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if this is fine then Yao's approach seems doable since you probably don't have that many pieces.
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your solution works if the initial state + the movement information received by each player is enough to derive the game's state at any turn.
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a player can't "change his mind" on his game state once the keys are revealed (by revealing a fake key which decrypts to what he wants - not likely to succeed in practice
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I thought of these, it is a yes on all three points. It is the nature of the game that the strength of a piece is partially revealed after a challenge (e.g. opponent's piece won, it's stronger than mine).

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