#20 - In-Game Currencies: What can we learn for the Real World?

In this episode, Jason and Flo enter the exciting world of gaming. All of us (nearly) were once mesmerised by in game worlds we lived in. Some still are. It was pretty common in multiplayer role playing games to come into contact with an in game currency of some sort that one used to barter/level up. I read this article and was impressed by how many parallels there are with the real world, and thought we could see what we could glean from the myriad of currencies that have come and gone, in the gaming world that is.

Show notes:

Keys to Economic Systems: https://gdkeys.com/keys-to-economic-systems/

* benefits of an economic system were to ration power, support specialization (impossibility to buy everything), encourage interaction between players, provide players goals, and support role-play

* In its simplest form, a currency could be defined as an agreed-upon tangible medium of exchange for goods or services

* Resources have proper value, a value often given by their transposition in currencies, A resource is useful in itself, a currency isn’t.

* The number of sources and sinks a game will need for each currency will then be dictated by its systems and expected player experience. Is the game trying to promote freedom of choices and self-expression? Then having a multitude of ways to earn a currency will ensure that players can focus on the part of the game they prefer or are the best at (assuming the sources are balanced equally). Is the game instead wanting players to engage with a particular system or rewarding particular actions? In this case, having a currency dedicated to these will instantly create a strong incentive for players (or a tight bottleneck if the currency is part of the main flow). (JN: FREE MARKET vs CENTRALLY PLANNED!)

* define the number of sources and sinks of a currency by how much agency you want your players to have in playing, or progressing through your game systems.

* When sources are not generous enough, players drop due to lack of motivation (economic depression). When sources are too generous, it kills motivation too! (JN: high minimum wage/Dole = low productivity)

JN: Trial phase = parents pay for your first home, university etc? Govts offer student loans?

* Having only one currency is dangerous. If players have too much gold at some point, they will remove every gating the game throw at them. Every system of the game tied to this currency will instantly lose any interest. Why go on an extremely long quest if the reward is again gold? Why sell items and engage with the trading systems when you are indecently rich? (JN: In real life, super rich use gold or currency to trade for other currencies such as reputation or status. Maybe even power)

* if we take the opposite then: hundreds of currencies, one for each and every micro-systems in the game, without any exchange of currency. On one side, this is extremely safe: every system is completely isolated, left with its own balance.

* the first one is the brutal reduction of the player agency: players must engage with every single system in the game in order to earn the currencies necessary to their progress.

* The other danger is that it makes a game feels… well, gamey. A real economy strives from its interactions, systems communicate to each other, currency trades for one another…

* (JN: In real life, this would be leaning towards centrally planned economies. Capital controls. Cuba: Exchange cigars or rum for sugar at a fixed rate, with 80% of crop belonging to the state)

* Be wary of currencies exchange: I’ve seen many systems failing because of situations like this: Gems can be exchanged for gears, that can be exchanged for gold, that can purchase tokens, that can… In the end, all these currencies communicate together and only form a single one, with all the dangers it brings. Be wary of these exchanges, or tax them accordingly. The Wretched Broker of Hades creates pathways to exchange currencies but at a very prohibitive cost.

* the value your currency has in the eye of your player, and how it evolves over time. Gold (USD IRL) vs Raid Tokens (Reputation/Status/Power IRL)

* Rebalance an economy by using extentions or patches. This allows new players to come in on a level playing field. (Currency reset, hello EURO vs Lira or Dmark. Hello Zimbabwean dollar/land reform when farms become commodity currencies ala stone of jordan. Hello berlin wall)

* Failsafes and Currency Protection

* Remove the multiplayer sharing component (or tax it) (Inheritance taxes. Licenses to trade. Licenses to practice. Sales and service taxes. No Barter)

* Multiply and specialize currencies: this is another extremely easy win. The more currencies a game contains, the smaller their impact will be: this will lead to better control and the certainty that a currency crashing won’t ripple through all your systems. Warning: this only works if these currencies aren’t connected in any way! If a currency can be exchanged for another one, they are virtually the same thing and will rise and drop together. (While every thing is backed by the dollar, not everyone uses the dollar in local economy. Also maybe why US citizen banking is so controlled, and is taxed on global income)

* Upkeep systems. Pay to use what he/she has. (Wealth tax. Property Tax. COE in Singapore for cars. Negative interest rates)

* Wallet limits (FDIC insurance is capped. Negative interest rates make you want to hold less currency. Wealth tax. Progressive income tax)

* Why not have a finite amount of money?

* players hoarding money combined with a lack of obligation to spend this money completely froze the economy and virtually removed it from the game world (Something to discuss. Is this true in real life? Are there ways around it?)

* Suggested schematic (What might real world analogs be over a person’s lifetime?)

* Iron (IRL: Food? Clothes)

* Gold (IRL: Fiat currency)

* Diamonds (IRL: Skills?)

* Hard Currency (IRL: Gold, BTC, Leicas, Rolexes, Beachfront Property, Trophy wife Hahah)

* Renown Tokens (IRL: Reputation. Status. Power. Network.)

* Some statements from the video

* What if there were no currency sinks in the real world? What if everyone was printing money all the time? Currency would become worthless (LOL)

* Gaia online , currency became worthless, company donated $250USD to charity everytime a player threw away 15 trillion Gold (sink)

* Diablo 2 and Asheron’s Call, money gets replaced by other items that become currency (Stones of Jordan, Shards respectively)

* Without players getting ahead, they get discouraged if all they are doing is paying fees (Ahem real life) When sinks are too strong

* New strategy from game designers (reserve currencies)

* Anchor for the local in game currency

* Allow in game currency to buy real world items (similar to air miles) examples: Flex and Eve online (real world items serve as reserve)

* Allow in game currencies to be traded for real money.

* Silver pieces earned by killing monsters. These can be traded for diamonds (that cannot be used for trade). Diamonds can either be sold for USD or used to purchase items from the game store (Sink). Prevent Diamonds from becoming the currency. Diamonds bid for something that is not available locally.

* Game designers set max limit on how much a diamond can cost vs silver pieces since silver keeps getting printed.

* What are some of the real world reserve currencies? (Jason Theory)

* US Dollar by decree (smaller extent the SDR basket of JPY, GBP, EUR etc)

* BTC, Gold, Crypto currencies

* Real Estate (foreign/local?)

Watch this episode on YouTube:

Disclaimer

Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research.

None of this is legal advice. This podcast is strictly educational. Talk to your lawyer.

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