Virtual Economies 101 - Sword of the New World Forums
Originally Posted by Keyten
Hello everyone, this post is the product of frustration after reading many people's thoughts on the recent state of the Swords economy. I apologize that this is somewhat after the issue has reached it's peak, but I did not have time up until now to make this post because I was wrapped up in finals. Now onto the main course.
Every MMO's virtual economy is either expansionary or contractionary. This means that the total amount of vis (or whatever the game's currency is) in circulation is either growing or shrinking. This is all circled around the creation and deletion of vis. In this game, it all has to do with NPCs. When you buy items to an NPC or vendor, you are giving your vis to the NPC thus taking that vis out of the economy so it is destroyed. An example of this would be Bellem boxes, Fire Island Keys, MM taxes, or anything else you buy from an NPC. The way vis is created is through selling items to NPCs. If an equal amount of vis is being created and destroyed, then you have an economy with no inflation and everyone is happy. The amount of vis in circulation is constant so inflation does not happen.
This has a lot to do with supply and demand. If you would get more vis selling an item on the MM than you would selling it to an NPC, this adjusts the equation. It is an extremely hard job to adjust the setup of the game to take out enough vis through taxation or selling useful products from vendors to combat inflation. This is not something K2 probably monitors, but was initially taken to account when IMC or whoever designed the game initially. Why do we have such a huge issue with inflation now though?
In short... duping. I just want to say that I in no way condone duping I am simply here to discuss the effects of it on the economy. Duping can both help and hurt the economy is different ways. It all depends on what the dupers do with their duped items. When a duper simply sells all their items on the market, this saturates the supply for a particular item, thus driving the price down since there are more going around. I don't think anyone would really complain if there were a ton of 92e armors going around. Due to the illegal nature of duping though, this is not going to happen. A duper might sell one or two just to make some easy vis but selling a ton of them will throw up a red flag with K2. That leads us to the next step. In hopes of staying of the map, dupers will dupe a large amount of an item that sells a lot to NPCs. They will then sell 100s or 1000s of those items to an NPC and get billions of Vis from it. When they turn around and then buy legit items off the MM, it is now in circulation and injects an obscene amount of vis into the economy. Looking above at the scale, this throws off the balance that is inherent in the game, and thus inflation kicks in. When you multiply this by 50 of so dupers doing this, that is when you see prices start to jump 2 or 3 times what they were just a month before.
Inflation hurts everyone for the most part. When you hold onto your vis and are saving up for an item, it is then increasingly hard to make enough vis to buy that item. You literally lose money while you sleep, which was a very real problem for people back during the great depression. One of the small positives on inflation though is the fact that since you have a higher baseline of vis in the economy, it becomes “cheaper” to buy items from an NPC. For example, buying 100 Bellem Boxes for 1 mil vis would be harder pre inflation when compared to after inflation happened.
I welcome any rebuttals or any comments. I wanted to simply bring this to light to educate people on the basics of virtual economies. I thank K2 for addressing the duping issue and I hope for now on you take more precautionary measures, rather than dealing with it after the fact when the effects are much harder to erase.
The game's economy and inflation problems are all explained very well in that thread. there are also some good solutions posted in there, one of them being Bellem Boxes.