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The Fairness of Virtual Currency

Posted by Zonk on from the change-your-gil-for-your-gold dept.

CNet.com is running an article looking into the fairness of the virtual currency exchange. From the article: "...according to two of the leading experts in the economies of these virtual worlds, getting a fair price in the exchange of real dollars for fantasy coins can be a crapshoot. Turns out it's hard to find reliable data about the dollar/virtual currency exchange rates in a pretend world where there's no Alan Greenspan setting interest rates and scolding everyone about irrational exuberance."

11 of 42 comments (clear)

  1. Artificial? by wlan0 · · Score: 2, Insightful

    Wait. Aren't all currencies artificial by now? I mean, not all countries have enough gold to substain the amount of "money" they have.

    1. Re:Artificial? by interiot · · Score: 3, Interesting
      It's easier to argue that the falling exchange rates are more due to the in-game economy (eg. the economies have actual inflation) than it is due to increased competition among MMORPG currency sellers. In fact, that paper almost seems to be arguing that MMORPG economies, as they currently stand, are almost unavaoidably always inflationary.

      (city of heros seems to buck the trend... is there anything fundamentally very different about its economy?)

    2. Re:Artificial? by droleary · · Score: 2, Insightful

      In fact, that paper almost seems to be arguing that MMORPG economies, as they currently stand, are almost unavaoidably always inflationary.

      That's pretty much true. With timed spawns and random drops, there is no real economy. I mean, there have only been so many bills printed by the US Mint but in most games it's like every wandering monster can print money. The false economies of games are directly related to the false ecologies. There is no real population of rats (or whatever) that make up the lower level grind such that you can kill them all and the rat problem goes away. They fabricate rats from the same nothing that they fabricate currency, and so inflation is bound to spiral out of control.

      (city of heros seems to buck the trend... is there anything fundamentally very different about its economy?)

      I don't know the particulars of that game enough to say. One way to balance inflation (without going down to a rat-level ecology) is to have sinks that take money out of the game just as quickly. What constant expenses are there in CoH that a player can't do without? Healing is often a good sink, as are items that wear out and break. If that's part of CoH, it would go a long way to explain a balanced economy.

    3. Re:Artificial? by blackicye · · Score: 2, Informative

      "(city of heros seems to buck the trend... is there anything fundamentally very different about its economy?)"

      City of Heroes has a system that uses no items at all. The only things characters purchase are skills.

      In COH, the currency (influence) is fairly easy to acquire. Also rarity of in-demand skills is not generally completely insane.

    4. Re:Artificial? by interiot · · Score: 2, Interesting
      What's interesting is that that paper addresses attempts to tie the sinks and sources together. He says this was tried many years ago, in Ultima Online, but was eventually a solid failure. He says this is because players hoard items in various places, and this eventually ends up slowing down the money sources (mob drops, etc) to a very slow trickle, at which point it's no longer fun to play the game. (he also says that adding new money sinks in the form of item degredation while in the user's storage area was flatly rejected by players as creating more of a work atmosphere than a game atmosphere).

      I think this is explicitely why World of Warcraft's storage areas are expontential in cost... the main long-term storage (the bank) costs 0.1g for the first expanded storage area, 1g for the second, then 10g, 25g, 50g, and 100g and that's it (for a max of 222 storage spaces, although it's very very expensive... players are likely to reach maximum character level with less than 70% of that). But perhaps this isn't sufficient to prevent the economy from being inflationary. (eg. if the storage space was too constricted, it would start to not feel like a game anymore... in fact, I'd say that the initial storage limitation is one of the least fun parts of the beginning game in WoW).

    5. Re:Artificial? by dfenstrate · · Score: 3, Interesting

      I'd say that the initial storage limitation is one of the least fun parts of the beginning game in WoW

      After you get your first 60, this isn't such a problem because you can always send gold and bags to your low level alts. But yeah, a pain at the start.

      Other than that, I've actually noticed deflation on my server- arcane crystals and arcanite bars are down 9g or so from their peak, runecloth is down from 2g a stack, and some other crafting items have taken price hits as well. Gold sellers prices are also down a few bucks. I'm not entirely sure how that relates, if at all.

      I think it has to do with the game/server reaching 'maturity'. Most of the first adopters who rushed to the scene have maxed out a character or two, and have them equipped with all the craftable items they're going to get. They also have an alt or so that can provide all of the players characters with whatever they need, so they don't visit the AH as much, driving up prices. So know you just have a trickle of characters passing through various levels and buying up some stuff, but at a slower rate than the original mass leveling that came with the server opening.

      Anyway, I hope that all makes sense, cause i've been up far too late. And it's just my humble observations, I have no data to back any of it up.

      --
      Alcohol, Tobacco and Firearms should be the name of a store, not a government agency.
    6. Re:Artificial? by HyperTiger · · Score: 3, Informative

      There really is nothing to spend on in COH in the later half of the game that drains your money (or influence). In the first half, costs for buying upgrades for your powers (damage enhancements, accuracy enhancements, duration enhancements, etc) are a significant part of the game so much that most people don't enhance until level 33 or so (out of 50 levels) for their first characters. After that though, all money issues are over as people have much more than they know what to do with. Costume changes are the biggest drain at that point, but that is decorative and doesn't add to the numeric or power aspect of the game. Money transactions such as costume contests only transfer the money from higher levels to lower levels, so does not leave the game economy. At the high levels COH has an economy problem, but there is not much of a demand for cash, and so money plays a small part. I would say that COH suffers from the inflation as much as any other game. The problem with a balanced economy is that of the haves and the have nots. In a balanced economy you will get some people that make a lot and some that will always struggle and not be able to pay for things (repair, rent, upgrades, transportation) and thus you get people that will complain and quit. In order to keep the weakest players able to play, you end up with increasing cash in the economy either through lack of money drains, or higher incomes.

    7. Re:Artificial? by interiot · · Score: 2, Interesting
      Yes, production/gathering items are absolutely in deflation. That's covered in the Ultima Online paper too.
      For a manufacturing profession such as tailoring or smithing, players are motivated to improve skills because it will allow them to make better items for themselves on-demand in the future. Thus players, in the process of training, produce huge numbers of item regardless of whether there is a market for them. This, combined with the effects of macroing and the fact that some players create items for the shear fun of it, conspire to shift the supply curve to the right. This results overproduction and deflated prices of many basic goods.

      Ultimately, it's a game, and people will make things for non-economic reasons. So if you're more profit-driven than fun-driven, avoid these items. It's still a problem though that the game encourages players to create these items, but then gives them decreasing rewards for producing those items.


      And yeah, there are definitely inflationary pressures when someone who is level 60 creates an alt. Normal level 10 players have to grind for money at lvl 10 to get their EQ. But there are a few people who instead are able to grind for money at level 60 for their level 10 EQ. I haven't seen good economic analysis of this to confirm how severe of an influence it is, but it's very obviously inflationary, and an increasing influence as time goes on. (if it were possible to remove this feature from an MMORPG though, the more global problem of the "open loop" economy creating inflation would still exist)


      For storage, yes, you can mail things between yourself, but there's a 2 hour delay, not convenient at all, because in some situations you need items more urgently. For items that have no vendor-buy price (eg. enchanting materials), you can post them items to the auction house for 9999gold, then cancel the auction, and let the item sit in your mailbox. That's slightly more convenient, but you have to make sure you retrieve the item before the mail expires.

  2. Did someone say the T word? by toad3k · · Score: 2, Funny

    "Cyberspace nations that are issuing these currencies are going to be under legal obligation to report sales and volumes and transactions, because in worlds where those currencies can be freely liquidated into dollars, there are clear tax implications."

    Man I can't even avoid taxes in a videogame.

  3. NO by vga_init · · Score: 2, Insightful
    I've posted on this subject before (and rather passionately). The past article was about property rights in a virtual world (ie MMORPGs and the like). It's just ludicrous. Now it's about currency value...

    I love games. I love to play these games; my girlfriend and I play a MMORPG together and think it's great. It is great to collect virtual money and spend it in entertaining ways, notwithstanding getting awesome items and equipment.

    That being said, the currency is worthless. Just plain worthless. Virtual assets don't exist; they're intangible. They're in a proprietary gameworld and if they belong to anyone they belong to the company that is providing the game. Also, trying to assign real value to items in-game by exchanging them for things outside the game like money is strictly prohibited in the license agreement of most games.

    Come on, people! The state should never be involved in this sort of thing.

  4. SWG credits value in US $ by phixson · · Score: 2, Interesting

    The economic studies are always interesting to me and occasionally something will happen in-game that provides a quick "level check". Recently SOE published a new boxed version of Star Wars Galaxies which includes both of the add-ons, Jump to Lightspeed and Rage of the Wookies. As an incentive, SOE included a BARC speeder special item, from the last movie. The new speeder is the only new content in the box, so it's the only incentive for existing players to buy it. The BARC speeders immediately started selling for 3 million credits. Since the box is available for $30.00, the value of a SWG credit could easily be pegged at $0.00001. At least as of last week in the Intreped "galaxy".