Virtual Currency Games

Every little boy’s (and several grown men’s) dream of making a living by playing video games is edging closer to reality. The recent release of HunterCoin and the in-development VoidSpace, games which reward players in digital currency instead of virtual princesses or gold stars point towards a future where one’s ranking on a scoreboard could possibly be rewarded in dollars, and sterling, euros and yen.

The story of the millionaire (virtual) real estate agent…

Digital currencies have been slowly gaining in maturity both in terms of their functionality and the financial infrastructure that allows them to be utilized as a credible alternative to non-virtual fiat currency. Though Bitcoin, the 1st and most popular of the crypto-currencies was made in 2009 2009 2009 there were forms of virtual currencies found in video games for a lot more than 15 years. 1997’s Ultima Online was the first notable attempt to add a large scale virtual economy in a game. Players could collect gold coins by undertaking quests, battling monsters and finding treasure and spend these on armour, weapons or property. This was an early incarnation of a virtual currency for the reason that it existed purely within the game though it did mirror real world economics to the extent that the Ultima currency experienced inflation as a result of the overall game mechanics which ensured that there is a never ending supply of monsters to kill and therefore gold coins to collect.

Released in 1999, EverQuest took virtual currency gaming a step further, allowing players to trade virtual goods amongst themselves in-game and even though it had been prohibited by the game’s designer to also sell virtual items to one another on eBay. In a real world phenomenon that was entertainingly explored in Neal Stephenson’s 2011 novel Reamde, Chinese gamers or ‘gold farmers’ were employed to play EverQuest along with other such games full-time with the aim of gaining experience points so as to level-up their characters thereby making them better and popular. These characters would then be sold on eBay to Western gamers who were unwilling or unable to devote the hours to level-up their own characters. In line with the calculated exchange rate of EverQuest’s currency because of real life trading that took place Edward Castronova, Professor of Telecommunications at Indiana University and a specialist in virtual currencies estimated that in 2002 EverQuest was the 77th richest country on earth, somewhere between Russia and Bulgaria and its GDP per capita was higher than the People’s Republic of China and India.

Launched in 2003 and having reached 1 million regular users by 2014, Second Life could very well be the most complete exemplory case of a virtual economy up to now whereby it’s virtual currency, the Linden Dollar that can be used to buy or sell in-game goods and services can be exchanged for real world currencies via market-based exchanges. There were a recorded $3.2 billion in-game transactions of virtual goods in the a decade between 2002-13, Second Life having become a marketplace where players and businesses alike were able to design, promote and sell content they created. Real estate was an especially lucrative commodity to trade, in 2006 Ailin Graef became the 1st Second Life millionaire when she turned an initial investment of $9.95 into over $1 million over 2.5 years through buying, selling and trading virtual real estate to other players. Examples such as for example Ailin will be the exception to the rule however, just a recorded 233 users making more than $5000 in ’09 2009 from Second Lifestyle.

How exactly to be paid in dollars for mining asteroids…

To date, the ability to generate non-virtual cash in video gaming has been of secondary design, the player having to proceed through non-authorised channels to switch their virtual booty or they needing to possess a degree of real life creative skill or business acumen which could be traded for cash. This may be set to improve with the advent of video games being built from the bottom up around the ‘plumbing’ of recognised digital currency platforms. The approach that HunterCoin has taken is to ‘gamify’ what’s typically the rather technical and automated process of creating digital currency. Unlike real life currencies which come into existence when they are printed by a Central bank, digital currencies are manufactured when you are ‘mined’ by users. The underlying source code of a particular digital currency which allows it to function is named the blockchain, an online decentralised public ledger which records all transactions and currency exchanges between individuals. Since digital currency is only intangible data it is more prone to fraud than physical currency in that you’ll be able to duplicate a unit of currency thereby causing inflation or altering the worthiness of a transaction after it has been made for personal gain. To ensure this does not happen the blockchain is ‘policed’ by volunteers or ‘miners’ who test the validity of each transaction that’s made whereby using specialist hardware and software they ensure that data has not been tampered with. This is an automatic process for miner’s software albeit an extremely time consuming the one that involves a lot of processing power from their computer. To reward technical analysis for verifying a transaction the blockchain releases a new unit of digital currency and rewards them with it being an incentive to help keep maintaining the network, thus is digital currency created. Since it may take anything from several days to years for a person to successfully mine a coin sets of users combine their resources into a mining ‘pool’, using the joint processing power of their computers to mine coins more quickly.

HunterCoin the game sits within this type of blockchain for an electronic currency also called HunterCoin. The act of playing the game replaces the automated procedure for mining digital currency and for the first time makes it a manual one and with no need for expensive hardware. Using strategy, time and teamwork, players venture out onto a map searching for coins and on finding some and returning safely to their base (other teams are on the market trying to stop them and steal their coins) they can cash out their coins by depositing them to their own digital wallet, typically an app designed to make and receive digital payments. 10% of the value of any coins deposited by players go to the miners maintaining HunterCoin’s blockchain plus a small percent of any coins lost when a player is killed and their coins dropped. As the game graphics are basic and significant rewards take time to accumulate HunterCoin is an experiment that might be viewed as the first video game with monetary reward built-in as a primary function.

Though still in development VoidSpace is a more polished approach towards gaming in a functioning economy. A Massively Multiplayer Online Roleplaying Game (MMORPG), VoidSpace is defined in space where players explore an ever-growing universe, mining natural resources such as asteroids and trading them for goods with other players with the purpose of building their very own galactic empire. Players will be rewarded for mining in DogeCoin, a far more established type of digital currency that is currently used widely for micro-payments on various social media marketing sites. DogeCoin may also be currency of in-game trade between players and the methods to make in-game purchases. Like HunterCoin, DogeCoin is really a legitimate and fully functioning digital currency and like HunterCoin it is usually traded for both digital and real fiat currencies on exchanges like Poloniex.

The future of video gaming?

Though it is early days when it comes to quality the release of HunterCoin and VoidSpace can be an interesting indication of what may be the next evolution for games. MMORPG’s are being considered as ways to model the outbreak of epidemics due to how player’s reactions to an unintended plague mirrored recorded hard-to-model aspects of human behaviour to real world outbreaks. It may be surmised that eventually in-game virtual economies could be used as models to test economic theories and develop responses to massive failures based on observations of how players use digital currency with real value. It is also an excellent test for the functionality and potential applications of digital currencies that have the promise of moving beyond mere vehicles of exchange and into exciting regions of personal digitial ownership for example. In the mean time, players now have the methods to translate hours before a screen into digital currency and then dollars, sterling, euros or yen.

But before you quit your day job…

… it’s worth mentioning current exchange rates. It’s estimated a player could comfortably recoup their initial registration fee of just one 1.005 HunterCoin (HUC) for joining HunterCoin the game in 1 day’s play. Currently HUC can’t be exchanged directly to USD, one must convert it right into a competent digital currency like Bitcoin. During writing the exchange rate of HUC to Bitcoin (BC) is 0.00001900 as the exchange rate of BC to USD is $384.24. 1 HUC traded to BC and then to USD, before any transaction fees were taken into consideration would equate to… $0.01 USD. This is not to say that as a player becomes more adept that they cannot grow their team of virtual CoinHunters and maybe employ a few ‘bot’ programmes that would automatically play the game under the guise of another player and earn coins for them aswell but I believe it’s safe to say that right now even efforts such as this might only realistically result in enough change for a daily McDonalds. Unless players are willing to submit to intrusive in-game advertising, share personal data or join a casino game such as CoinHunter that’s built on the Bitcoin blockchain it is improbable that rewards are ever likely to be more than micro-payments for the casual gamer. And perhaps this is a positive thing, because surely if you get paid for something it stops being a game any more?