Is MMORPG money any less real than "real" money?

The manner in which bank account balances are stored (numbers rather than an individual pile of money) has little to do with the creation of money through loans, even though both could be described as "not real money". As for your question, the inherent value of any fiat currency is based on confidence in its stability. Because WoW does not have a closed economy, there is no basis for confidence in its currency. As for why effort does not automatically create wealth, see the broken window fallacy.

If their scarcity is enforced (closed economy, no duping of items) then they are just as valuable as stock, only I guess it would depreciate in time when players leave. It's just that most people don't understand how something in a computer game can be valuable to someone.

I haven't played any MMORPGS, so maybe someone can answer this for me: Is there any credit/deposit thing going on? How about investment - loan someone money so they can get weapons to fight a monster and sell the items he drops to repay said loan and profit? Would that work, or would intricate finance defeat the point of a game [smile]?

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Original post by Ilici If their scarcity is enforced (closed economy, no duping of items) then they are just as valuable as stock, only I guess it would depreciate in time when players leave. It's just that most people don't understand how something in a computer game can be valuable to someone. I haven't played any MMORPGS, so maybe someone can answer this for me: Is there any credit/deposit thing going on? How about investment - loan someone money so they can get weapons to fight a monster and sell the items he drops to repay said loan and profit? Would that work, or would intricate finance defeat the point of a game [smile]?

When I still played KoL, for the last month that I played or so, I was bored of actual fighting and questing, so I basically just played the marketplace, buying stuff that was underpriced, selling stuff that was overpriced, etc. I made millions.

Then I got bored and quit.

But the point being, economics can be fun in a game setting, due to the fact that you're less concerned with the risks involved in a real market.

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Original post by Sneftel The manner in which bank account balances are stored (numbers rather than an individual pile of money) has little to do with the creation of money through loans, even though both could be described as "not real money". As for your question, the inherent value of any fiat currency is based on confidence in its stability. Because WoW does not have a closed economy, there is no basis for confidence in its currency. As for why effort does not automatically create wealth, see the broken window fallacy.

Good points. I think what really irks me isn't so much that the representation of that money is completely virtual, but that, to come to that amount, erroneous calculations were applied on completely made-up numbers. This complete lack of transparency is the problem. To go back to my example, I can look up the stats of any sword, so I know its utility, and if I know what boss drops it, I can guesstimate the work required, so I can make informed decisions. I can give it a price.

And is there any really closed economy in the world, besides perhaps North Korea? Governments have several mechanisms to control cash flow in the economy, so as you said, in the end it's a matter of trust. But I don't see why I should trust the Fed more than I should trust Blizzard.

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Original post by ruby-lang Good points. I think what really irks me isn't so much that the representation of that money is completely virtual, but that, to come to that amount, erroneous calculations were applied on completely made-up numbers. This complete lack of transparency is the problem. To go back to my example, I can look up the stats of any sword, so I know its utility, and if I know what boss drops it, I can guesstimate the work required, so I can make informed decisions. I can give it a price.

I'm not sure what your point is. If you're looking for simple and stable financial instruments, there's no reason to bring MMORPGs into the discussion. Commodities will do just fine.

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And is there any really closed economy in the world, besides perhaps North Korea?

I think I spoke with too much ambiguity. WoW's lack of a closed economy means that the money supply may increase without anything of worth being produced. Kill an orc, sell his head to a vendor, and one more silver piece is present in the world without anything else changing. (The orc respawns, of course.) This is fine for the WoW "economy" because there is no need for a real economy. Characters don't need to eat, and if they did, food creation would be trivial from a technological standpoint. Everything is luxury goods.

If you decide to bring WoW gold into the real world, though, buying and selling it as though it were either a useful good or a fixed currency, you would be making a very serious financial mistake. Because Blizzard, unlike the Fed, is not interested in keying the money supply to any real-world metrics. Money is created and destroyed entirely to make the game fun and addictive. Put simply, it's not a matter of whether you trust Blizzard or the Fed more. If you trust Blizzard, you'd better not put your money in WoW gold.

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Original post by ruby-lang But I don't see why I should trust the Fed more than I should trust Blizzard.

Consider this though. In a game like WoW, there is an infinite supply of money. Just go around and kill random monsters, who will respawn after you kill them.


In every MUD I've ever played, this eventually leads to massive inflation. It's "controlled" in that the games respawn rate puts an effective limit on the amount of money that can be generated per time, but it's still essentially infinite.


This is usually manageable in the first few months of the game. The amount of money grows, but usually so does the number of players, so the effective amount of money per player stays fairly constant. But eventually, as with all games, you have a dropoff in the rate of new players. The older players keep progressing to higher and higher dungeons which generate more and more money, and pretty soon you have a massive inflation problem.

In one game I used to play, MajorMUD, there were five different coins, each with a varying value:

Copper = 1 copper
Silver = 10 copper
Gold = 100 copper
Platinum = 10,000 copper
Runic Coin = 1,000,000 copper

Each character could only carry so much on them at any given time, with each coin weighing 1/10th of a weight point, and a typical character could carry 500-1000 weight points.

So people would play the game, killing hundreds and hundreds of monsters, but eventually it got to be so bad that people would just leave money lying around on the floor because it was too heavy to pick up and carry back to the bank. So literally, in some places of the game, there would be millions of copper or silver pieces lying around, and any new character could just sneak in and grab a fortune and skip them way beyond where they should have been at that point in the game.

Then at some point the people with all the money started hoarding all the items in the game as well, because they had nothing better to do with the money, so they would raid every shop, buying everything at the in-game fixed prices, and then operated as a shop keeper themselves, selling the items for far more than they originally cost (because there was far more money available).

So that's one huge problem of games where the wealth comes out of nowhere. In order to counterbalance it, you need some sort of "money sink", which takes the money out of the game and destroys it. Say, tolls or taxes or whatever. Or maybe a special service in game that doesn't result in any physical items or money being created.

Problem with that is that people generally don't like spending money on things that net them no return. In most games I've seen, money sinks tend to aggravate the users, so developers tend not to make them as much as they should, which inevitably leads to the inflation problem.


Anyway, my point is that no one with any brains actually invests in electronic "goods", because they definitely are created out of nothing continuously. They almost always lose value in the long run due to overabundance of supply.

'Real' money is like anything else that has a value. That value is not fixed, but is determined by proxy with reference to what people will exchange for that money.

- the value of money with respect to everyday goods is explicit (when including a time dimension) as (de)inflation.
- the value of money as a currency with respect to other currencies is captured in an exchange rate.
- the value of money over time is captured in a bond/bill price (price = discounted future income).


The distinguishing feature of 'real' money (as compared to other stores of value) is that it is liquid. This means that there is an organisational structure in place permitting very easy exchange for other items/goods/services. eg with cash in hand you can buy your beer by walking into a supermarket. Other assets like say gold, drugs, property titles, intellectual ideas etc are varyingly less liquid.

I dont play mmorpg(s) but money in an mmorpg or virtual world lacks this liquidly. I doubt that any bank has issued a credit card that automates the exchange between mmorpg currency and 'real' currency using some open mmorpg exchange as proxy. But there is no reason this couldnt be done (eg its more a technical issue), for instance some debit/credit cards allow you to draw on them in local currency when travelling even though the account is denominated in the currency where the card was issued.

The value of any item in an orpg or vr would probably be a function of

1) how popular at the moment is the game and (game items like swords) with players
2) how freely and how much confidence there is in the game maker's introduction of money into the game.

Just reread the thread, and it seems my post is more about money in mmorpgs and virtual realities than items but hopefully its still topical enough.

Real money is real because the government said so. The value of money isn't backed by gold anymore (you used to be able to exchange currency for gold, and that's what gave paper money its value), it's only valuable because we think it is valuable and trust that others will think so too.


MMO money has value because you can exchange it for 'real' money, which you can then buy 'real' goods with. I don't see it any less real than real world currencies. But like any currency if people no longer see the value in it, it stops being valuable, or if the more money is produced than goods to back it up then inflation happens and the currency lose value too.