Online virtual economy games

It is a high quality game that has been running continuously, with a large population of players, since It stands out from the competition by using an in-game economy based on a virtual currency that can be converted directly to real world cash. Real cash economy games are rare in the online gaming market. Most games allow you to invest money in them, but few allow you to withdraw it. Entropia Universe is one of the few true real cash economy games that actually allows you to withdraw virtual money, as real money, at any time you want.

The entire game is built on that economy. Everything, from clothing to equipment to resources has a value in virtual currency. These items can be bought and sold freely with other players or with in-game virtual merchants. EVE Online is an example of a robust game economy that encompasses many different actors who operate fairly autonomously and are constantly transacting in virtual goods and digital currencies. According to a popular video game commentator :. If a game economy is not properly set up with the right reward and incentive structures, enabling gamers to truly own their game content can have disastrous effects on the game.

Unlike typical video games where you tend to own your hard-earned loot into eternity, EVE more closely simulates the real world where goods are subject to loss, depreciation and theft. This has significant implications because gamers tend to use and value their items differently when there is a likelihood of losing them.

One of the characteristics of truly owning something is that you can potentially lose it. In the real world, you can have your assets stolen, accidentally lost or damaged or you can use them up to acquire something else.

A way to make true ownership have significance within a game world is to make items that are depreciable. Games can do this by making items have wear and tear based on usage, a set lifespan, or be able to be damaged, lost or stolen. A huge implication of this is that gamers fight differently. In most other games, players build up their loot stash over time with items that they can use over and over.

Whilst most games strive to match players of similar skills to prevent those with more experience and better loot from immediately beating newer players, in highly autonomous worlds like EVE Online where gameplay is player-driven, if players never lost their items, there would be an increasing skills and wealth gap between newer and older players.

However, with the death mechanic where gamers can lose their items in an unsuccessful battle, gamers must carefully choose which items they want to fight with, and make sure that is commensurate with the level of the fight. This has resulted in a high level of engagement and interaction between gamers. People begin organizing themselves as they would in real world economies.

They find ways to produce and trade to build wealth. Additionally, they can utilize non-financial assets, like social status, power within a group or in-game relationships in order to further their own goals. Scarcity of resources and the reliance of gamers on each other for trade and alliances results in the development of a social order where items become valuable because they have signaling power, ie.

For gamers, these dynamics make the game more interesting. As a result, gamers take on different roles according to their skills, whether it be mining for raw materials, crafting ships or transporting items across the galaxies. Image credit: Minecraft. Minecraft also has its own Marketplace, featuring content from handpicked community developers - from skins and textures to hand-crafted worlds, and epic adventures.

The Coins can then be used to purchase professionally made lands to explore and play in. Players, however, cannot exchange that secondary currency for real money or mine any assets for real money directly in the game. The revenue-sharing model for partners in the Marketplace is not public. Many hobbyists formalised the operations and applied for the developer program, enabling young people to pay for college or even to create people-strong design studios. By any measure, conventional or otherwise, the volume of microtransactions shows that the significance gamers attach to their virtual items and achievements can be a real source of economic value.

Yet most in-game marketplaces currently lack transparent and legitimate in-game or out-of-the-game secondary markets for all the items that have value in game. Gamers currently go to great lengths to exchange the assets on black and grey markets - such as Reddit forums, or peer-to-peer online exchanges - risking being scammed, getting locked out of games or having their PayPal accounts frozen.

And in most cases, even when purchased in the game platform legally, in-game items ultimately belong to the game publisher, which determines how the user can access, modify or transfer the assets. If the game or virtual world shuts down, the item disappears and its value vanishes. So does the time and money spent to acquire it. This means a lot of sunk costs in terms of money, effort, and time.

The need for transparent and legitimate ways to exchange virtual assets has prompted entrepreneurs to seek alternative options, away from the walled gardens of game publishers. Distributed ledgers presented exactly this opportunity. Blockchain technology enables instant secondary marketplaces that can operate outside of games and in-game economies.

Multiple platforms, marketplaces and exchanges for virtual assets have been created since Ethereum was launched in , with new projects springing up every few weeks or months.

Distributed open markets are typically based on decentralised infrastructure and are not owned by any single entity. They allow the creation of unique virtual assets that only exist in a virtual space. These assets are created, bought, licensed, rented and sold in decentralised markets. These decentralised exchanges are currently a fairly small slice of the Virtual Economy but present some of the most promising use cases for the creation and exchange of virtual assets.

The CryptoKitties craze of - the primitive blockchain game that allowed users to breed digital cats to produce new virtual cats of varying rarity - was a run-up to the emerging interest in creating and trading of virtual assets represented as tokens, especially in online social games built on the blockchain. A token could represent any asset - such as a painting or a digital skin - or a utility, such as a token that gives you access to 10 hours of streaming on a video streaming service.

Tokens represent a new way to own digital goods and services. Unlike traditional physical assets or money, tokens can be programmed, which gives them more flexibility and variety than physical assets.

For example, they can be programmed to reduce in value over time. Developers can also cap the supply of certain tokens, making them a scarce resource. Non-fungible tokens NFTs , in particular, represent unique digital items on the Ethereum blockchain. NFTs could be collectibles; game items such as weapons and skins; digital art; virtual real estate; event tickets; social network handles and even ownership records for physical assets.

NFTs also have a clear trace of ownership that is preserved on the blockchain. Since they are standardised in their programming, they can easily be exchanged on open markets.

And unlike a lot of virtual goods on centralised gaming platforms, NFTs can be liquidated for real-world value without breaching the terms of service or the law. From land worth hundreds of thousands of dollars, to trading cards, to shoes that look like fish, NFTs offer an infinite market of goods that can be scaled at no cost.

As tokenised virtual assets increase in value, they can be traded, insured, and securitised. And if NFTs and other virtual assets are in high demand, users would want to buy and sell them on trusted platforms for other virtual assets, cryptocurrencies, or real money. CryptoKitties was a run-up to the growing interest in creating and trading of unique virtual assets such as NFTs. Image credit: CryptoKitties. CryptoKitties launched NFTs into the mainstream and were a massive attraction point for investors in the space, giving rise to an evolving ecosystem of NFT projects in gaming, art, virtual real estate and gambling, among others.

The rules were simple. A new NFT would be minted, then traded and passed among users at an increasingly high price, some increment of the previous price. Users are now left with unique but useless NFTs. Though speculative, the hot potato phenomenon showed that a specific NFT can see incredible growth in value in a matter of days.

It also ushered in experimentation with pricing and auctions in the budding NFT space. After the CryptoKitties bubble, the number of unique accounts interacting with NFTs has grown slowly but steadily on OpenSea, the largest NFT marketplace, from around 8, accounts in February to more than 20, accounts in December For reference, the Ethereum blockchain as a whole has nearly 92 million registered accounts as of early Moreover, developers are building more NFTs on the Ethereum network, increasing the likelihood of finding more attractive NFTs that can generate momentum.

Overall, the market for NFTs is still small, fickle and harder to size than the cryptocurrency market, given the prices for assets. Overall, while the number of OpenSea users and contracts based on the NFT standard is increasing, the volume of trade seems to be steady or decreasing.

The NFT market remains volatile. It is highly sensitive to fluctuations in the Ethereum price and to the actions of a small number of power users.

Variation can happen quickly through the actions of a small number of players, either wittingly or unwittingly acting as a cartel. The trading volume on the NFT market is also highly sensitive to fluctuations of cryptocurrencies. For example, contrary to what people might expect, a noticeable bump in trading volume on February 7, does not seem to indicate increased interest in NFTs since the number of active users did not change much on or around that day.

In reality, a small jump in Ethereum prices that day jolted one or a few big players buyers or sellers to liquidate their assets. Historically, single but significant new types of NFTs can lead to a knock-on effect on other NFTs, lifting the entire market.

The first wave of knock-on effects in was in a small immature market incapable of handling both user expectations Cryptocelebrities and the number of transactions CryptoKitties needed to sustain growth. By the same logic, the NFT market has the potential to skyrocket if a small number of blockchain-based apps can reach mainstream status and have a potential knock-on effect for other NFT assets. NFTs are also showing signals of a maturing market ready for growth.

While collectibles were a straightforward application of NFTs, there are signs that users are starting to gravitate towards more complex games that expand on the NFT capabilities. They also exhibit a seemingly more durable growth pattern of users and volume. New platforms like these are likely to increase the NFT user base and broaden the number of significant actors, reducing the impact of cartel-like or speculative behaviour. Each Hero is a token that can be customised and traded on any marketplace.

Its popularity comes from a group of PC gamers who are pushing for a cross-game currency. While it is experiencing a high number of players and spending in the game, the secondary market to resell the assets is still weak and has low levels of liquidity.

Gaming NFTs could start to see more activity once gaming companies allow assets to trade freely across different ecosystems. Notably, there is increased activity with the recent public launch of the Decentraland metaverse and the development of an ecosystem of startups enabling the scaling of blockchain-based apps. New technology such as standardised NFTs and new infrastructure are now smoothing scaling and transactions across platforms, reducing the risk of blockchain clogs and uncertain transaction fees.

It was a 25x return on a six-figure investment. By any measure, it was a solid deal. Encouraged by the return, in he re-invested some of the coins to buy virtual land in an auction on Decentraland. He used some of the land to build a mega casino in the virtual world, which he is now leasing in parcels to willing buyers. Investors were quick to join the venture, renting out floors in the casino in a profit-sharing arrangement. It is a virtual world that is designed by its users and where landowners have the freedom to build whatever content and experiences they want in a 3D virtual world.

Most Decentraland investors focus on flipping virtual land. The land comes in the form of NFTs, an emerging asset class in the Virtual Economy that is aiming to change virtual ownership and is seeing a flurry of new projects and experiments, from crypto games and marketplaces, to new infrastructure solutions.

Decentraland, in particular, aims to allow the creation and exchange of truly unique virtual assets and experiences outside the walled gardens of centralised virtual gaming environments. The platform officially launched in February after a long beta period. Users can now explore the virtual world for free through their browsers.

New content is being added by the day. The decentralised nature of the world will allow users to move and trade inside the universe with no restrictions. While the world still feels young and incomplete, its premise is tantalising. By creating an open developer platform, in combination with a free market-based economic system and a high number of users, Decentraland can provide substantial incomes to investors and potentially entrepreneurs within the platform, first through real estate transactions, and subsequently through virtual goods.

Image credit: Decentraland. All major decisions in Decentraland are made by the landowners through its voting platform, Agora, allowing the emergence of organised districts and proto-governments. This level of control by users is unusual in traditional virtual platforms and makes Decentraland attractive to virtual land developers. The Dragon City district, for example, will include nearly 6, parcels and showcase a mixture of ancient Chinese and Western culture.

Other initiatives include a fashion district and a casino strip modeled after Las Vegas. While the world is built around decentralised free-market ideals, analog real estate conventions still apply. These investments put a lot of pressure on landowners to monetise their land, creating concerns that real estate speculation would remain the driver of value in Decentraland. Meilich hopes that eventually billion-dollar companies could be creating content for the platform.

Though they may not be seeking direct monetisation, corporations could see an opportunity to reach tech-savvy crypto enthusiasts. Design contests have also been organised to incentivise the creation of new content on the platform. The founders of Decentraland want to eventually pull out of the project and leave it in the hands of the community. In theory, this will allow the creation of new economies, where art, clothing, pets, collectibles, education, and an infinity of other goods and services could be traded or exchanged for MANA.

It is, however, hard to imagine that sin stocks or exit scams for crypto will not play a role in the economic development of Decentraland. A red light district is already planned at the border of virtual Vegas. Grey and black market players could exploit the platform to expand their trade. Extremist groups could also infiltrate Decentraland to recruit young people or spread propaganda. To counter destructive behaviours, filters could be applied by the portal used to access the world, blocking offensive content, or modifying others.

Meilich compares these yet-to-be-developed third-party filters to community-driven modding software used to alter games. Filters are, however, not yet a reality as the source code required for development remains closed source for now. The official client at decentraland. It is still unclear what impact filters will have on this brave new world. Meilich hopes for a multi-billion economy to develop on Decentraland in the next decade.

For now, the low-poly aesthetics of Decentraland are closer to a modernised user-generated Farmville than a futuristic Blade Runner. In more than one way, the NFT market resembles the days of the dot.

The Bitcoin bubble led to investors throwing liquidity at NFTs at any valuation in and This has allowed objectively poor-quality NFTs, such as Cryptocelebrities, to turn big profits.

Much hyped NFTs failed to deliver on their promise. Blockchain transactions were slow. Transaction fees ballooned. Games failed. A number of ICO creators profiteered and ran.

The bubble burst in , resulting in capital withdrawals and plummeting values. The surviving players remained due to a process akin to natural selection. They consolidated their place in the market despite lower valuations. Many were flush with cash from the bubble, others lost it all.

Secondary players also saw the bubble as a stress test that showed the limitations of the infrastructure. This led to a period of standardisation and the early build of scalable technologies. Amid continuing volatility, NFTs now resemble more a young stock market than a free-for-all cash-burning machine.

A potential future CryptoKitties-like knock-on effect in a more mature market could lead to a Bitcoin-like exponential growth that can be sustained by the new-found utility of NFTs and a more streamlined and scaleable trading experience.

It is difficult, due to anonymity, illicit activity and lack of data, to establish a reasonable approximation for the active population of the Virtual Economy.

We can, however, estimate with reasonable confidence that the population of the gaming platforms that supply much of the Virtual Economy has reached around 2. This number contains the entirety of the Virtual Economy, in addition to a large population of people who contribute to it by virtue of buying virtual goods but are not active within it. The Virtual Economy does not have 2. Its constituents are primarily designers and developers creating assets for publisher-owned marketplaces, active asset creators and investors in distributed open marketplaces, and illicit traders in gaming environments.

This population is likely in the hundreds of thousands rather than the millions or billions. Yet 2. It shows that there are up to 2.

They invest their time and money acquiring assets that are useful to them and millions of others within specific virtual domains. The constituents of any emerging market opportunity tend to be a potent constellation of idiosyncratic characters and entrepreneurs. It takes time for the rules to be defined and for the institutions to be created, for best practices to emerge and for reputations to develop.

Until that time, these markets are a figurative Wild West. In the case of Virtual Economies, this is exacerbated by the speed at which contemporary technology allows these markets to develop and the invisible nature of the virtual marketplace.

Each of these marketplaces has different core participants. Pirates are active within massive multi-player gaming platforms. They find ways to sell rare items such as avatars and access keys to other players for real-world currency in breach of the terms of service agreements.

If caught, these players are kicked off the platform. Sometimes their activities extend past the terms of service and fall foul of anti-money laundering, counterfeiting and wire fraud laws. Producers create virtual assets to be sold legitimately within large multi-participant platforms.

They are third-party sellers who effectively lease shop fronts on the platform to sell their goods. These sellers can make enormous sums of money selling customised costumes, weapons, skins, and other modifications. Pioneers are highly technical creators of a wide variety of virtual assets, typically sold through open distributed marketplaces. These entrepreneurs are building new virtual worlds and new categories of assets.

The rest of the Virtual Economy is made of the people who purchase these virtual goods. They are gamers, speculators and entrepreneurs seeking to better their social or commercial reality. People seizing an opportunity to craft a different or alternative reality, to express themselves in new ways, or to invest in their future. The roles that people play within the Virtual Economy are often different from how they represent themselves in the real world.

New community constructs facilitate the creation of new roles. Technology provides the infrastructure for new systems, and anonymity allows people to express themselves in new and unique ways. Gender, race, age, disability and even physics are no longer the limitations they are in the real world. This unlimited capacity for self-expression has resulted in extraordinary digital diversity.

These new points of interaction create opportunities for value creation unique to virtual worlds. The extravagant can become mundane, and the mundane extravagant, depending on the social dynamics.

To understand the reasons and motivations for existing in the Virtual Economy, L'Atelier talked to dozens of its participants. They expressed the same drivers that steer actions in the real world. Their motivations are distinctly human, common and ancient, ranging from the simple to the complex, from the righteous to the nefarious. They often include a desire for wealth, a need to belong, a desire to play, a need to express oneself, and a desire to exert influence. For many, it is a new beginning, an opportunity to reorientate themselves, to redeem themselves and to throw off the shackles of outdated perceptions.

To be the person you are, rather than the person others know you to be. For some, it is the only opportunity to escape an unfulfilling economic reality, a way to accumulate wealth, power and reputation amongst an audience of millions, regardless of your beginnings.

For others, it is the opportunity to play god, to create a world of their own design. To build empires and planets, and worlds that obey their command. For many, the Virtual Economy augments real-world needs and desires, filling the gap created by geography, disability, wealth, or personality.

Virtual environments offer a solution to many of these needs and desires in a way that costs less, is easier to attain, and requires less emotional or reputational commitment. Dr Estelle Codier, 65, is a retired professor and a former critical care nurse who uses virtual simulation platforms to teach health care.

Emerging technology has always created a need for new jobs. Printers, engineers, astronauts, radiographers, and more recently coders, are all examples of these tech-instigated jobs. This form of emerging labour is familiar to us. These jobs respond to existing needs through improved solutions. Far less frequently do we see a conflux of technologies spawning an entirely new market with entirely new needs. Internet search, social media, ecommerce and cloud computing all resulted from multiple technologies intersecting with overwhelming social change.

Social media influencers and search engine optimisers, for example, emerged to meet the new demands by these industries. The Virtual Economy is the newest example of many technologies converging to facilitate the emergence of a new labour market. Young people, unable or unwilling to access the upper echelons of traditional careers, are finding ways to earn income and build a reputation through novel activities unique to virtual spaces.

From builders to entertainers, athletes to investors, a whole new spectrum of labour is emerging, virtually. He came for the fun but stayed for the creative and professional opportunities. For a year or so, he worked with a small group of fellow Minecrafters on building commissioned custom worlds in the game, known as maps.

The side gig quickly turned into a main project. In , Delaney started Blockworks, a collective of designers, artists and developers around the world that use Minecraft as a design and marketing tool to create experiences, brand promotions and custom builds for corporate clients - from film studios, to marketing firms, and educational institutions.

The group has built environments ranging from a Minecraft map commemorating the Great Fire of London of , to a Minecraft city filled with real-world climate initiatives and technologies. An architect by training, Delaney is currently pursuing a degree in urban design and is working to expand the scope of Blockworks projects to real-world urban planning and construction.

Delaney is part of a growing number of professional modders, people who create modifications for existing games and virtual worlds in the form of characters, skins, model reworks, map upgrades, or changes in game balances, among others. Modification and custom in-game work has been a staple of gaming and online interactions since the early days.

From designing skins or maps, to creating smaller games from the ground up, virtual worlds offer the perfect canvas for artists and graphic designers to experiment, improve their skills and even make money. As with Delaney, more often than not, modding or development starts as a labour of love. Projects are done out of an urge to improve a game or to share creative works with a like-minded community. Those good and passionate enough are increasingly turning modding into a part-time job.

Recent years have seen further monetisation of these activities - a gig economy has emerged for artists, graphic designers and the like to make or contribute to the steady stream of in-game items that drive microtransactions across games. Whether through channels like the Steam workshop, specialist distribution sites like NexusMods, or virtual worlds like Second Life or Decentraland, the creation of new and custom assets for games remains a staple of online interaction.

Some modders have gone on to launch careers in independent game development. The exact number of modders globally is hard to pin down. NexusMods alone has close to 99, Mod Authors. Mods for games have historically been mostly free. This means that many freelance mod makers earn a living via direct support from communities or by pursuing other gig-based work. When Microsoft bought Minecraft in , and new guidelines prevented brands from doing in-game ads, Delaney and his team were able to pivot to doing work with Microsoft directly.

Blockworks was also among the first wave of partnered creators when Microsoft launched a dedicated Marketplace for partners and vetted sellers to sell maps, skins, add-ons and other content for in-game currency. Not too dissimilar to Blockworks, collaborations between modders, developers and other artists are becoming more common. An artist may hire or collaborate with a 3D modeler to convert their skin or asset design to a usable model in game.

This creates a heavily embedded social network within given subgroups or modding scenes.