Gold - Currency x Token - Part 2 - Gold In MMORPGs

Click here to move to part 1 part 3

In part 2 I'll look at the recent title - Diablo III - a game that has a true functioning currency.
But before that it's important to establish a few concepts:



Gold sink

• Can be understood as any in-game mechanism that reduces the amount of currency in circulation
• In psychological terms it's usually a non-reversible token exchange (Paying for Gear Repairing - Buying Consumable Benefits)
• Can also be represented by a difference between Prize->Token and Token->Prize operations
• Example: An NPC shop sell a potion for 50g but only buy it from player for 25g - If a player keeps buying then selling potions to the NPC he will run out of both Gold and Potions.

Inflation Rate

• Inflation, in a modern sense is "Prices Increase"
• Inflation is usually measured by (Consumer Price Index) / (Time)
• The Consumer Price Index measures prices of a selection of goods and services purchased by a "typical consumer"
• Time is usually measured in Days, Months or Years depending on what's more relevant in that context

Hyperinflation

• A highly accelerating inflation rate - usually caused by a bad (elevated) amount of currency in circulation.
• This is obviously a typical case of continuous Monetary Inflation (a problem several countries faced in the past - check Wikipedia)
• This usually affect only the economy that suffers from the hyperinflation (the true price of good is stable when compared to other economies) - i.e. price change isn't caused by a change in the rate of production/consumption of goods (tough it'll affect it anyway).

Example

• Diablo III for PC - 2012
• Currency called Gold pieces 
•  You acquire Gold pieces by killing foes. This behavior is regarded as "playing the game"
• The amount of gold pieces you earn is proportional to enemy difficulty. So players see as fair to earn more pieces when playing in a higher difficulty setting
• Multiple Gold Sinks:
• NPC shops sell potions, cosmetic changes, equipment modifiers (gem upgrading), run keys (to access secret level) and even randomly generated items. 
• (Shops are just token exchange contingencies). A Player only "buys from shop" if their sold goods and services are attractive to them
• Buying is a simple behavior - it's frequency/chance is obviously related to the reinforcement "value" of what's "sold".
• This reinforcement value obviously drops to 0 when the player doesn't "want" the reward for any purpose (like when he acquires a good that never gets obsolete)
• Repair costs - now this is very interesting mechanic - A player must trade their acquired tokens (Gold pieces) in a steady rate to be able to play with his equipment. In other words this is a Positive Punishment (I'll deal in detail with this mechanic in part 3)
• The fantastic Auction House - a platform where players can trade any in-game good for gold, or trade gold for any in-game good - this effectively makes gold a currency, since it becomes the standard medium of trading.

    Basically gold sinks exist to make the currency stable because a good currency needs to have a fairly predictable/stable value as stated in previous article. Controlling the Token Input/Token Output ratio with the repair costs was fundamental to make their revolutionary Auction House work, otherwise gold wouldn't be a good medium for trade.     It should be noted that when players trade between themselves no gold is destroyed, they just use Gold as Medium of Exchange. But gold's intrinsic value is defined by Gold Sinks. Gold isn't Fiat money. This means that players only use gold as a medium of trade because they need/want to spend gold themselves in the gold sinks. Lesson: When a player believe they want to spend gold with a Gold Sink, designers are making a good job.


   In part 3 I'll take a look General Currency Issues most MMORPGS face and how to interpret "Reparing Services" in the light of Psychology.