WallStreetJournal: Where Online Money Meets Real-World Cash

NotAdmin · Feb 25, 2011

Just came across this. Ironically, the very last statement seems no longer to be true at the moment.

As in the case of most online games, Eve Online developers ban the exchange of in-game currency for real-world money, an activity that is restricted to websites where impatient players often pay real cash for huge amounts of in-game currency that can buy better ships and equipment. In fact, Eve Online cancels the subscriptions of any players caught in that activity. But there are exceptions to that rule.

Entropia Universe is the most prominent of those exceptions. This game, a futuristic virtual world with several planets, run from Sweden by MindArk, is geared towards making it easy for its 200,000 players to exchange the in-game currency, the pred, for U.S. dollars, at a fixed rate of 10-to-1.

Such a currency peg provides Entropia Universe with a solid sales pitch that it claims has helped it flourish during the recent economic crises, as players moved investments out of real-world assets like stocks and bonds into Entropia markets including virtual real estate and virtual banks.

Entropia players have set several records with their trading of virtual goods recently. Last year, an asteroid space resort was reportedly sold for $635,000 to a group of investors who plan to profit from fees to let other players mine for valuable items and hunt in the property. That same asteroid, Entropia says, became the world's most valuable virtual property, and made the Guinness World Records book, after it was originally bought for $100,000 in 2005.

Activity keeps picking up. Christian Bjorkman, MindArk's chief marketing officer, says Entropia has recently sold five commercial banking licenses for $320,000 each.
The peg also makes Entropia Universe developers more similar to real-world bankers than Eve Online's—the sort of deflation seen there would make players less interested in chasing Entropia products in the local markets, depressing economic activity in the same manner that real-world deflation does, as Japan's central bankers have painfully found out.

At the same time, the peg implies that inflation, by boosting the amount of dollar-exchangeable pred in circulation, is still a big threat for Entropia's developers, as they may be forced to back that with more real-world dollars. At the same time, rising prices have the negative effect of making it more expensive for new players to buy the gear they need to start up, Mr. Bjorkman says.

"People are making investments. It's not just entertainment," he adds. "It's important to know what they're getting into, to know they're not risking too much."
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Original here.

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