Virtual Currency Exchange

by Jordan Hicks, Jun 6 2011

Since the dawn of MMO gaming, online games have emulated the real world in all sorts of ways. It seems perfectly logical that, as technology and games progress and advance, the virtual game worlds that we create will come to resemble our real world more and more. One area that this has proven true in recent years is the area of economics. Most every MMO game has at least one form of in-game currency used by the players to buy and sell in-game goods and services. As these games have grown and more players have joined, micro-economies have formed within the games and have rooted themselves into the games’ subcultures. In fact, back in 2004, the Sony Online Entertainment team discovered the existence of a dupe bug in the game Star Wars Galaxies not by spotting irregularities in the game itself, but by noticing patterns in the game’s overall economic statistics. Whether or not these games have any effect on real world economics, the reality of MMO economics is undeniable.

The Collision Of Economies

virtual currency exchange Human history has shown that whatever people are willing to spend time on, some will be willing to spend money on. A testament to this is the success of the premium membership model in online gaming. If a person has dedicated a significant amount of time to playing a game, they may jump at the opportunity to spend a little bit of real world money in order to advance in the game. To respond to this demand, a number of websites such as and have popped up offering to sell in-game currency to players for a small amount of real world money. Players have the opportunity to make out of game transactions with real world currency, and then return to the game world to have the goods delivered to them. As these transactions have become more and more common, the laws of economics have caused approximate exchange rates to emerge between online and offline currencies.

Exchange Rates Trends

Listed here are some approximate current exchange rates based on the price of buying virtual currency from the leading websites at the lowest possible quantity (e.g., $1.16 for 1000 pieces of gold would be an exchange rate of 1/862G. All exchange rates are measured against $1USD).
Game Exchange Rate Source
World of Warcraft Gold 1/862G
Ultima Online Gold1/1,000,000G
EverQuest Platinum1/71P
EverQuest2 Platinum 1/33P Station Exchange
Dark Age of Camelot Platinum 1/4P
Final Fantasy XI Gil 1/56,497Gil
EVE Online ISK1/32,000,000ISK

Overall, most of the games listed have seen massive inflation in their in-game currencies over the past several years. While the nature of virtual currency trading makes it very difficult to establish a standard exchange rate, the following are approximate exchange rates collected by back in 2005.

GameExchange Rate
World of Warcraft Gold 1/10.2G
Ultima Online Gold 1/138,888G
EverQuest Platinum 1/1.8P
EverQuest2 Platinum1/5.88P
Dark Age of Camelot Platinum 1/0.29P
Final Fantasy XI Gil1/55,987Gil
EVE Online ISK 1/2,500,000ISK

For some perspective, $1 USD was worth about 10.8 Mexican Pesos in 2005. That puts gold in World of Warcraft at a higher value than the Peso in 2005. While these numbers cannot be trusted to be fully accurate or unbiased ( is primarily a virtual currency seller), they still show how much the value of in-game currency as a whole has changed over the last couple of years. On top of this, we must keep in mind also that the dollar was quite a bit stronger in the global market back in 2005 than it is 2011. As the games have gained more popularity, the number of players and virtual gold dealers has increased, causing more virtual currency to enter the market. As the supply goes up, value goes down.

The Difficulty of Defining Virtual Exchange Rates

At this point, exchange rates for in-game currencies are, at best, illusive. Part of the problem with trying to establish a set rate of exchange is that most virtual currency trading is done illegitimately, and is therefore difficult to quantify. Of all of the virtual currency exchange sites that we have discussed in this article, all but one of them operate in defiance of the terms of service of the games themselves. The only exception to this is the Sony’s Station Exchange, where players can trade virtual goods for real world money in a secured and sanctioned environment. All of the other virtual currency dealers require players to make real money transactions outside of the game and then log back into the game to receive their purchases. Even then, the goods must be delivered in such a way so that the game moderators do not suspect foul play. In this regard, the virtual currency exchange is more akin to the black market than it is to the Federal Reserve. As a result, statistics for the exchange of virtual goods are imperfect at best, and no one can really know how much trading is going on.

virtual currency exchange

Further Implications of Virtual Currency Exchange

The very existence of virtual to real world currency exchange brings up interesting questions about the economics of virtual currency as a whole. If players have the ability to “cash out” by trading virtual currency for real money, how much longer can virtual currency not be considered to be real money itself? In 2010, South Korea ruled that virtual currencies were real money, allowing individuals to press charges for damages quantified in terms of virtual currencies. This ruling also paves the way for tax and gambling laws to apply to virtual currency. It is not difficult to imagine a similar ruling in the United States in the near future, especially as it concerns the politically touchy subjects of taxation and gambling regulations. More information about the South Korean ruling can be found here.

A story in the UK’s Guardian on May 25th, 2011 has shed additional light on the current state of the virtual currency market. The article tells the story of a survivor from a Chinese reeducation-through-labor camp where the inmates were forced to play MMO games for hours on end in addition to the other hard labor tasks given to them at the hands of their prison bosses. The inmates were forced to perform simple “gold farming” tasks for hours on end so that the virtual gold could be sold online for real money. From the understanding of the inmate interviewed, this “virtual work” was more profitable to the prison bosses than the physical labor. According to the article, there are an estimated 100,000 full-time gold farmers in China alone.

The sheer amount of gold farming and virtual currency sales in the online gaming community could have a huge impact on the exchange rate of virtual currencies in the next several years. Additionally, laws regulating the trade of virtual currency could likely emerge in the United States and completely change the playing field of virtual currency exchange. At any rate, it will be interesting to see what the next few years have in store for virtual currency exchange rates.