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Last Updated: Wednesday, 7 January, 2004, 09:48 GMT
Virtual cash exchange goes live
By Mark Ward
BBC News Online technology correspondent

Screengrab from Horizons, Atari
Fantasy fans will recognise the Horizons setting
Online games now have their own foreign exchange that lets players buy and sell different virtual currencies just like in the real world.

The Gaming Open Market allows players who control characters in games such as Star Wars Galaxies, The Sims Online and Ultima, to buy and sell the currencies used in the different game worlds.

Players can convert cash reserves in one game into a different currency in another world or sell their virtual money for US dollars.

The market now has 29 characters in six different games that act as virtual bank managers in the separate worlds.

Money maker

Jamie Hale, co-founder of the Gaming Open Market, said that before the exchange was established buying and selling game cash was a laborious process.

He said many players used auction sites such as Ebay or paid high transaction costs on specific dealer sites such as Player Auctions. Then they had to arrange to meet other players inside different games to make the transfers.

The Sims Online
Star Wars Galaxies
Horizons: Empire of Istaria
Second Life
Ultima Online
The firms behind online multiplayer games run several versions of their world simultaneously on separate servers or shards. Swapping cash between shards was possible but much more laborious, said Mr Hale, and exchanging money from one game to another was almost impossible.

Despite this huge amounts of money are being spent every month buying and selling game cash, game artefacts (such as magic weapons) and even complete characters.

According to figures collated by economics professor Edward Castronova, 2003 saw more than $9m of trades on Ebay category 1654 which covers internet games.

This figure excludes trades done on EverQuest - by far the most popular US online game.

Mr Hale said the Gaming Open Market hoped to make the process of buying and selling game cash much easier and cheaper.

Cash crunch

Mr Hale and his co-founder Tom Merrall run characters in all the games the market covers to act as virtual bank managers who handle the movement of cash in and out of the virtual worlds.

Screengrab from There, There
There is all about meeting and greeting
Currently the market handles transactions in six separate currencies including Simoleons from The Sims Online, gold from Ultima Online and credits from Star Wars Galaxies.

Soon it hopes to be helping people trade cash from Dark Ages of Camelot and EverQuest.

Currencies are traded in blocks to make the market consistent and trade values easier to understand. The market makes its money by charging commission on deposits, withdrawals and trades.

"We expect the exchange rates to fluctuate in response to supply and demand in the games," Mr Hale said.

Inflation could also put pressure on exchange rates.

"There have been times when players have found cheats and manufactured piles and piles of gold in the game," said Mr Hale. "In that situation we expect the price to drop substantially."

Eventually, said Mr Hale, people will be able to speculate on future currency values and use them to hedge just like they do with real world currencies.

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