Dev Diary: Rethinking Gold as a Currency

As it is now, the system, while very innovative, lacks efficiency. You're losing a lot of time in selling/buying stuff instead of playing the game instead.
Other than that, I can only say I look forward to improvements to trading in general, which I know will come.

Efficiency? This is all about immersion!

I log into the game, new toon. Nearly dead on the beach, and immediately I'm fighting for my life. Survivor tells me about a possible encampment up the beach, and then he's attacked and killed! I fight for my life, picking up stray items as I head to hoped-for safety, and eventually, after an EPIC struggle with the badest dude in my way, and exhausted, I make it to ... the sadest little broken-down excuse for sanctuary you've ever seen. The few aurvivors are willing to accept another, as a long as you're willing to help keep everyone alive. Oh, and if you need a few things, we may be able to help. If you have something useful to exchange in return.

[Cut to memory of most games, where now I'd find a full banking system, universal auction house, and an inn fully stocked with all the perishables I could need.]

Ok, if i HAD any gold on this journey, the pirates, jailors, thieves, fellow inmates, chaotic seas, and loss of everything i had in the world would have taken care of it. But, hey, I scrounged a few baubles off the (un)-(re)-dead, would you have any use for these?

"Hey man, those are nifty magical items. This land doesn't just bring the dead back to life, and try to take yours, it's got a few odds and ends that have washed up through the sands of beach and time. Some of them are magical, and more than you'd think, if you keep your eyes open. I'll take whatever you find in exchange for some other stuff we've scrounged, but you may want to use 'em yourself. They could save your life someday!"

Tough choice. Take what I can get, or hold onto it for the future? Which, by the looks of it, is pretty bleak. Lucky to have made it this far, I'll be needing any advantage I can get.

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You catch my drift. Items that aren't "heirloom", but tradeable to other players? Potion bottles you can refill? Limited storage for my "coin" that can't stack to a gazillion, as if I had a Fort Knox in my pocket?

Gotta tell ya, if you want the standard gold-based game, PLEASE go somewhere else, and don't ruin this pure GEM!

Here's one of those "TLDR" posts.

I'm looking at the situation from an economic perspective. I'm currently working on my master's degree in research economics, so if you're genuinely interested, here's my arguments.

At first when my friend told me there is no gold, I was like "WTF?" Then he told me there are scroll bits and scrolls instead of currency. Then I thought "wow, that's actually really cool... makes perfect sense in a continent of exiles, which is a kind of Australia I guess... even if Australia always had currency". But then I saw that this "poor" continent with sub-standard standard of living dropped GOLD rings and precious gems all over the place... and wild animals were found in possession of expensive silks, finely cured leather and intricately designed chainmail. So nevermind that...

But then I tried to convert my various "currencies" and saw that the opportunity cost wasn't well represented in the "convertibility" ratios (if you could call it that), and worse of all, trade generates more frustration than payoff due to the market being a bitch to clear.
And my economist training kicked in:


Gold sinks and inflation? Please... there is no game such as this where inflation can be prevented. In fact, there is no economy in the world, bartering or monetary, where inflation and price distortions can be blocked out completely. Take out orbs and consumables, if trade is possible and items are not bind-on-pickup, there will ALWAYS be inflation, simply because the item mass over time increases, both aggregate and per capita. Inflation is only a nominal process... if the rest of the economy is running well, nobody cares. If there is inflation, the only people hurt by it will be the ones taking a long break from the game. But since they can easily store the value of the money by buying orbs, problem solved!

Gold sink is just as effective if you can buy the orbs. If gold inflates, the only result will be that people will buy more orbs and risk a little more. This has been proven already by the gambling system in Diablo 2 (sorry if we're not supposed to talk specific other titles). Instead of accumulating gold, people just gambled it all away till they were broke. The only reason the money sink in diablo 3 wasn't as effective was because the "gambling" (crafting) required other materials, was tedious, and provided horrible rewards overall to the point where people felt it wasn't worth the stress. So orbs aren't a better gold sink. They are simply mini-gambling operations where you just randomize 1 aspect of an item. Do people gamble more when they have more? Yes. Do they save their last few orbs or a certain type? You bet. So ultimately, gold sink argument is economically invalid.

Gold farmers? Please... as long as there is a market opportunity, someone will eventually rise to take advantage of it. That's universal. They won't sell gold. They will sell chaos orbs and GCPs, which are the two currencies. So where is the improvement? I find this argument economically invalid.

Wealth Determinism? - "People’s net worth in gold is directly proportional to the amount of time they have invested playing." The same applies to items. Again, even if there was no such thing as the orb system and just items... people would trade (albeit much much less). And the value and trade in low level items will disappear, and people will trade only in high-level items. Remember, when agriculture first appeared on the valley of the Nile, before any type of currency, people accumulated wealth at different rates, and you had rich and you had poor. Again, argument is economically invalid.

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Trade Parity: With a common gold currency, it’s easy for players to know and demand the current market value for an item. If the trade occurs at a value that differs from the current perceived market value, then one of the players feels that they got ripped off.

False, false, and false again. Here's why! If people can estimate the market value better, this will increase the volume of trade. And you can only talk about people looking for market price when there is no product differentiation. Once you have product differentiation and grades of quality, "market price" becomes an ethereal concept in reality. What matters here is reservation price, both the seller's and the buyer's. What's more, having an auction house where people can browse and list products means their reservation price will quickly get matched to someone else's reservation price. Voila, you have trade where both sides feel like they got what they wanted out of a trade.

If anything, the current system is unforgiving to anyone without experience, and in order to get a good feel for the true value of something, you'd have to level to end-game, get a feel for drop rates and try to estimate opportunity cost, and learn the system of orbs and their relative prices. Not to mention that trade chat is full of trolls and people looking to cheat others if they smell easy prey. If anything, trust and trade are considerably lowered because of two things: asymmetry of information and lack of transparency. Again, your arguments are economically invalid.

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Homogeneity: Each unit of the currency has to be equivalent to other units. They should stack together, and there should never be a reason for a player to discriminate between two different units of that currency.

False. They are not equivalent. The ratios between world drops aren't the conversion rates of vendors, and are again different from any trade going on. And the many many intended types of currencies have died, leaving chaos orbs and gem cutter's prisms as the only ones (and chaos orbs seem to be dominating).
This has happened in human history, in barter economies. In one example, people bartered for cheese, effectively turning cheese into currency. The conclusion to this is that people WANT and NEED a centralized expression of value and liquidity. Otherwise a market never clears. Again, your claims are false and economically unsound.

Utility - you have more gold than you find utility for? No problem, go to orb vendors and try to improve your current gear. Don't feel like risking? Farm a little more than go buy an item with the exact stats you want.

Scarcity - you can make gold scarce as well. For instance, don't make gold drop from mobs, just from selling items... or hell, just orbs. But make the buying/selling price identical so they're all liquid. And certainly not at the conversion rate they go for now. If you want to upgrade 4 orbs higher, the conversion is 64 to 1. What current trade there is doesn't suggest ridiculous rates like this, and the ratio of drops when adventuring certainly isn't 1 jewler's orb to 1 transmog or whatever... Point being, the scarcity is bad enough, the fact that they are effectively untradeable and completely unconvertible makes is just aggravating.

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Handleability: It should be convenient to transport or transact with a large portion of your net worth as currency.

HAAAAAhahahahha! Are you kidding? I have a stash full of good items (good for their level anyway). I am unable to sell them when I post in trade chat, and I would rather spend most of my time in the game actually playing it. If I wanted to shout offers for hours on end, I'd go back to trading securities or just play EVE Online and scam people.

Now finally, the scarcity of it all... I find it just plain stupid that you need to play for weeks or months in order to reach a lever where your items are worth liquidity. If this were any other business model, then yes, subscription would make sense, make goals extremely time-consuming. But with the current business model the ridiculous scarcity and illiquidity make no sense to me... but then again, I've only studied business and economics, it's not like I know principles 'n' shit...

Dear Chris and Grinding Gear Games, please, hire an actual economist if you want to design a better economy. I know this is the internet and my opinion doesn't mean squat to most people, especially the ones I see giving just ludicrous arguments and writing opinions as facts... But read some basic literature on currency and monetary systems and inflation or hire a decent economist who isn't biased one way or another. And make sure he plays the game for a long time to get a feel for the truth.

There are many conflicting ideologies in economics, which is part of the reason why economists don't have too much credibility, and I for one am not a big fan of monetarism (Milton Friedman's), but in the swarms of books and theories, you will not find one properly formulated theory where a market is better off without a central measure of value and liquidity. Inflation and wealth determinism will occur in barter economies anyway.

In my 50+ hours of gameplay where I've only made one trade, I've concluded that PoE desperately needs 2 things - an auction house and a currency. Until then, anyone wanting to trade will have to spend most of their time in town trading rather than playing the game. And I'm pretty sure the developers at GGG don't want that.

I think DrexelDitch has pretty much already said what I wanted to say here. I'll rephrase it my way, though. (translation: Let the rambling commence!)

Trying to trade is too much of a pain in the rear. I don't want to stand around in a town yelling every 30 seconds watching my attempt to trade immediately scroll right off the screen I surrendered in less than 5 minutes, I'd guess, I'm playing a game after all, and it's not called Path of Barter.

Tonight I tried to trade a Divine Orb for some Fusing and/or Chromatic. I can tell you now - this is an impossible trade. And if you think there's not a gold system currently in play please check here: --link removed-- - you're just not calling it gold. It's like the Standard system of gold. Metric would just be easier.

Rambling continues... Exchange House idea.

So what we need is some kind of Exchange House. If someone wants to trade something they would need to have a Exchange Rate defined then maybe a min/max of acceptable currency with a timeout (if the minimum bid comes in, wait 5 for the asking to be met, else take the minimum) . If you wanted to be kind you could have the Exchange House convert for the players. Then the seller can post his Exalted Orb. Seller has set his conversion to 30 Fusion and/or 300 Chromatic or any combination that ends in the desired trade. Seller wanted half and half, but buyer offered 2/3, 1/3, the house converts to 15 ex and 150 chrom.

Then you can use this data to have vendors make trades for the impatient among us and then the vendor takes a Handling Fee of 5%. I might use the vendor if I pop into town hoping to link 2 sockets and there are no Fusion available in the Exchange House and I don't want to lose progress in my instance in the Mud Flats. I would be willing to take a hit in the profit.

Further - people could post gear in the Exchange House. If you wanted to be kind, you could use the current (calculated average) exchange rates to automatically convert for the buyer and seller. Then I could use 8 Alterations for an Alchemy Orb since I have a couple dozen or so laying around.

/ramble ends

RANT Part Deux: Now I've consigned to try and sell, and I get kicked for "Trying to many actions too fast... repeatedly.
/RANT

I am not sure why some of you are devoting so much time trying to convince us that this bartering system doesn't work or is unnecessary, but I want to point out something that I think all of you are forgetting/overlooking.

The developers of PoE wanted to do away with the gold currency system, so this was their innovative alternative. You can take it or leave it. Personally, I think its genius and I'll explain why.

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Everything that they pointed out as being a flaw in gold-based economies holds true. When gold is the universal in-game currency...

1. Gold sinks become a necessary evil. Nobody likes them and yet there is no avoiding them because inflation destroys game economies. If you are denying that then you are denying reality.

2. There will be gold farmers. It is a lucrative business and people are always looking for ways to cheat. This creates a buy-to-win atmosphere, which is something the PoE developers are strongly against.

3. The players that aren't buying their gold from professional farmers are simply doing the farming themselves. It is a grind to be able to afford that top-of-the-line gear and players hate that grind (for the most part).

4. As an economy stabilizes, accepted item values become universal, based on supply, demand, and the current value of in-game gold. As soon as one of those three factors change (and they inevitably will), the price changes. Price changes cause panic and anger for the majority who lost out and benefit the lucky few who were holding the right item (or were at the right place, or doing the right thing, etc.) at the right time.

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So, to try and avoid these well-known issues with gold-based economies, the PoE developers implemented their new system. With PoE's economy...

1. The "gold sink" no longer feels like a sink. Players choose when they want to spend their currency, they aren't told to. Inflation is also a non-issue because, as an overabundance of currency-items lowers their value, players are then more apt to use those items and consequently restore the currency-items to their original equilibrium value.

2. Most money comes from selling loot to NPC's or getting lucky drops. This slows down gold farmers tremendously because they cannot simply "farm X amount of this resource" or "make X amount of that item" for money. They have to actually play the game. When gold farmers are slowed down, the real-world cost of farming gold increases. Higher prices make players less likely to buy in-game currency with real money, putting somewhat of a dent in the problem (at the very least).

3. Becoming wealthy to afford top-of-the-line equipment is no longer a second job. Currency-items accrue as you play the actual fun part of the game. Furthermore, if you still can't be bothered to save-up for that piece of equipment, some of your "money" can be used to (with a little luck of course) create that top-of-the-line equipment that you wanted, without even glancing at the trade chat.

4. There is no set value for items because their very existence is decided by random drops and then subjected to the decisions of players and their application of item mods. The subjective value of an item is therefore based upon how badly various players want/need the item in question at the very moment of transaction. Every trade becomes a true barter between players based upon their current needs and desires. Also, while the currency-items tend to have general relative values of exchange, much like pennies to the dollar, even those values can fluctuate from person-to-person as some consider various currency-items more important/useful than others.

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Wow, sorry for being so long winded, but I felt a need to have someone explaining what the developer was trying to say in a different way. I think it's a brilliant system and I guarantee we will see more of this type of system in future games.

Good job GGG for producing such a top-quality game. The gaming community thanks you.

Having played many hack'n'slash / ARPG games, PoE feels right regarding this feature. And no, I didn't read books and I didn't learn things in schools about economy and such. From a simple player's point of view, it just feels right, and that's what matters, at least for me.

The problem with any of the negative posts, is the negativity itself. When will a game be good enough; and if it's not good enough for some. When will people learn to play something that is right for them and leave their cyber mouths shut. I'm not pointing fingers, I see small and large issue with PoE, but the GGG guys have done something here, and it's free. We should all thank them. (Points to the suggestion box) Have a valid idea, send it to them, smart programers always listen. But as far as I can remember complaining made people do the opposite.

The only thing I will mention as a draw back, with concerns to items in general, is the litter I leave on the ground when I'm soloing area's. This must be taking up space some where, which means maybe the game isn't running as fast as it could be for me.

In closing I'd like to point out to those who made points against the GGG guys reasons why they made the current PoE currency system that I think your wrong that gold will make the game better; and that arbitrarily inflation, bad economy, and gold farmers will always exist.

My answer is simple, the few will always outweigh the many. To be clear, this isn't about people, instead its about the few reasons why GGG went with and should stick with the currency plan as is, versus the many reasons that can be made against the Orb system itself.

I'll take a guess at the number one reason:

#1 Reason why PoE should stick to the Orb Currency System.

Answer: It works...

I just started playing, and wow the developers of this game are my heroes. This game is absolutely amazing. Now how do I manage my time and not get addicted too much? This is the type of game where you don't need to charge because it's so good it makes you want to donate and buy something. Upgradable flask, that self refill, where do you guys come up with this stuff? Just amazing.. It's so configurable and diverse in every aspect, yet so simple to pick up and understand.

Sorry I just started playing yesterday. =) Let me get off the high a little bit and get back to topic. Forget gold, orbs are awesome. D3 is learning the hard way right now. I think everyone feels a little weid at first but it all makes sense.

If GGG want to use gold as currency, i think it might be better in a form of static trading
Gold should be obtained ONLY from NPC
Players can sell orbs to NPC with certain rate like
1 alteration orb = 1 gold
1 chaos orb = 20 gold
1 orb of fusing/alchemy/scouring = 10 gold
1 gcp = 60 gold
1 exalted orb = 600 gold


Players can buy those orbs also from NPC with gold
better deals still can be done while trading with other players (like buying exalted orb for 500 gold)

As this is my first post here, I wish to thanks GGG for this great game. I strongly agree both with the scientific DrexelDitch analysis, and also with people enjoying the orb-based economy.

Some suggestion for a 'mixed' economy:
1) Gold drops from monster and from selling items and orbs.
2) Orbs can be both buyed and sold for gold. However the 'higher' the value of an orb, the higher is the buy/sell ratio. For example a ScroolOfW may be buyed/sold with a ratio 2:1 (it cost twice as it is sold), but for an ChaosOrb this ratio may be 25:1.
3) When i buy Items/Orbs from NPC, i can choose to use money or (specific) orbs, but if i choose to use orbs it will cost 'less'. So there is an incentive to keep orbs rather than selling then for money (of course there is also an incentive since orbs have skills). Similarly, when i sell item i can get money or orbs but if I choose orbs i would get higher revenue. The only advantages of gold is that it is universal (and easily stackable).
4) The coexistence of an orb and gold econonomy allows to make things more complex and funny: for example a NPC shop for rare items, where i can buy some rare items with complex combos of orbs (depending on item skills), or with lot of gold if I do not have the right number/types of orb.
5) With gold it would be more easy to make large-scale (globalized) trade. For example there could be a stock-exchange for orbs, and an auction-mechanism for buying items (even outside the game or in a browser). I think the actual trade system in POE lacks in efficiency: trade should be more easy and fast. I think the optimum would be a trading system which allows trader to not communicate (i.e. an automatic auction system). This would be not in replacement but as an alternative to the trade-chat.
6) With gold there could be more kinds of orbs, each with its different skill.