Currency Basics

One of the most obvious features of virtual economies is the currency or currencies used. In most one currency is the primary currency in which the vast majority of inter-player transactions occur. In a handful, multiple currencies are used concurrently, which can lead to interesting dynamics.

Typically in the most basic currency in the game will be represented by something setting-appropriate like gold coins in a fantasy setting. It will be a strange hybrid between a fiat currency and one backed by commodities, in that it is generated by in game activities like completing quests or killing monsters, but the rate at which it is created is controlled by the game developer. It’s as if there were a country with a gold-backed currency where the government could set the effectiveness of various extraction techniques at will. Technically, it could also seize or issue more of the currency at will too, but the outcry from players this would generate tends to minimize the risk of that.

A second common type of currency is one purchasable with real world money at a fixed rate (With very few exceptions the reverse transaction is not officially allowed). Its most obvious purpose is to effectively facilitate microtransactions by separating the time one has to go through the process of entering payment information and depositing money and the time one buys an item in game. In some games the real-world purchasable currency is tradable among players and/or exchangeable for the more basic currencies. This can allow it to become the de facto primary currency in which transactions are conducted even though in the story of the setting, non-player characters pretend like the more basic currency is important.

A final common type of currency in virtual economies is a useful, valuable item for which there is a steady and widespread enough demand that most players will accept it in exchange for other goods because either they wish to use it personally or trust that it can be traded for things they want later. Typically these are not official currencies, but ones that have emerged for various reasons, which makes for some interesting case studies.