markets, though he said this process hasn't been completed.
In the US, he said he expects residents will likely be able to play its gambling properties for free, while competing in its fantasy sports offerings. By comparison, Perroni indicated that licensing in Canada would allow the company to offer a full suite of services both there and the UK.
“We’ll be able to provide some form of gaming experience in every country, whether it’s free only or a blend of free and real-money gaming,” Perroni said.
Breakout Gaming reported that it intends to launch a second phase of the ICO, though specific dates have yet to be announced.
Images via Breakout Gaming; Shutterstock
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