Understanding What Makes Virtual Items Valuable

When the first tethered game was released on Facebook, it did not take long before people were trading their virtual items for real money in online auctions. Many people are now wondering what makes these items so special that they can be exchanged as currency. This is a question that has been explored by economists and cultural theorists throughout history with varying levels of success.

Virtual items are becoming more popular, and many people are looking to invest in them. The value of a virtual product is determined by the demand for it. In order to understand what makes virtual products valuable,. Read more in detail here: virtual product example.

Why are virtual objects valuable? This is a question I’ve heard a lot from individuals who can’t understand why someone would spend $20,000 on a virtual piece of land or $2,000 on a pair of virtual armor. The idea of paying actual money for intangibles may seem absurd to these folks, but it makes sense to someone who grew up playing video games with artificial scarcity. Allow me to explain…

Scarcity

Scarcity is unquestionably a significant component in determining the value of virtual things. Diamonds, for example, were formerly among the least frequent raw commodities in the computer game Minecraft, but they are now among the most precious.

Diamonds were often employed as a store of value by players on online multiplayer Minecraft servers, who treated them as treasure and kept them concealed in chests. Diamonds were sometimes utilized as a means of exchange when players swapped them for other in-game commodities that were rare. The “era of the diamond standard” is how I refer to this phase in Minecraft’s history.

In Minecraft, you may mine diamonds on the left and wear diamond armor on the right.

Minecraft diamonds were likewise tough to come by in the days of the diamond standard. Another reason they were so valuable to players was because of this. Before you could start mining diamonds, you had to spend hours gathering the resources you’d need to make diamond-mining instruments. You couldn’t start a diamond-mining expedition until you obtained the necessary equipment, and even then, you’d have to spend hours mining enough raw diamonds to make a complete suit of diamond armor. 

Utility

Minecraft diamonds were also valuable due of their in-game functionality. A player with 24 diamonds could make a complete set of diamond armor, which was one of the most sought-after in-game items during the diamond standard’s heyday. Diamond armor was not only the most durable sort of armor, but it also provided the best protection against hostile things. 

Wearing diamond armor and using diamond weapons boosted your odds of surviving by a factor of two. You would be allowed to keep your in-game fortune if you managed to survive. You may even enhance your productivity in-game by employing diamond tools. Putting your (diamond) savings to work, much like investing in the real world, was a proven method to increase your riches in Minecraft. 

1655560211_233_Understanding-What-Makes-Virtual-Items-ValuableIn Runescape, a player wearing Rune Armor (left) and fishing “Swordies” (right)

A complete suit of rune armor, like diamond armor in Minecraft, is one of the most wanted in-game goods in Runescape. In middle school, I would skip out on after-school activities with my buddies to go fishing for swordfish, sometimes known as “swordies,” on Karamja Island in Old School Runescape (OSRS).

After hundreds of hours spent fishing swordies and several visits to the Grand Exchange, I was able to save up enough in-game cash to purchase my dream set. With my new rune armor, I was finally able to fight some of the game’s most dangerous and strong foes, reaping the benefits in coin, the Runescape universe’s native currency.

Runescape’s and Minecraft’s virtual economies have a lot in common. Because virtual things were algorithmically rare and difficult to get, they effectively acted as value stores. I had swordies in Runescape. I had diamonds in Mincecraft. I wasted an absurd amount of time and effort in both games gathering value and preserving it in these virtual assets. Value-capture methods like this may also be seen in newer metaverse systems like Decentraland. 

Creating Value

Golfcraft is one of a few innovative and promising play-to-earn games in Decentraland that allows users to collect, store, and trade value. In Golfcraft, players complete virtual mini golf courses in order to collect gold coins, the game’s currency. Coins are rare and difficult to get by. They’re also useful in-game, so they’re an excellent way to save money. 

1655560211_860_Understanding-What-Makes-Virtual-Items-ValuableGolfcraft Wearables (Left) and the Golfcraft Game (Left) (Right)

By playing competitively, coins may be re-invested in the game for a chance to obtain tickets. Golfcraft wearables may be purchased with tickets. Some Golfcraft wearables enhance your stats, allowing you to gain more XP and cash for your time spent playing. Wearables in Golfcraft are comparable to armor in Minecraft and Runescape in this regard. Players buy them using in-game cash (tickets) and utilize them to grow their in-game fortune. Diamonds are used for a similar but somewhat different purpose.

Golfcraft users get diamonds at random for merely playing the game. Players must spend diamonds to improve the properties of their clubs, which include power, control, and aim. Upgraded clubs have a higher secondary market value since they are more useful to players in-game. 

Value Extraction

The major difference between play-to-earn games like Golfcraft and legacy games like Runescape is that play-to-earn games like Golfcraft take use of technology that enable players to quickly transfer value off-platform. Because golf craft gear and clubs are stored as NFTs on the blockchain, they can be readily transferred to third-party markets like as OpenSea and sold for MANA, Decentraland’s native currency. MANA may then be exchanged for FIAT currencies such as the US dollar, which have higher tangible use. 

This was one of the most important aspects of Runescape that was lacking in games like Minecraft. To get in-game items like as gems and armor, players would have to work for hundreds of hours. Due to rarity and usefulness, these goods successfully acted as value stores in-game, but their worth was not readily transferable into the real world. Outside of their own virtual worlds, these objects were poor transaction mediums. 

Players have traditionally been constrained by the restrictions of isolated metaverse systems that lack interoperability. Players may now extract real-world value from their virtual goods owing to blockchain technology like NFTs and cryptocurrencies.

Players may currently purchase and self-build Golfcraft clubs on third-party markets like OpenSea. It’ll only be a matter of time until participants in metaverses other than Decentraland can draw value and usefulness from these clubs.

 

The “virtual goods trading” is a market that has been growing in the last few years. The market has seen a lot of growth because it’s easy to transfer virtual items, and they are also easy to trade.

Related Tags

  • virtual goods marketplace
  • virtual goods economy
  • technological factors enabling the growth of virtual goods
  • virtual goods in games
  • virtual goods metaverse

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