The virtual item trading company, Dmarket.com, had a presence at E3. Intrigued, I sat down with Vlad Pachenko, the CEO and founder of Dmarket, to pick his brain regarding the company.
mxdwn: What is Dmarket exactly?
Panchenko: Dmarket is an exchange to trade virtual items from any game on any platform to the 2 Billion gamers on Earth.
mxdwn: Do you do all of this on your own website, or do you run things through your own application?
Panchenko: We have our own website, Dmarket.com, and we also have our own application on mobile for iPhone and Android, but you can still check things out at the Dmarket website.
mxdwn: Could you explain how exactly the exchange works for the virtual items?
Panchenko: We developed our own technology, our own blockchain, and we spent over a million dollars to develop it for a year. It works like this, the technology and the service, which we provide to game developers, allows virtual items to be traded, exchanged, and transferred on different platforms.
mxdwn: And are you trading with other people for items, or are you trading for virtual currency?
Panchenko: Both options are correct. If you are playing a game and you earn an item, you will be able to put it on the marketplace to sell it to get the money, or, for example, you are playing a game and you want some item that you couldn’t get, you could go to the marketplace, buy it, and then use it in the game.
mxdwn: Can you exchange this currency for real money, or is this real money that you are dealing with?
Panchenko: You can definitely exchange it for real money. That is how it all started. The previous project we had, skins cash, which is the platform where you can sell any Steam item to cash out immediately. You can get a payout instantly to your bank account, paypal, and anything really. We are doing the same thing with Dmarket, but it is based on the blockchain, so it involves a cryptocurrency, but you can immediately exchange and withdraw so you can have the money in real life.
mxdwn: Could you explain what blockchain is for the people who don’t understand the technology?
Panchenko: There are two answers to this. Understanding blockchain technology is not important to use this service. As a gamer, you will be able to take your item to sell it, trade it, or save it, and you will be the actual owner of that item. With blockchain technology, no one will be able to take that item away from you, forge it, or fake it. This is what is important and this is what we do, and we do it with blockchain technology. If we dive a little bit deeper, this is honestly not rocket science, but this is also a very important technology to bringing virtual items into a real market. With the rules with blockchain and how it works, there is no ability to chargeback, reverse, or fake something. So, when something virtual is yours, you cannot change it to something different. This is your item and your wallet, so you will always own it. And, with this this technology, we can connect different games with each other very easily where it was not possible before. It is really easy to do and to use, and it brings a lot of additional revenue to game developers. For us, it brings a lot more fun to playing games because we can monetize being rewarded for playing. You can actually take the money you make and go out to buy a burger.
mxdwn: You mention that this technology has been around for a while, but how long have you been utilizing this technology for?
Panchenko: I was in the blockchain industry for about 5 years. At first, we dealt with the bitcoin craze, and then recently, things picked up again and we started dealing with ICOs. I had to study up on the technology and understand it better with the utilities based on the technology. Based on the technology they give to use, we had to decide how we could combine them to provide different ways of playing games, and then more than a year ago, we started Dmarket.
mxdwn: What compelled you to start Dmarket? What made you realize that this was something that was missing from the market that needed to happen?
Panchenko: Well, I’ve been in the gaming industry for the last 10 years, and it all started with trading games, such as Steam, Origin, and Uplay keys. We sold more than 25 million of those, and there were 6 million sold just within the last year. A couple years before, we started a new service, skins cash, to trade virtual items from those games which allow it to happen, such as Team Fortress 2, DotA 2, and so on. That was the moment when I realized that there was actually a huge hidden demand from the gamers to trade their items. It was magical how even today, we trade around 40,000 virtual items every day. So I thought, what if we could give this possibility to every other game and gamer on the planet. You will be able to customize to show off and make something out of your time playing. It really blew my mind, and we had a team of 5 research and development people find out how to make it work.
However, there were two problems we couldn’t solve. First was was we tried to work with some different game developers, and we synchronized them when we had to synchronize their databases. There are a tremendous number of transactions to put into work. It’s insane. Another thing is the actual ownership of an item. I remember when I bought a Counter-Strike skin from someone, I traveled to Germany and my account was blocked there, so my trade was reversed, and I never got my money or skin back. Even though this was a legitimate transaction, it set something off because I was changing countries. So, you can’t build a multi-mullion dollar company on the idea that you don’t own an item. The last record for the highest price of a virtual item was $60,000 for a sniper Counter-Strike even though it is just a picture. We needed a technology to satisfy this demand of high-priced items. That’s why we started where we started looking for ways for Dmarket to fill that hole, and at some point we realized that blockchain resolves all of these problems.
You can actually own an item. You can easily synchronize all of the databases, and that is how Dmarket is live, and how all the interconnectivity and blockchain are working right now.
mxdwn: It seems like there are a lot of complexities that are going into this right now. What was that biggest hurdle to overcome with this project?
Panchenko: I have had a lot of business experience before, so to build the business for me, it is hard, but I understand where we are going. When we are dealing with international companies, from U.S. mostly, one of the things we have to fight with is perception. When we say our development team comes from Ukraine, sometimes they are hesitant. We have a product that works and is legitimate, but companies are still hesitant. It is sometimes surprising me just because I believe in equality. It is not important where you are born or who your parents are. Everything important should be up in your head. Sometimes it is hard to work with that, but we are moving forward. We are international company with people working for us all over the world – in US, in Ukraine, in Israel, in Great Britain.
mxdwn: Where do you see Dmarket going in the future?
Panchenko: In the nearest future, by the end of this year, we will have even more than 20 games connected to the service for virtual item trades. We are hoping that in July, we can open an office in Santa Monica to help with the perception of game integration. But, in 3 to 4 years, I see the Dmarket blockchain doing something very similar to the gaming industry that Visa did for banking.
mxdwn: Do you have any closing statements?
Panchenko: Dmarket.com is live. Come register and try trading, buying, and selling virtual items.