| 26 February 2010
The demands of virtual economy development.
In original virtual community, only a few kinds of virtual goods and services are provided, and almost no trade of virtual goods exists. With the varieties of virtual goods and services increase, the virtual goods trade between users increased sharply. The virtual money comes out to act as a general equivalent in virtual world to facilitate the virtual trade.(Primary Mode)
When more and more users create value in the real world and consume in the virtual world, the demand of exchanging real money into virtual money rises.(Primary mode à Ameliorative mode)
With more and more players entering the virtual world and spend a lot of time in it, they tend to create and accumulate virtual wealth in virtual world. Then the demand of exchanging virtual money to real money rises. (Ameliorative mode à Intermediate mode)
The expansion of the virtual capital drives the virtual economy increasingly vibrant enough to emerge in-world virtual financial system. (Intermediate mode à Advanced mode)
All these modes were made possible due to technological advancements and increase in progress of modern information technology mainly due to the Internet. With more and more people joining virtual communities, some activities in the real world were unmistakably transferred to the virtual world. Increase in virtual goods trading also drove virtual money to have a higher stand in reality and virtual world. Hence, making it a source of “real” money to people in the virtual world.
Users Perspective
There was also a demand from users as players needed to use virtual money to satisfy their own needs.
1. Basic mode virtual money meets the demands of virtual goods trade.
2. The primary mode facilitates the need of obtaining virtual money more quickly.
3. The using scope of virtual money is expanded to meet the needs of buying real goods
with virtual money.
4. The intermediate mode satisfies the demand of earning real money in virtual world.
5. The advanced mode meets the speculation and wealth storage needs.
Game Developers Perspective
The profit maximization of issuers.
The issuers issue virtual money in order to attract players to join the game and consume in the virtual world to make profit.
1. Original mode virtual money is only a way of promotion.
2. The primary mode evolved into a mean of profit making and virtual money
issuance becomes the biggest source of income for the issuers.
3. Intermediate mode extending to the real economy enhanced the attractiveness of the game and stimulated more players into the game.
4. Subscription and profit will increase when players can speculate in an advanced mode virtual community.
Conclusion
We can see that the development of virtual money mode is not a coincidence, but an inevitable result of the virtual and real economy development. As internet affects people’s daily life, virtual money will eventually develop towards its advanced mode, becoming an independent money form.
There exist various types of virtual money and each one has a totally different level of development, which makes great difficulties in and monitoring the virtual money. We classified the virtual money into five modes: original mode, primary mode, ameliorative mode, intermediate mode and advanced mode. The moneyness of virtual currency showed that the original mode virtual money existing in the form of experience value is not a real kind of virtual money and has no influence to the real
economy. The primary mode and the ameliorative mode of virtual money are not true senses of money with some basic money functions, so the virtual money in the two modes has a very limited impact on the real economy. Theoretically, the virtual money in the intermediate mode and the advanced mode is totally a kind of money, especially the virtual money under the advanced mode, which has all the characteristics of real money. Under the advanced mode, the virtual financial
system has been established and the uncertainty of virtual economy increases, which will definitely take great impact on the real economy.
The dynamics of evolution comes from the increase of in-game virtual goods trade, the facilitation provided by the information technology and internet development, the demands from users and choice from the game operators who use the virtual money as a way to maximize its profit. It shows that people’s demand for higher level virtual money was getting more and stronger. Hence, in order to be able to have a valid source of virtual money and be able to ensure the survival and portability of virtual money in the virtual world, people need to be able to distinguish and differentiate what type of virtual money they are actually acquiring and this will eventually aid the advancement of virtual money to a high mode that will create a validating means for users and developers in reality and virtually.