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Many games, both online and off, use a common or standard type of currency that can only be earned in-game and used to spend on in-game items that cannot be traded with other players or converted to real-world funds; for example, by completing quests in World of Warcraft , players earn gold pieces that are used to purchase new gear.
Many online games, particularly those that use the freemium model, offer at least one additional form of currency beyond its standard one, called premium currency.
Premium currency cannot typically be earned in-game like common currency but instead by purchasing the premium currency using real-world funds.
Premium currency typically is limited to purchase time-limited virtual goods, access to new characters or levels, temporary boosts to the player-character's experience growth, or other goods that cannot be acquired with the common in-game currency.
Once premium currency is purchased, it is rare for players to be able to revert the premium currency, or the goods purchased with it, back into real-world funds, making it a "one-way currency".
This practice tends to encourage the player to buy additional bundles as to minimize their leftover premium currency, a favorable practice for the publisher.
Team Fortress 2 , a team-based online FPS released by Valve in , is a hero shooter , where players selected from one of several created characters to control.
In , Valve introduced hats, virtual goods that could be used to customize the character models. Hats could be earned by players by accumulating in-game material drops and then used to synthesis the hat, or later could be purchased directly using real-world currency through the game's storefront.
Valve also expanded this customization beyond hats to include weapons, weapon "skins" which change the appearance of the weapon, and similar means to customize the selected character avatar.
In addition, through Valve's digital storefront Steam , players could trade these items, or receive them in promotions with other publishers of products they owned.
This created a virtual economy around the game, as certain customization items carried status and recognition, giving them a perceived social value status.
Valve followed the same pattern with its next major game, Counter-Strike: Global Offensive , where players could earn crates in-game that could be unlocked with keys purchased through real-world funds to obtain weapon skins that were doled out based on a rarity scale, a practice they had started in Team Fortress 2.
As with Team Fortress 2 skins, these Counter-Strike skins gained value as status symbols among players coupled with the rarity of certain skins, and became highly valued, and was considered to help boost the popularity of the game.
While some of these websites were taken off line for various reasons, Valve was pressured to prevent abuse of the skin trading systems on Steam.
Some games may have currency systems that are partially or fully controlled by players of the game. Such games offer the means for players to acquire in-game resources which players may then sell or trade with other players, craft into gear which can be sell or traded, and otherwise create an virtual marketplace within the game above and beyond in-game stores established by the developer.
This economy may also mix with real-world currency, with players trading in-game items through external websites to the game.
Information brokerages and other tools that aid in the valuation of virtual items on secondary markets have increased in number.
This has occurred as a response to alleviate the labor involved in leveling that requires hours, days or weeks to achieve.
Being able to exchange real money for virtual currency provides the player purchasing power for virtual commodities. As such, players are guaranteed opportunities, increased skills and a fine reputation, which is a definite advantage over others.
Most scholars agree that the sale of virtual property for real currency or assets is taxable. In addition to taxing income from transactions involving real currency or assets, there has been considerable discussion involving the taxation of transactions that take place entirely within a virtual economy.
As with the above skin gambling concerns, conversion between in-game and real-world currency has led to direct comparisons with other online games of chance as 'virtual winnings'.
This is why gamers and companies engaged in this conversion, where it is permitted by a game, may fall under gambling legislation. You can see how these would be ignored at first, but very soon they could be in trouble.
If it does have value, it could be gambling. Monetary issues can give a virtual world problems similar to those in the real world. In South Korea , where the number of video game players is massive, some [ who?
Other similar problems arise in other virtual economies. In the game The Sims Online , a year-old boy going by the in-game name "Evangeline" was discovered to have built a cyber- brothel , where customers would pay sim-money for minutes of cybersex.
Maxis canceled each of his accounts, but had he deposited his fortune in the Gaming Open Market he would have been able to keep a part of it.
This heist left investors feeling outraged and vulnerable. In EVE Online however, theft and scamming other players is perfectly allowed within the game's framework as long as no real world trading is committed.
Players are allowed to loot all items from fallen victims in battle, but there is a disincentive in the form of NPC police intervention in higher-security space.
Virtual possessions valued in the tens of thousands of USD have been destroyed or plundered through corporate espionage and piracy.
This has resulted in widespread retributive warfare and crime between various player corporations. RuneScape went as far as making this practice impossible by removing unbalanced trades and their traditional player vs.
To control real money trading, EVE Online created an official and sanctioned method to convert real world cash to in-game currency; players can use real world money to buy a specific in-game item which can be redeemed for account subscription time or traded on the in-game market for in-game currency.
For a persistent world to maintain a stable economy, a balance must be struck between currency sources and sinks. Generally, games possess numerous sources of new currency for players to earn.
However, some possess no effective "sinks", or methods of removing currency from circulation. If other factors remain constant, greater currency supply weakens the buying power of a given amount; a process known as inflation.
In practice, this results in constantly rising prices for traded commodities. With the proper balance of growth in player base, currency sources, and sinks, a virtual economy could remain stable indefinitely.
As in the real world, actions by players can destabilize the economy. Gold farming creates resources within the game more rapidly than usual, exacerbating inflation.
In extreme cases, a cracker may be able to exploit the system and create a large amount of money. This could result in hyperinflation.
In the real world entire institutions are devoted to maintaining desired level of inflation. Episodes of hyperinflation have also been observed.
In these virtual economies, the value of in-game resources is frequently tied to the in-game power they confer upon the owner. This power allows the user, usually, to acquire more rare and valuable items.
In this regard, in-game resources are not just tradable objects but can play the role of capital. Players also acquire human capital as they become more powerful.
Powerful guilds often recruit powerful players so that certain players can acquire better items which can only be acquired by the cooperation among many players.
Virtual economies have also been said to exist in the "metagame" worlds of live-action role-playing games and collectible card games. Other "metagame" currencies have cropped up in games such as Everquest and World of Warcraft.
Dragon kill points or DKP are a semi-formal score-keeping system used by guilds in massively multiplayer online games.
Players in these games are faced with large scale challenges, or raids , which may only be surmounted through the concerted effort of dozens of players at a time.
Dragon kill points are not official currencies, but are created and managed by endgame guilds to manage distributions of rewards in those raids.
Virtual economies represented not only in mmorpg genre but also in online business simulation games Virtonomics , Miniconomy.
Simplified economy represented in almost all real-time strategies StarCraft II: Heart of the Swarm , Red alert 2 in a form of gathering and spending resources.
Diablo III has its virtual economy as well which is represented by online game auction. On a number of discussion and networking sites, such as Slashdot , Reddit , care2 and Yahoo!
Answers , points are gained through the garnering of trust evidenced in upward moderations of posted content ; however, as stated by Slashdot co-founder CmdrTaco , his implementation of user moderation was not intended as a currency, even though it has evolved on other discussion-oriented sites into such a system.
On some such sites, the accumulation of "karma points" can be redeemed in various ways for virtual services or objects, while most other sites do not contain a redemption system.
A game's synthetic economy often results in interaction with a "real" economy; characters, currency, and items may be sold and bought on online auction websites or purchased from standalone webshops.
Since January users are no longer allowed to sell virtual goods of online games on eBay due to the ambiguous legal status of real world trading.
While many game developers, such as Blizzard creator of World of Warcraft , prohibit the practice, it is common that goods and services within virtual economies will be sold on online auction sites and traded for real currencies.
According to standard conceptions of economic value see the subjective theory of value , the goods and services of virtual economies do have a demonstrable value.
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