Last week, a bug in the game "Diablo III," which allows players to buy items with either real or in-game virtual money, wrecked its whole economy. This affected not only those using pretend gold, but players spending real cash as well. Although digital currency bugs and hacks are not common, they can happen. The subsequent fallout is seldom limited to just the virtual space or just to gamers.
The bug in the game's Auction House (a menu-based interface that exists outside of the main game) was a simple programming error that allowed players to generate infinite quantities of in-game gold with little effort. The trick went up on Reddit, and it did not take long for the rest of the " Diablo III " fan base to replicate its success.
Enterprising snake oil salesmen then bought high-priced items with their ill-gotten gains and resold them for real money. This debacle may make players question the wisdom of mixing real money and in-game currency purchases.
Short of wielding immense amounts of money or influence, changing the course of a real national economy is just about impossible. Modifying a virtual economy, on the other hand, can be as simple as misplacing one line of code, as in "Diablo III."
A speculator with virtual currency — Bitcoin, for example, which recently surged to more than $200 per digital coin — need not even be a savvy hacker to strike it rich. "Diablo III" developer Blizzard, not an outside malefactor, introduced the bug. Operating under the assumption that, sooner or later, someone will artificially (whether deliberately or by accident) modify a currency's value, a person hoarding digital coins could stand to make a lot of money.
Even content providers want to hop on the digital currency bandwagon. On May 13, Amazon gave out 500 Amazon Coins (worth $5 total, or $1 per 100 Coins) to each Kindle Fire owner. Users can spend coins on books, movies, apps and in-app purchases (like extra levels or power-ups in games). Amazon also offers discounts of up to 10 percent for purchases made with Coins. [See also: Not Child’s Play: 6 Kid-Centric Games That Aren’t for Kids ]
Since Amazon sells Coins to users rather than users selling them to each other, inflation should not present a problem: The supply will always be controlled by Amazon, and always be essentially infinite. Assuming that Amazon sticks with the Coins program indefinitely, however, a bug or hack is almost certain to crop up at some point, rendering a customer's currency useless, at least until Amazon solves the problem.
The psychology behind currencies like Amazon Coins (or Microsoft Points used with Xbox Live, or even poker chips at a casino) is that users are more likely to part with something that doesn't "feel" like real money. If they can only spend it at a certain venue, that venue is guaranteed a customer.
Psychological chicanery aside, there's nothing inherently wrong with this practice, but things can go awry when users see others "gaming" the system. Whether a casino employs a card shark to rake in bundles of chips or a hacker fills his own wallet with Microsoft Points, average users feel resentment, and may be more likely to just avoid a service in the first place.
Speculating with virtual money may not be practical, especially since there are dozens of currencies available and comparatively few are likely to suffer exploits. However, economic catastrophes with digital goods can have very real consequences. A bug in "Diablo III" affects only people who play the game. A bug in Bitcoin, or whatever comes next, could render some people very rich, and others very poor.
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