Many older games required players to collect a certain number of different currencies to get an extra life or some other in-game perk. The concept of video game currencies has evolved dramatically over the decades and today, in-game currencies have begun to impact real-world values.
In-game currencies are often used by developers as a back-end way to make a profit (when not charging for the game), since it offers an option for players who don’t want to pay an initial out-of-pocket expense just to find out whether they like they game.
Virtual currencies are created to work strictly within a specified game economy. For example, Eve Online uses ISK (Interstellar Kredits) as their virtual currency. But ISK isn’t transferrable to another game, like World of Warcraft. Virtual currencies aren’t intended for real world use. For example, you wouldn’t be able to walk into your local groceries and buy a bag of groceries – although that would be pretty cool.
Oftentimes, virtual currencies are associated as being centralized. The reason is because these currencies are controlled by the game developers. These games often have some variation of a centralized banking system on which the game economies run.
Digital currencies can be used to purchase real-world tangible items, outside of the game realm. BitCoin is an example of a digital currency. Anyone can use BitCoin to make purchases in real life as well as the virtual world. Many would argue that BitCoin is a digital cryptocurrency — a digital token created from peer-to-peer networking groups. A cryptocurrency is considered decentralized, because there is no central governing body that controls it.
Many gamers were thrilled when BitCoin started to rise in popularity. More and more companies are now starting to incorporate BitCoin as a form of payment, including game companies like Zynga.
Nexon offered users a chance to buy in-game perks, advantages, skins, and similar stuff through the use of their in-game (virtual) currency, which players bought with actual money. Players could exchange real money for virtual currency by means of a phone call, SMS, credit card, or PayPal.
This unique in-game currency feature distinguished Nexon from many other game companies at the time, as they truly were one of the first pioneers to convert virtual currency into real-world currency.
The idea that a game-maker could profit repeatedly from the same customer-player without creating new content was very appealing to the gaming industry. Nexon’s approach was copied numerous times with varying degrees of success. What set Nexon apart from BitCoin and other in-game virtual currencies was the fact that theirs was centralized in most cases — the game’s economy was controlled exclusively by the developers.
EVE online is one of the biggest virtual markets in which the majority of items are crafted by people. One of the biggest PvP battles in EVE online is estimated to have cost around $250,000 in real-world currency.
In World of Warcraft, players have been known to pay other players to maintain their accounts and farm resources and achievements in exchange for real money. That means players are paying someone real money to earn… virtual currency! Ultimately, isn’t that just a form of conversion?
There are also games where you can earn virtual currencies and directly convert them into BitCoin or some other cryptocurrency from the game interface. By relying on SHA256 (a secure hash algorithm), Hunter Coin has managed to create an in-game currency that can be converted into decentralized currencies. The cryptocurrency market is changing rapidly, so who knows where it will lead!