Thunk—the dice land on the wooden table, and Zvi Mowshowitz cackles. A lucky roll has endowed two playing cards in his deck with special powers. He turns the plastic-coated slips of paper, illustrated with leaping superheroes, into a horizontal position indicating combat mode. The imaginary characters attack, dealing fatal blows to the overmatched defenses of his opponent. Victory!

The scene could take place in any basement or game shop in the country—anywhere nerds gather to send card-bound wizards, warriors, and Valkyries into battle. But this match is unusual. On this mid-April morning the setting is a luxury loft in Manhattan’s tony Tribeca neighborhood, where a stylish venture capitalist and a husky-voiced historian of pop culture are, as gamers say, “playtesting.”

The pair’s business partner and temporary adversary, Mowshowitz, is no ordinary player. A 41-year-old with unkempt hair and black glasses, Mowshowitz explodes frequently into laughter, eerily similar to that of the boy-genius Mandark from the ’90s cartoon series Dexter’s Laboratory. Mowshowitz has a fondness for novelty T-shirts: Today’s reads, “Question Authority: Ask Me Anything.” He’s famous in geek circles as a champion of Magic: The Gathering, a fantasy card game beloved by millions of people.

Mowshowitz made his name as a David among Goliaths. His slingshot: using low-value cards to triumph over opponents with more powerful hands.

Now Mowshowitz is playing a bigger game. He wants to deploy the same strategy against a video game industry worth more than $100 billion that is, in Mowshowitz’s view, exploiting fans with addictive, money-grubbing ploys like forcing them to “grind,” or engage in repetitious quests. Mowshowitz’s target is a niche corner of the industry known as digital collectible card games, which are forecast to grow to a $2 billion market this year from $1.5 billion last year. Perhaps the crowning example, Hearthstone, a breakout mobile game, claimed to have 100 million players as of November 2018.

Mowshowitz’s plan is both radical and simple: Create an utterly engrossing game that doesn’t resort to conventional, predatory tactics. In it, players battle one another with digital trading cards featuring superheroes and robots. Central to the plan is an online marketplace where players can buy, sell, or trade the individual digital goods they acquire—no hoops required. It's a feature absent in recent, free-to-play hits like Hearthstone.

The concept seems obvious enough. Game players have been able to trade cards in the physical world for decades. But online newcomers have, for a variety of reasons, legal and otherwise, stubbornly refused to support the ability.

Mowshowitz has rallied a pair of converts to his cause. By his side is Brian David-Marshall, the aforementioned historian who is working with Mowshowitz as product director for Emergents. Among David-Marshall’s credits are having opened a store called Neutral Ground in a loft in Manhattan’s Chelsea district that, though now closed, retains a mythic status among the initiated—the Studio 54 of the gaming set. (On some nights, David-Marshall would keep his store open until two or three in the morning as Magic players—everyone from middle-aged math nerds to maladjusted middle schoolers—plunked down creature cards from their deck in battle after battle.)

The other member of the trio is Kathleen Breitman, the 30-year-old CEO of Coase, the startup developing the game. The name is a nod to the celebrated economist Ronald Coase.

If Mowshowitz and David-Marshall bring gaming pedigree to the project, Breitman brings connections to venture capital and influential people beyond the gaming world, including billionaire crypto enthusiast Tim Draper as a backer. Having done stints at two pillars of the financial establishment, the Wall Street Journal and the hedge fund Bridgewater, Breitman is best known for leading a cryptocurrency project with her husband that raised $234 million in 2017. A savvy networker with the ability to charm—she and her French husband, Arthur, were featured on the cover of Wired magazine last year—Breitman flits between New York and Paris, leaving a trail of cocktails and bon mots in her wake.

Together, Breitman, Mowshowitz, and David-Marshall are throwing a gauntlet at the gaming industry. If their game, now being rolled out to early testers, catches on, one industry veteran predicts it could help spawn a new billion-dollar industry centered on the trade of digital goods. Others are less optimistic, pointing out that new games face entrenched competitors. Often they fail.

Mowshowitz is unfazed by the skeptics. Shuffling a deck of superheroes, he reflects on the many times he’s won as an underdog. He plans to do it again—this time, by overturning the conventional logic of digital game design, translating the appeal of the original nerd card game Magic into software, and potentially igniting a new virtual card-collecting frenzy in the process.

Making magic happen

In the late 1980s, inklings of a new kind of game began to jell in the mind of Richard Garfield, a mathematician and Bell Laboratories alumnus. He arrived at the idea to combine collectible cards with a fantasy battle game. As in the business of baseball cards, some cards would be rarer than others, and they would be sold in randomized packs—an innovation distinguishing Garfield’s design from most other contemporary tabletop card games. Magic: The Gathering was born.

When the first Magic cards appeared on the West Coast in 1993, they won instant, ardent fans. Teens and adults alike were absorbed by the otherworldly mythology of the Dungeons & Dragons–like universe. They became hooked on buying “booster packs” to acquire new cards they could employ in personalized decks. The game went viral the old-fashioned way, through word-of-mouth, as players introduced it in comic-book shops and college campuses across the country.

For its fans, Magic: The Gathering was a deeply personal affair. “Magic is closer to role-playing than any other card or board game I know of. Each player’s deck is like a character,” the game’s creator, Garfield, would later relate in an account cited by the New Yorker.

Players assumed the role of spectral beings called “planeswalkers” that can summon pretend beasts and enchantments into battle. This fantasy backdrop—and a complexly layered rule book—were core to the game’s appeal. Constructing a deck was, for many people, an intimate act. Different personalities tended to gravitate toward one of five colors on Magic’s “color wheel,” a sort of Hogwartsian sorting hat. White characters, for instance, were associated with law and order, while black ones embodied ruthless power. Green characters stood for communal values and so on.

Magic soon became a full-fledged craze. “I found out about it when I was doing event marketing for comic stores. People were desperately seeking out the cards. I was physically accosted by someone who was so angry we didn’t have it, he literally shook me by the lapels,” David-Marshall recalls.

While Magic cards were the source of a rich, high-fantasy culture, they were also appreciating in real-world dollars. Not long after Magic launched, trouble arose in the form of a market bubble as speculators tore open piles of $3 booster packs in hopes of finding rare cards they could flip for a profit. It was tulip mania for the geek set. The phenomenon boosted sales. But the mania also threatened to ruin the integrity and underlying fun of the game, and to turn Magic into a flash-in-the-pan fad like Pogs, which today is more of a historical curiosity than a game.

For Wizards of the Coast, the company that owned the game, building a sustainable franchise required thinking like a central banker. The company could have milked the Magic bubble for all it was worth, but Wizards instead chose a different strategy, flooding the market with certain cards in order to erode their resale value, much to the chagrin of speculators. It also introduced tournament rules requiring players to use cards of recent vintage, meaning no one could win by purchasing and deploying all-powerful cards, like the much-coveted Black Lotus. In deliberately popping its own bubble, Wizards made a risky bet, but one that proved prescient.

The shake-up worked. Magic: The Gathering kept thriving. Today, the Magic universe operates much like a well-governed Scandinavian country of 38 million people—the estimated number of players around the world—and has spawned a rich fan culture and a series of imitators. The secondary markets are still going strong as well; in 2019, a Black Lotus sold for more than $166,000 on eBay.

Despite its early success, Magic fumbled while crossing over to the computer screen. Hasbro, the parent of Wizards of the Coast, has offered a desktop-only version of Magic on the Internet for years, but it has remained comparatively niche. Last September, Hasbro made a new attempt to refresh the franchise with the release of Magic: The Gathering Arena, which takes cues from rival Hearthstone. But while the early response has been positive, Arena can only be played on desktop, not mobile, and, like Hearthstone, players cannot trade and resell cards as they can in the physical world—typically through secondary markets. (Bruce Dugan, a spokesperson for Magic, says mobile is “something we’ll consider.” And while technically there are underground markets where people can buy and sell Hearthstone and Arena accounts, these are rather dubious and breach the games’ terms of service agreements.)

In building a digital game they hope will replicate the fun of Magic, members of the Emergents team are paying close attention to the lessons of the groundbreaking game. “Just as all philosophy is a footnote to Plato, all card games are a footnote to Magic,” Breitman says.

The team, and its scruffy leader Mowshowitz, believes it has finally cracked the code. As the crew tilts against a gaming industry colossus, Mowshowitz holds the lance. He’s not just an expert player and, in Breitman’s words “a video game snob,” but also a Martin Luther figure who likes to call out exploitative and manipulative behavior on the part of other game designers. Maybe there’s a little Don Quixote in him, too.

Escaping the rat race

Mowshowitz’s introduction to games came early when, as a small boy, he would play chess against his father. Those games had a twist. In their first matches, Mowshowitz’s father played only with a king and pawn, letting the young boy advance with a full board of chess pieces. In time, as Mowshowitz learned to checkmate the depleted force, his father added more pieces to his side, making the task harder.

He encountered a similar mismatch of forces as a teenager when he immersed himself in Magic, crisscrossing New York City to attend tournaments in search of prize money and prestige. While his parents, both Columbia University professors, earned a comfortable living, Mowshowitz had only a paltry allowance. His relative penury required him to build his deck—the set of 60 or so cards used in a Magic game—from others’ cast-off cards, and develop unorthodox strategies to win.

Mowshowitz would make such game play his calling card, earning renown as he won matches with low-value cards. Such abilities led gaming companies, including Magic’s Wizards of the Coast, to invite Mowshowitz to test trial versions of their games. On several occasions, he “broke” the game—geek lingo for finding a flaw in the design that produces automatic victory. During a stint in the Western U.S., Mowshowitz took up a different sort of gaming. He made a modest fortune playing poker in Indian casinos outside Denver, and then worked in Las Vegas for the professional gambling industry. Mowshowitz won’t provide specifics about his job duties other than to say they involved math.

This isn’t surprising. When Mowshowitz speaks, one can almost see a cascade of equations popping from his brain as he parses the probability of every situation around him. His math prowess also leads him to speak of certain integers with tenderness. “Seventeen has a special place in my heart. It’s the most random number,” he notes in passing when recalling his days at his high school math club.

Mowshowitz left the world of Las Vegas for stints at the quant firm Jane Street and, later, as CEO of MetaMed, a short-lived medical research startup. But he is now expending all his number-crunching abilities on his crusade with Emergents. His quest: to design a new type of game that knocks down a pillar upon which gamemakers historically earn money.

Mowshowitz is doing away with “loot boxes.” Critics say these grab-bags—which offer the promise of winning special weapons or other game enhancements—are akin to lottery tickets. They accuse the gaming industry of manipulating players, especially children, into spending hundreds or even thousands of dollars (or playtime hours) to obtain digital junk. Controversy over loot boxes has led politicians in the U.S. and Europe to call for banning them.

Loot boxes manipulate players by preying on their biological foibles, says Mowshowitz. He points to the practice of “Skinner boxing”—a science term for putting a rat in a box and then training it to perform an activity in return for a pellet of food.

In the case of video games, Skinner boxing uses virtual rewards. In lieu of pellets, the gamemaker offers in-game money, weapons, level-ups, hypnotizing noises, and various trinkets to induce players to spend more time in a game—which usually leads to tedious, repetitious activity. The practice isn’t a conspiracy theory hatched by Mowshowitz. Search the Internet for “Skinner box and video games,” and you’ll discover the term is commonplace in design discussions. For game makers, manipulating players to play for longer periods of time helps convert some fraction into customers willing to pony up for more loot boxes, thereby boosting revenue. But the upshot is, in Mowshowitz’s view, the games become monotonous.

A marketplace for gaming goods—which Emergents is baking into its game—seems like an unlikely fix for these problems. But Mowshowitz is convinced that such a market will be transformative. “When you don’t allow trading, you force people to grind,” he says, explaining how a player might have to roam the same small corner of a game for hours to acquire a certain tool or weapon.

Mowshowitz also believes the industry’s failure to build in-game trading options undermines imagination. When every player has to grind to acquire goods, he says, they will gravitate toward one of a few tried-and-true, proven-to-win, deck-building strategies described on gaming blogs. In his view, a store where players can buy or swap tools and weapons will encourage them to explore unorthodox tactics and new ways to gain an edge. This is what Mowshowitz did in the physical world of Magic card games, and he’s convinced the lesson would apply equally to online games.

All of this, though, raises an obvious question: If secondhand digital goods can unlock a billion-dollar industry and make games more fun, why is no one doing it?

Where others failed before

There are good reasons why the video game industry is reluctant to offer players a way to sell and swap their wares.

Unsurprisingly, the first reasons are legal. For starters, explicitly stating card values could be a tacit omission that the company is hosting private lotteries, which are illegal in certain parts of the world, including many states in the U.S. As a result, Wizards of the Coast and other companies have wisely operated under the cover of better-left-unsaid deniability, leaving the business of marketplaces to independent resellers. Secondly, these markets can be abused by fraudsters. As the makers of Counter-Strike: Global Offensive recently discovered, almost all of the traders in their marketplace were money launderers seeking to cash out ill-gotten gains.

There's another set of reasons—commercial ones—that in-game marketplaces are rare. Game makers fear that markets for used items could eat into the sales of new ones.

Traditionally, such sales involved fare like swords or gold in World of Warcraft, but lately more sales are coming in the form of what gamers call “chrome” or “skins”—swag to adorn a player’s character such as sunglasses or new shoes. Chrome has become especially conspicuous during the craze over the game Fortnite. Owning it has became so important among high school kids that those with unadorned avatars have been mocked for being “a default,” and bullied into spending money to dress up their digital character. In 2018 alone Fortnite reaped $2.4 billion on sales of chrome. In Fortnite, where the proceeds of every pair of digital sneakers and sunglasses goes right into the pocket of the game maker, Epic Games, who in their right mind would risk undercutting that margin by allowing stores for resold goods? Cash cows get milked, not slaughtered.

Michael Pachter, an analyst with Wedbush Securities, says the fear of cannibalization is real but also overstated. “It’s like fake sunglasses. You can’t say every person who pays $10 for knock-off Louis Vuittons would have spent $200 if the fakes weren’t available,” he says.

But even if game makers can be persuaded that secondhand goods won’t eat into their sales, there is another reason why games have shied away from used goods markets—and why the likes of Hearthstone and Magic Arena enable no forms of trading at all. It is rooted in fear that a person—or bot—with multiple accounts will game the system, grinding to earn rare cards and then trading all that loot to a single account. The cards might lose their value, the game might lose its purpose.

Game designers are very aware of predecessors’ missteps when it comes to offering an in-game trading house. In 2011, video game giant Blizzard introduced an “auction house” to Diablo III, a hack-and-slash role-playing game. The auction house was supposed to provide an in-house alternative to eBay and other unauthorized trading forums. It was also supposed to add a fun new economic element to the Diablo franchise. Unfortunately, the auction house spawned an unintended consequence in the form of economic mercenaries—often from China and Russia—who, aided by bots, played the game solely to obtain and sell used weapons. These interlopers would hawk their digital haul in the official auction house where wealthy traders took the other side of the transactions, buying the best weapons needed to defeat Diablo’s toughest bad guys. Soon, Diablo’s elite ranks featured a growing number of gamers who had engaged in “pay to win”—a taboo in the gaming world. The ensuing backlash led Blizzard to shut down the auction house in 2013.

As with the speculative bubble that almost destroyed Magic in its early days, the Diablo fiasco shows how perverse economic forces can ruin an otherwise popular game. The episode led many in the gaming industry to conclude in-game trading markets do not work. Indeed, Mowshowitz acknowledges the Emergents crew have been quizzed by potential investors about how they plan to avoid a Diablo-style debacle.

Mowshowitz responds by drawing an analogy to the physical gaming world. “In Magic: The Gathering, there’s this guy we call ‘Mr. Suitcase’ who shows up at tournaments with every possible card,” he says. In that world, Mr. Suitcase is kept in check by Wizards of the Coast tournament rules that narrow the types of cards that can be deployed in a given match. When it comes to Emergents, Mowshowitz envisions sorting players into tiers that pit those with card decks of similar value against one another. (This system won’t preclude a crafty player with modest resources challenging a “Mr. Suitcase,” but will ensure most matchups are evenly balanced.)

Breitman, the CEO, has also thought deeply about the pay-to-win problem, though her perspective is a more academic one. In her studies, and in building the cryptocurrency company Tezos, she’s read extensively about finance and game theory—good training, it turns out, for understanding the role of economics in designing a game.

Breitman says that Diablo’s auction house failed because the game’s free-to-play model was easily exploited by bots and rogue actors. And even though Emergents will include a free version—new players will receive a handful of cards at no cost—she says the game will be designed so that players can’t use bots to “grind” and amass items for resale.

But even if the Emergents crew has found a way to beat the bots, their quest will only be a success if people decide to play their game in the first place—and that could be a tall order. Hearthstone remains the most popular digital collectible card game by a long shot, and some of the very tactics Mowshowitz despises are what have kept players casting spells on their phones for hours on end. Few rival versions of the game (“Hearth-clones,” as they’re known) have gained any traction.

“A lot of games have tried to copy Hearthstone’s approach but haven’t differentiated themselves," says NPD Games analyst Matthew Diener. "There’s a lot of skeletons on the side of the road. Blizzard really has a hammer lock on the space."

The odds may be daunting, but the Emergents team members have one more attribute—beyond Mowshowitz and David-Marshall’s gaming cred and Breitman’s economic savvy—that could help them pull off a breakout game. They believe they have an ace up their sleeve in the form of a new technology called blockchain.

Blockchain in the balance

The term blockchain achieved buzzword status in 2017, and many people have since written it off as a fad. But as with other new technologies, blockchain is both overhyped and misunderstood. For the Emergents group, it falls to Breitman to make the case that blockchain technology can solve the challenge of introducing used-goods markets and transform game play.

At its essence, a blockchain is simply a new type of software that is run across multiple computers to create a permanent, tamper-proof ledger. The most famous example is the Bitcoin blockchain, but there are numerous other examples, including Tezos, which Breitman and her husband created in 2014. These and other blockchains can all be used to create a public and trusted transaction record. Currently, industries as diverse as finance, shipping, and precious gems are using blockchains to track products and establish proof of origin.

In the world of gaming, a blockchain could be used to establish an inviolable record of who owns a given piece of digital property—be it a sword, a monster, or a rare pair of sunglasses. In the case of Emergents, a blockchain will provide an authoritative record of which players own a given card at any time. It’s as if the game’s overseers have been given an army of infallible accountants to help ensure its economic integrity.

The use of blockchains in video games offers another intriguing possibility: the creation of a new class of digital collectibles for fans. Specifically, a player could pay to obtain the same digital card or sword used by an elite player in a tournament; a blockchain would confirm its provenance. It would be the gamer equivalent of buying a bat used by a star player in the World Series.

While blockchain is a novel technology for gaming, it’s notable that many of the most prominent people in the world of blockchain and cryptocurrency are Magic fans. These include Vitalik Buterin, the creator of Ethereum, the second most popular digital currency after Bitcoin. Jesse Powell, the CEO of cryptocurrency exchange Kraken, recalls playing against Mowshowitz in Magic tournaments. (Mt. Gox, an early, major Bitcoin exchange, started its life as a “Magic: The Gathering online exchange.”) Such figures and their immense social media followings could give a boost to new video games that embrace blockchain.

All of this, of course, depends on whether gamemakers can integrate blockchain technology seamlessly in the first place. John Hanke, the CEO of Niantic Labs, creator of Pokémon Go, cautions that “the game has to come first.” He means that if a game doesn’t grip people, it doesn’t matter what technology might be supporting it on the back end.

Others have had this same revelation. “At the end of day, you have to have a triple-A quality game and be incredibly fun to play. You cannot compromise on that,” says James Ferguson, CEO of Immutable, a Coinbase- and Naspers-backed startup that’s creating a blockchain-based digital card game called Gods Unchained.

That’s not the only competition Emergents has. In 2018, the cryptocurrency company Ripple and a consortium of gaming industry veterans announced a $100 million fund for game makers to integrate blockchain technology. Kevin Chou, previously the cofounder and CEO fo Kabam, a hit mobile game maker that had partnerships with Star Wars, Marvel, and Lord of the Rings franchises, is now leading Forte, a blockchain gaming startup. And John Linden, the former head of Call of Duty, is now CEO of Mythical Games, and he is overseeing new games with blockchain built in.

“What’s beautiful about blockchain is it’s a paradigm shift rather than a new platform. Using blockchain to track and trade in-game assets changes the opportunity for what can be sold,” he says.

Linden, as well as Breitman and others, are all betting that blockchain will bring a technological leap forward in gaming akin to the introduction of the joystick or online multiplayer games before it. For them, it’s not a question of whether blockchain will transform gaming, but rather who will be the first to pull it off.

It takes Moxie

In the Tribeca loft, Mowshowitz invites the venture capitalist to join him in combat against another investor at the table. She sits, and the pair shuffle around physical cards—the Tinkerer and the Striker and Shimmer Storm—which the team is using to demonstrate the game while developers build out a digital version.

“We’ll play Dimetrodon to get rid of their Beacon so we can play our Beacon!” Mowshowitz tells his bemused partner. His eyes glint when he draws another card. The piece features a character named Moxie. She is, apparently, ultra-powerful. In a few minutes, it’s all over as Mowshowitz deploys Moxie to decimate the last of his opponent’s forces.

Afterward, as the small assembly tucks into doughnuts from Brooklyn’s popular Dough bakery, the investors quiz Mowshowitz about launch plans for the game. One critical decision will be whether the Emergents team can license a set of characters from a familiar brand like Marvel or Game of Thrones, or if it will rely on the Tinkerer, Dimetrodon, and others who come from a little-known collection devised by David-Marshall.

The Emergents crew have been in talks with big-name studios, they say, but so far have met reluctance. “Nobody wants to be the first penguin,” says Breitman, who predicts companies will be more willing to license their intellectual property once they see the first blockchain game gain traction.

Mowshowitz, meanwhile, is quietly confident that his quest to build a better version of online gaming will succeed. He is used to encountering skeptics and surprising them when his predictions turn out to be correct. If Mowshowitz gets the last laugh—which everyone will know by its abrupt and clamorous detonation—as he has so many times before, the success of Emergents could crack open an enormous new vertical in an already massive video game industry, which eclipsed the global film business in revenue in 2018.

John Linden, the Mythical Games CEO known for formerly heading up mega-franchises like Tony Hawk Skateboarding, has seen this happen before. He cites the example of Amazon-owned Twitch, where millions of fans watch video games live-streamed, as well as the growth of brands buying sponsorships inside online games. In Linden’s view, the introduction of a secondhand goods market into popular games could trigger another financial bonanza.

“Every time we’ve given people a chance to be more involved in the games and make some money,” he says, “it births a new multimillion-dollar industry.”