January 26, 2004

Virtual Currencies

101-280 points to a fascinating new service in Massively Multiplayer Online Role Playing Game (MMORPG) add ons, a foreign exchange market. Right now it's a little acorn but it's likely that low commissions and specialized facilities will permit this initiative, or a future competitor, from unseating ebay and the other general goods online markets from their dominance in the virtual goods trade.

Essentially, the trade in virtual goods and currencies is a highly specialized form of trade in entertainment goods. The essence of buying a korean soap opera or a 100k purchase of Star Wars Galaxies credits is the same. It's just that the liguidity of SWG credits, being produced as well as consumed, is much higher and the follow on trade will be much higher because, unlike the soap opera, SWG is an artistic endeavor that is a collaborative process. People not only consume the art, as art, but also play small or even large roles in creating it.

There does not seem to be any enforceable legal restraint that MMORPGs can do to prevent such virtual goods trading. The only thing that I can see that would handle the game balance problems that such trading would create would be to make a more realistic economic system with a high charity component that fades out as you gain resources, especially if you gain them quickly. Poor and new players get lots of things out of pity 'on the house' so to speak. But accumulate treasure and everybody is nickle and diming you on everything, the tax man is taking a hefty chunk, and things get expensive. It would be a way of asserting balance without going into motive, why did xyz player give up their incredibly valuable weapon to Mr. nondescript new player? It becomes irrelevant as an army of merchants, beggers, toll takers, and other NPCs descends on the newly wealthy like a piranha school on a bleeding cow in the Amazon.

Posted by TMLutas at January 26, 2004 01:16 PM