Blockchain Technology and Virtual Worlds — Part 2 The Link Between Gold Farming and Blockchain

In my previous article, I provided a background on the concept of “virtual worlds” as they exist in gaming and their real world economic impacts. I also claimed that the concept of humans migrating to virtual worlds on a massive scale may be closer to becoming a reality than many of us think.

Continuing where we left off, I want to talk a bit more about the similarities between the blockchain industry and gaming (specifically, gold farming), and how the industry, to some extent, was both ‘made by’ and ‘made for’ gamers.


One year before the Satoshi whitepaper…

Location: Dongguan, China

The year was 2007, and I, as a soon-to-graduate American student majoring in Chinese, had been living in China off and on for the past three years. As part of the curriculum for my master’s degree, I was required to find a three-to -six month internship in an industry that related to my area of study. As a language major, I didn’t really have a specific area of study outside of Chinese, and ended up working in an American-owned shoe factory doing quality control in a location that could only be described as “the middle of nowhere.”

Needless to say, as a nerd/gamer, fashion was not the least bit interesting to me, and I spent a good majority of my time sitting around playing World of Warcraft to kill time, eventually getting very into the game.

Before I moved to China, I had spent a lot of time playing the American version of WOW, where I already had a high-level character. In starting over on the Chinese servers, in order to save time, I found someone to “power-level” (play my account on my behalf) me to the maximum level (which was 60 at the time). This cost me 300 RMB, which, at that time, translated to about $40 USD. I remembered that I had seen similar services being sold on eBay and other Western websites for $300+.

I started connecting the dots, and realized with my experience in trading game items from Ultima OnlineEverquest, and Asheron’s Call years earlier, combined with a knowledge in both English and Chinese and being located in China, that this was an exciting business opportunity that had the potential to be a hell of a lot more fun than checking for wrinkles in leather orthopedic shoes.

Wow gold farming company in Changsha, China

The next day, I walked into the factory, quit my job, and started working full-time in the industry that, at that time, we referred to as Real Money Trade, or RMT. I went on to build a business around selling virtual currency and powerleveling services to Western gamers.

The RMT industry was growing rapidly, mostly in thanks to WOW, and more and more gamers started accepting the concept of limited inter-exchangeability between real and virtual currencies.

While I later left RMT to found companies in the game publishing, game development, and social media space, building a blockchain gaming company has once again got me thinking about RMT and the correlations I see between it and the cryptocurrency industry.


I briefly mentioned this in the last article, but wanted to get into a little bit more detail here.

“Gold farming” in online games is incredibly similar to cryptocurrency mining.

Killing Monsters vs. Mining

Designing and balancing video game economies is not easy, and most game devs employ entire teams of producers, designers, mathematicians, and economists who work full-time on doing just this.

Let’s talk about the way virtual currency is “minted” in online games. (To make it easy, we will use “gold” to refer to coins inside of these games).

  1. Monsters “spawn” in the virtual world. Each monster carries on it a limited number of gold pieces and/or virtual items which can be sold to vendors or other players for gold. Higher level monsters carry more virtual loot than lower level monsters. A level 100 monster might carry 100 gold, while a level 10 monster might carry 0.1 gold.
  2. Players “kill” monsters to acquire the gold. The higher level the player’s avatar and the better his/her equipment, the higher level of monsters they can kill, and the faster they can do so.
  3. After a certain amount of time (usually 30 seconds to 1 minute, or longer for bosses), the monster respawns, and can be killed again by the same or other players.

This is an inflationary economic model, in the effect that there is essentially an unlimited amount of gold in the game waiting to be farmed. 1 gold farmed in 2004 in World of Warcraft may have been worth $100 then, but is worth a fraction of a penny now. In theory, the more players playing the game, the more gold that will be minted. Game developers work to counteract some of the effects of this inflation by designing increasingly expensive gold sinks, or systems that extract money out of the game economy. Some examples of sinks include:

  • Purchasing items from non-player vendors
  • Upgrading and reparing equipment
  • Auction house transaction fees
  • (In some games) — purchasing additional “game time”

Essentially, when a player buys something from “the game” itself instead of a another player, that gold goes to the developer, who then destroys it.


Are you starting to see the correlation with cryptocurrency mining?

Most cryptocurrencies today are designed with a couple of questions in mind:

  1. How are new coins minted? Is there a set supply? Are they mined over time?
  2. Inflationary or deflationary?
  3. What are the economic incentives for people to use or hold the coin?

We could almost think of World of Warcraft as one big mining algorithm, with the game’s gold pieces as its cryptocurrency.

  • Game developer = cryptocurrency founders
  • Gamer = miner
  • Game economics = tokenomics
  • Mob spawn = new block
  • Player kills monster = miner solves block
  • Loot gold = receive block reward

While, with the extent of the inflation of the game’s currency, reliance on buybacks and burns from the developers, the ability for anyone to mine blocks, the variability in block rewards based on player skill and time invested in the game, the necessity of cooperating with other players to mine, and last, but not least, the existence of a central authority (Blizzard) controlling a central bank that could change the rules or ban accounts at any time for any reason – WOW’s “whitepaper” might be laughed at, this nevertheless provides an interesting basis for what problems blockchain games may seek to address in the future.

Maybe one day we’ll even see a blockchain based on PoMK (Proof of Monster Kill)?


While we tend to think of games as means of entertainment where everyone is constantly having a good ole’ time, many online games actually feel much more like work than play. A player may need to kill hundreds of thousands of monsters to hit the “level cap” in a game where the real fun (boss raids, guild wars, etc.) actually begins.

Players are laboring to earn their virtual coins!


A few other correlations we can make…

Organized Gold Farming vs. Mining Pools

Understanding that players of massively multiplayer online games were willing to spend their hard-earned cash for in-game gold (so they could reduce their time laboring in-game and increase their time enjoying all the virtual world had to offer), it didn’t take long for organized ‘gold farms’ to come into the scene. These gold farms were often made up of 50–300 workers each in countries like China, Indonesia, and Vietnam, where ‘real world’ labor was cheap.

Gold farms would pool their gold together and negotiate deals with game currency exchanges, just as cryptocurrency pools work together to increase their chance at solving blocks.

With diminishing returns for the individual (game players / at-home crypto miners), professional organizations ended up taking over both industries.

Botting vs. ASICs

With professional gold farms’ being businesses, they started to take a look at their costs, and realized that paying workers to play games all day (as well as feeding and housing them), even at only $200–300 a month each, was not bringing in the big bucks. Even with two twelve hour shifts per computer per day, the math just wasn’t good enough. They needed to mine more gold, faster.

This led to a push towards automation, and tech-savvy farms started writing pieces of software that would play games like World of Warcraft automatically. They then took it a step further by figuring out how to run 5–10 copies of the game on one computer. Three workers could now output as much gold as three hundred.

Needless to say, the ‘manual labor’ gold farms started to go extinct, and the race became to see who could write the best software. This resembles the hardware race we have been observing over the past couple of years in crypto miners.

In addition, the game industry is ripe with individual and organized hackers, whose sole mission is to steal gold from players’ accounts.

Exchanges vs. Exchanges

In the world of virtual game currency sales, the people and companies doing the mining rarely dealt with the customer. Instead, they would list what they had to offer on exchanges,which worked in very similar ways to the cryptocurrency exchanges of today.

A player would visit an exchange website, login to their account, choose the game (and server) they wanted to purchase gold on, then exchange their hard-earned USD/EUR/or CNY for that sweet, sweet, WOW gold.

Competition between exchanges was fierce, as everyone was essentially selling the same thing (fungible WOW coins). This is similar to cryptocurrency exchanges, where there’s no inherent difference between the bitcoin Binance sells vs. the bitcoin Huobi sells. This led to innovation (both good and bad) in sales, marketing, customer support, and technology.


Early cryptocurrency pioneers

Considering the similarities between RMT and cryptocurrency, it shouldn’t come as a surprise that a lot of key early figures in the blockchain space came from the gaming, and more specifically, real money trade industry. (Most notably Brendan Blumer of EOS and Brock Pierce of too many credits to list, but also many founders of top coins and cryptocurrency exchanges globally). Yes, RMT, the absolute bottom rung of the totem pole when it comes to the hierarchy of the video game industry, hated by a great deal of game players and developers alike, produced some of the coolest projects in crypto.

But, I guess, in some ways, it makes sense. Can you think of walking up to a Wall Street finance guy in 2009 (before Bitcoin was worth anything) and saying something like:

Dude! I just found out about this awesome new technology! All you gotta do is carve out some space in your garage, put a few computers in there, and turn your graphics cards on full blast! The computers are going to print out virtual coins! Then we’ll be able to take those coins and send them back and forth to each other! This is gonna be the next big thing! I bet we can even sell them for real money!

That finance guy would probably take a quick look at his tourbillon watch, wipe the dust off of his Italian suit, and tell you to get lost.

To a gold farmer though, it all made sense. A room full of computers running software to mine virtual coins? Turning around and selling those coins on a website in exchange for US dollars? Hah! Of course! We’d been doing that for years.

But blockchain technology was about to make it a whole lot easier…

— Jared Psigoda (@swaysnt), Founder of BitGuild

Part 3 of this article will analyze a couple of little-known games, both over ten years old, that hint at what the future of blockchain games may look like.

Check out the documentary about gold farming and Real Money Trade, Play Money, featuring Jared Psigoda and Brock Pierce, at www.playmoneyfilm.com — coming soon.


BitGuild’s mission is to revolutionize the global gaming industry by creating a platform for a brand new class of games that live on the blockchain. Blockchain games completely redefine the relationship between players and developers by facilitating full and true ownership of in-game assets, cheap & safe item trading, cross-game compatibility of items & currency, and more.

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