Virtual Currency Games

Every little boy’s (and many grown men’s) dream of earning money 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) agent…

Digital currencies have been slowly gaining in maturity both with regards to their functionality and the financial infrastructure that enables them to be used as a credible alternative to non-virtual fiat currency. Though Bitcoin Revolution , the 1st and most popular of the crypto-currencies was made in 2009 2009 2009 there have been forms of virtual currencies used in video games for 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 coins by undertaking quests, battling monsters and finding treasure and spend these on armour, weapons or property. This was an early on incarnation of a virtual currency for the reason that it existed purely within the overall game though it did mirror real life economics to the extent that the Ultima currency experienced inflation because of the game mechanics which ensured that there was 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 was prohibited by the game’s designer to also sell virtual items to each other on eBay. In a real world phenomenon which was entertainingly explored in Neal Stephenson’s 2011 novel Reamde, Chinese gamers or ‘gold farmers’ were employed to play EverQuest and other such games full-time with the purpose of gaining experience points in order to level-up their characters thereby making them more powerful 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. Based on the calculated exchange rate of EverQuest’s currency because of real life trading that occurred Edward Castronova, Professor of Telecommunications at Indiana University and an expert in virtual currencies estimated that in 2002 EverQuest was the 77th richest country on earth, somewhere between Russia and Bulgaria and its own GDP per capita was greater 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 and this can be used to buy or sell in-game goods and services could 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 could actually design, promote and sell content that they created. Real estate was a particularly lucrative commodity to trade, in 2006 Ailin Graef became the very first 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 Ailin are the exception to the rule however, only a recorded 233 users making more than $5000 in ’09 2009 from Second Life activities.

How exactly to be paid in dollars for mining asteroids…

To date, the opportunity to generate non-virtual cash in video games has been of secondary design, the player having to proceed through non-authorised channels to exchange their virtual booty or they needing to possess a degree of real world creative skill or business acumen which could be traded for cash. This may be set to change with the advent of video gaming being built from the ground up around the ‘plumbing’ of recognised digital currency platforms. The approach that HunterCoin has had is to ‘gamify’ what’s usually the rather technical and automated process of creating digital currency. Unlike real world currencies that come into existence when they are printed by a Central bank, digital currencies are created by being ‘mined’ by users. The underlying source code of a particular digital currency that 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 nothing more than intangible data it really is more susceptible to fraud than physical currency for the reason that it is possible to duplicate a unit of currency thereby causing inflation or altering the worthiness of a transaction after it’s been made for personal gain. To ensure this will not happen the blockchain is ‘policed’ by volunteers or ‘miners’ who test the validity of every 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 exceptionally time consuming the one that involves lots of processing power from their computer. To reward a miner for verifying a transaction the blockchain releases a fresh unit of digital currency and rewards them with it being an incentive to keep maintaining the network, thus is digital currency created. Since it can take anything from several days to years for an individual 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 overall game sits within such a blockchain for an electronic currency also known as HunterCoin. The act of playing the game replaces the automated procedure for mining digital currency and for the 1st time makes it a manual one and without the 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 with their base (other teams are on the market trying to stop them and steal their coins) they are able to cash out their coins by depositing them to their own digital wallet, typically an app made to make and receive digital payments. 10% of the value of any coins deposited by players visit the miners maintaining HunterCoin’s blockchain plus a small percent of any coins lost whenever a player is killed and their coins dropped. As the game graphics are basic and significant rewards remember to accumulate HunterCoin is an experiment that might be viewed as the first gaming 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 set 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 goal of building their very own galactic empire. Players will be rewarded for mining in DogeCoin, a far more established form of digital currency which is currently used widely for micro-payments on various social media sites. DogeCoin will also be currency of in-game trade between players and the means to make in-game purchases. Like HunterCoin, DogeCoin is 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 start with regards to quality the release of HunterCoin and VoidSpace is an interesting indication of what could be the next evolution for games. MMORPG’s are being considered as methods to model the outbreak of epidemics because of how player’s reactions to an unintended plague mirrored recorded hard-to-model areas of human behaviour to real world outbreaks. It could be surmised that eventually in-game virtual economies could be used as models to test economic theories and develop responses to massive failures predicated on observations of how players use digital currency with real value. It is also a good test for the functionality and potential applications of digital currencies that have the promise of moving beyond mere vehicles of exchange and into exciting areas of personal digitial ownership for instance. In the mean time, players will have the means to translate hours in front of a screen into digital currency and dollars, sterling, euros or yen.

But before you quit your day job…

… it’s worth mentioning current exchange rates. It’s estimated that a player could comfortably recoup their initial registration fee of 1 1.005 HunterCoin (HUC) for joining HunterCoin the game in 1 day’s play. Currently HUC cannot be exchanged directly to USD, one must convert it right into a more established digital currency like Bitcoin. At the time of writing the exchange rate of HUC to Bitcoin (BC) is 0.00001900 while 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 mean… $0.01 USD. This is not to say that as a new player becomes more adept that they cannot grow their team of virtual CoinHunters and maybe hire a few ‘bot’ programmes that could automatically play the game under the guise of another player and earn coins for them aswell but I think it’s safe to state that right now even efforts such as this might only realistically result in enough change for an everyday McDonalds. Unless players are prepared to submit to intrusive in-game advertising, share personal data or join a game such as CoinHunter that’s built on the Bitcoin blockchain it really is improbable that rewards are ever likely to be a lot more than micro-payments for the casual gamer. And maybe this is a good thing, because surely if you receives a commission for something it stops being a game any more?