Upcoming MMO's Cryptocurrency Marketplace Was Inspired By Other Games' Black Markets

When black markets develop on the sidelines of most massively multiplayer online role-playing games, most developers would panic. But with today's rise of cryptocurrencies such as Bitcoin, a growing group of game-makers are embracing some gamers' tendency to turn in-game currency into real-world money.

Lordmancer 2

In general, publishers often take steps to prevent the selling of in-game currency, such as World of Warcraft gold, outside the game. "Developers and publishers strive to suppress such black markets in order to reduce the effect that they have on in-game economies [and] player balance," Russian software developer and Active Games CEO Anton Telitsyn told me over email.

Lordmancer 2

Last year, publisher Valve moved to choke out Counter-Strike: Global Offensive's $US7 billion ($8.9 billion) in-game designer weapon gambling market. Similarly, Blizzard has waged a decade-long battle against businesses — including prisoner-fuelled gold-farming labour camps — that sell WoW gold for cash.

With Active Games' MMORPG Lordmancer 2, following the 2011 free-to-play mobile MMORPG Lordmancer, Telitsyn is taking the opposite approach. Lordmancer 2, in beta on Android right now, is a sword-and-sworcery RPG where players are invited to freely purchase and sell weapons and artefacts in-game with the game's custom cryptocurrency Lord Coin, which can be exchanged for real money outside of the game.

So, by levelling up and earning better items, players can mine cryptocurrency with real value. "Instead of expressly forbidding extra-game trading of resources, we endeavour to create a safe, transparent marketplace for trading game items and characters," Telitsyn said.

Earning real money by gaming is not a popular concept, but it's not totally new, either: 2003's sci-fi MMORPG Entropia Universe also runs off a real cash economy. A consistent virtual currency to real money exchange rate of 10-to-one keeps prices stable, and players can deposit money in-game and withdraw it to their real-life bank accounts. In 2008, Entropia Universe earned a Guinness World Record for "most expensive virtual object" after a player bid $US335,000 ($428,280) on a space station.

Even though the game's publisher might approve of it, it's worth noting that a lot of these game markets can exist in a legal grey area. Money-laundering or fraud may abound. Some virtual currency markets might amount to illegal lotteries.

The buzz around cryptocurrency-fuelled MMORPGs grew with the introduction of Ethereum, which has exploded in popularity since its creation in 2014. It's the cryptocurrency system being used for Lordmancer 2 transactions. Like Bitcoin, Ethereum's Ether is a digital currency. In June, the price of one Ethereum coin peaked at $US400 ($511) per "Ether" coin. Unlike Bitcoin, Ethereum uses something called "smart contracts". It's highly-customisable digital currency. Quora's description is quite good:

Imagine automatically sending money from one person to another but only when a certain set of conditions are met. For example an individual wants to purchase a home from another person. Traditionally there are multiple third parties involved in the exchange including lawyers and escrow agents which makes the process unnecessarily slow and expensive. With Ethereum, a piece of code could automatically transfer the home ownership to the buyer and the funds to the seller after a deal is agreed upon without needing a third party to execute on their behalf.

The reason why Lordmancer 2's developers are building digital currencies off Ethereum is because the conditions of exchange can be quite trustworthy. "If somebody purchases Lord Coins, they will be kept inside Ethereum," Teliysyn said, "and even the developers will not have a way to change anything besides what was described in Lord Coin's smart contract."

Forging digital economies in games was an early idea among Ethereum enthusiasts. Making it accessible and attractive is another story. Jon "Neverdie" Jacobs, who bought an asteroid in Entropia Universe for $US100,000 ($127,845), established with the help of Ultima creator Richard Garriott a cryptocurrency he calls the Teleport token, using Ethereum in July with the lofty dream of designing a money-backed infrastructure for a virtual goods economy. The pitch: Gamified jobs in virtual reality will reap the currency, which will eventually be used across virtual reality worlds. Unfortunately, virtual reality technology's install base is pretty slim right now, so a bustling economy doesn't seem likely in the near future.

Similarly, Telisyn's Lordmancer 2 is polished in its beta state, but is, at base, a primitive game. He doesn't expect anyone to be making a living off the mobile MMORPG: "The amount of cryptocurrency that a player can mine will depend only on the market price of Lord Coin," he says. Likely, that price will remain low, and therefore so will a player's potential earnings.

Lordmancer 2 will begin selling its Lord Coins on October 23. Right now, its developers are pitching the game to Chinese investors, who know well the desire for big (and legal) money-backed digital marketplaces. Even if these early options don't boom, they may be laying the groundwork for more mainstream adoption.


Comments

    You touch on why this is a bad idea in the article. Companies put so much effort into shutting down black markets not because it ruins the in-game economy (that's only a small factor) but because once you hit two-way exchange of real currency to virtual currency you cross a regulatory threshold.

    From that point you're subject to regulations for anti-laundering, taxable income and so on, and both the developer and players pick up liability - if an item with a convertible value is destroyed by the actions of another player then it gets into destruction of property laws.

    They're welcome to try of course, but don't paint the picture as though they're doing something innovative. Other companies don't avoid it because it's a 2.0 kind of idea, they avoid it because it's an absolute minefield.

    Yeah no, I can tell this game will be exploited instantly by farming operations. This game company has obviously set the game up like this say they can profit off gold farming type groups.

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