Sunday, April 02, 2006

Money is what you make it!

... where you make it.

There are lots of different kinds of money. For example, we have the US dollar, the Canadian dollar, the ruble, the zlotny, and so on and so forth.

More than that, there are kinds of money not usually categorized as "money-money". Stocks. Bonds. Gold. Land. These things have a definite value and can usually be converted over into something anyone will happily accept... although the time to convert may be considerably longer than if you're using "money-money". (Okay, technically, there's other words for this kind of thing. But it's close enough for a blog post.)

Then we have the tenuous moneys. The standing example here would be virtual world currencies. This is just like the previous examples, although most of the world might not yet agree. Just remember: ten million Lindens can buy you a car in real life. That's close enough for me.

All money - virtual, real, or standard - is valued based on what people think it's going to be worth in the future. How far in the future depends on the timescale the person is looking at. Lots of people buy up undervalued stocks and land, hoping that it will become extremely valuable in a decade or so.

Now, back to virtual worlds: what is the long-term (or even moderately short term, say two years) stability of these moneys?

Nada. The stability doesn't exist. The problem is that games are run by small groups of idiots. Real economies are run by huge groups of idiots - hundreds of thousands or even millions of significant customers. Their personal idiocies are ironed out and the basic laws of money keep the economy stable. Ish. More stable than a game's economy.

A game economy is run by a small group of idiots, rather than a large group of idiots. Not only are there rarely more than ten thousand significant consumers, those consumers are continually trumped by a very tiny group of idiots - usually three or four - and their ill-thought out ideas as to how to break the laws of money.

The end result is almost always staggering inflation. Sometimes, it's staggering deflation. Just about the best virtual world for stable money appears to be SecondLife, but it is entering a glorious inflationary spiral because of - guess why? One guess. Okay: the small group of idiots breaking the laws of money.

Did you guess right?

Now, I've actually met several of the Linden Labs people. Some of them are staggeringly brilliant. Some of them aren't. Presumably, the staggeringly brilliant ones are not, in fact, being listened to. But everyone is an idiot, sometimes, and with so little error correction, even one idiotic lapse can spell disaster. Linden Labs has had three big ones that I can see. I won't go into them unless people are interested.

This is the stable money on the market!

You're talking about your virtual world economies? You want to think your world's cash is "real cash"? You've got to prove it: survive!

In this world, MMORPGs come and go. Even if they don't die (I don't think UO is dead, yet) they grow and wane in popularity. Their economies bloat and deform under the pressure of thousands or thousands of thousands of players. They get cancers and diseases from poorly thought out expansion packs and band-aid patches.

What's the answer?

Well, I suppose you could design your game with a perfect economy in mind. Of course, to do that you would have to allow unlimited player content and let players distribute their own cash. Plus, your world would still get old and die, someday.

The other thing you could do is use a pan-world economy.

For example, if an economic juggernaut from one game (say, Anshe Chung of SecondLife) decides to distribute her own cash. But distributing it solely in SecondLife makes a slave to SecondLife's life cycle. Which, at present, appears to be a rather poor decision.

But what if your "Pan-Universal Credits" were seperate from SecondLife and linked to other games? You can exchange them not just for SecondLife capital, but for money in Eve Online, or any of the hundreds of "3D chat rooms" popping up all over? Buy them with game money in one game, redeem them for game money in another game. Or real money. Whatever.

All you need is a significant amount of cash in the game you're going into. Then, you can distribute your PUCs. Anyone who has them can use them to buy cash in any game you keep a bank in. Sure, there might be a run on the bank and you end up unable to give out cash on that game for a while. But, honestly, that's a threat regardless of how you do your banking.

Plus, you can minimize it: have a standing offer. "Bored? Leaving this game? Don't let your time be wasted: transfer us your cash in exchange for Pan-Universal Credits - almost certainly good in the game you're going to be in next!" The local (this-game) value of your PUC can be directly related to how many people are willing to give you cash for PUC.

Some people are probably thinking, "why not just pop it into real money?"

Well, first off, real money is trackable. If you're doing significant business, it's of interest not only to the people running the game, but also to people like the IRS. PUCs are not "money", and the vast majority of games which outlaw outside sales don't word it to prevent these kinds of "barter trade".

Second, having a powerful nexus of game money allows...

Let me see if I can explain it.

Right now, games are like ten thousand water hoses, spraying at various speeds. Their spray just kinds of sloshes around, soaking into the ground as people change games. Having a network of capital built specifically for games keeps this water from hitting the ground. Instead, it is channeled into another, larger hose. This hose has a hell of a lot of water in it, and an astonishing amount of water pressure. Some of that pressure feeds the tops of the hoses spraying down: a symbiotic relationship. However, that water can be used for other purposes. That's pure capital.

What would you use that capital for? How about designing "the perfect MMO" - Funded by the MMOs which are currently popular? How about splashing it back and forth a bit to get the attention of venture capitalists and the media? How about just the fact that it could prove the viability of virtual money - paving the way into a bright new future?

All that aside from the fact that it's busily making you rich.

Of course, the math you'd need to keep your affairs in order would be astonishing. And games would adapt their rules to ban your money. But those are initial problems: after two or four years, they'll go away and you'll be riding high.

Riding high on money.

(I'm thinking of the math right now. Man, that would be fun.)

Anyhow, this is the sort of thing I think about when I'm trying to design games. :D

As always, comments are welcome.


teamonkey said...

Aren't MMO economies generally designed to be inflationary anyway? I mean, my current character in Eve is not even two months old yet I've earned millions of ISK in that time. I think that's because you need to earn enough cash to progress and buy better things (otherwise it gets boring) but you need to be able to do it much faster and easier than an equivalent in real life (otherwise it gets very boring). I suppose this is also spurred on by more new characters joining the game, altering the balance.

Also, in-game cash is a sign of status, prosperity and success - like points. In-game, prectically everyone wants to keep saving and build up their wealth rather than spend it on things like iPods, designer clothes and computer games.

Craig Perko said...

That's perfectly valid, but it's not something that produces a long-term healthy economy. If you want a long-term, healthy economy, you need something that can survive long-term.

But, as I tried to say, few games are designed with that in mind. Most of them are happy to have massive inflation. That's valid. It's just not part of this post. :)

Duncan said...

The problem is that no MMOs that I know of employ economists to help design, analyse, and balance their economies. I'm actually surprised that Linden Labs doesn't.

But economics is not my forte, and something that I've just looked at the edges of.

Craig Perko said...

They might, but if they do, they're not listening to him.

Anyhow, it's not always a bad thing, so long as you realize your economy is temporary. However, even an inflationary economy can be managed using pan-universe credits. :D