Cypherpoker a P2p Poker Development Platform

Patrick Bay's Cypherpoker, a p2p poker implementation based on the Ethereum network, is almost ready for attention from developers those that want to implement their own poker site ideas. Patrick is finishing up on the web based version and some other game flow tweaks that will signify the advent of a browser based demo for Cypherpoker.

In the meantime I have been doing my best to familiarize myself with the code while working on customizing a version of Cypherpoker that will present well to the regular and professional online poker players who are used to the existing legacy betting/controls system and user interface. I want their version of Cypherpoker to look like home to them so the demo sells a seamless transaction from existing legacy sites to the new p2p poker framework.

The headway has allowed Patrick to begin reflect on how he might launch the project. Cypherpoker is expected to function somewhat like an inverse-common grounds. The project will be open source so anyone can fork it and make a competing version (and they are encouraged to do so!) but the idea is that there will be at least a few leading poker sites that will want to basically support and fund a leading group of decentralized development which will serve as the common grounds.

Each poker site that uses Cypherpoker can decide how they want to monetize their project (or not if they want to be non-profit) so competition and capitalism is expected to increase the value of the products offered and the network as a whole.

From this perspective, Patrick is considering that Cypherpoker itself might not need a crowdfunded token at all:

I’m also making headway on a CypherPoker investment/profit concept. I don’t want to put the cart before the horse but with various incentives and self-enforcing concepts being deeply embedded in the model there should be no reliance on a DAO, the issuance of new crypto-tokens, or any sort of traditional crowdfunding. More to come soon!

A Different Scope

However, as I outline in The Hidden Value of Cypto-Currencies the PLAYERS might in fact REQUIRE such a token in order to leave their already established grazing grounds:

We can think about a hypothetical scenario in the online poker industry: a monopoly has arisen that offers a service (dealing cards and settling bets) for a certain cost (ie rake or fees paid per hand played). Because of payment processing restrictions and high cost/barrier to entry for emerging poker sites the monopoly begins to raise the fee they charge and/or lower the quality of the product offered in favor of cost reduction/profit seeking.

A site can do this in two distinct ways. Firstly, they can raise the % of rake or fee paid per hand or per tournament entry by the customer (players). The second way, however, is more deceptive and harder to notice by the majority of unaware players-raising “effective” rake.

The reason such a token might be valuable extends from poker having two different classes of players: predators and prey (with no moral argument being made here). P2p poker is a good sell to the predators that want to play poker for a lower cost (rake). The reduced rake increases their profitability over time. But the prey, the recreational players that are habitual net losers/depositors are far less sensitive to this and other benefits of p2p poker using crypto-currency:

Effective rake is just basically the net profitability from the player’s perspective. Factors that contribute to effective rake included game parameters, software design, player rakeback or vip points, and general site policies.

These are factors sites can control and are mostly noticed by regular and professional players. In contrast negative changes to these factors are often missed by unawares casual recreational players.

This discrepancy creates a sticking point (an equilibrium) because of the symbiotic relationship between the causal and professional player: professionals cannot rationally leave en mass because the games get more profitable the more professionals that leave them!

This is why a poker token would be valuable in light of the current industry conditions which are control by a dominating monopoly.

Enter the Poker Token

Therefore, I present the argument that such a token is necessary for a p2p poker project to bootstrap:

This time there could be introduced a poker token through, for example, an ICO (initial coin offering comparable to an initial public offering for a stock company) for the competing solution. In this modified scenario, provided there is a reasonable expectation that the new site will be successful, there is still no immediate profit from deviation, HOWEVER, its true to suggest or point out that the earliest adopters of the new network token stand to gain the most. This effectively allows the rational self interest players, who are otherwise stuck in an equilibrium, to unilaterally deviate and gain!

Because of the pressure or gravitational like force the expected value creates, a cooperative result is now possible without breaking the non-cooperative tendencies of the players.

How To Bootstrap a P2p Poker Project

Vitalik Buterin recently gave an objective construct for evaluating token crowd-sales for emerging crypto/software projects.

He outlines 5 categories an investor should consider:

Vitalik continues and shows that the want to optimize these parameters however is impeded by -ilemas:

Creating a P2p Poker Implementation ICO Crowdsale

From the above, it should hopefully be clear that while there is no way to counteract the dilemma and trilemma head on, there are ways to chip away at the edges by thinking outside the box and compromising on variables that are not apparent from a simplistic view of the problem~V. Buterin

A p2p poker implementation creates and interesting opportunity for initial share offerings for a ICO crowdsale or even a presale. Revisiting some old musings we can think of a crowdsale offered in the form of a private or publicly held poker tournament:

One possible way to implement or drop Naj Coin would be to have the biggest MTT ever. It could be cross site, cross platform, international, cross venue (internet and/or live poker). It would be a create way to advertise the next evolution of poker and it might interesting to discuss the types of people that are likely to win the most Naj Coin. The tourney could be long or short and could possibly involve multi-entry or even an entire event/series or circuit.

There could be many possibilities.

Successive rounds could introduce landmarks crossed such as new game formats and functions being introduced.

A cap on the overall shares could be decided and tournament buy-ins could be adjusted at each round. Participants could choose to buy shares from previous holders and either purchase tickets to tournaments with other crypto-currencies or use previously distributed/won poker tokens.

Negative Rake As A Form Of Inflation Control

Thinking about the possibility of a “negative rake” it might make sense to burn the historical fee that usually is paid to the casino for providing security. This way shareholders of the network will ultimately have some incentive from deflationary pressure, which benefits the network by giving incentive to developers who can thus benefit from having shares in their own work.

Can a Cypherpoker Tournament System Crowd Fund Be Arranged to Address the ICO Dilemma and Trilema Problems?

Players make transactions (poker hands) with each other based on certain complex agreements (game rules and probabilities) and value is transferred as a result much like value (ie commodities) is transferred in Szabo’s industrial/land economy example.

This suggests that the reduction of rake % and effective rake that would inevitably result from the efficiencies in payment processing technology and the competition from emerging sites would result in a dramatic increase in the total value of the emerging network and the token that represents it.

There are many possible considerations for a schedule of development and implementation for either Cypherpoker as a project or the different poker site projects that might be developed on the CypherPoker platform. Depending on the paradigm used projects that arise might provide a very valuable solution to the existing frustrated players base forced to confront a monopoly based on payment processor restrictions and excessive regulatory control by governments and tax authorities.

A token offering might provide the solution to an otherwise unsolvable coincidence of wants, ushering in a new age for gambling and gaming creating incredible value for participants and investors.