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How Gold Farming Works

The Economics of Gold Farming

Gold farming is an important part of the virtual economy. This term was first used to describe economies inside online games, because, just like the real world, fantasy worlds can contain finite resources that are subject to the laws of supply and demand. Gold farming expands this definition into the real economy, however, as it involves the exchange of virtual goods and currency for actual money.

So how does gold farming actually happen? First, gold farmers obtain virtual goods and currency by playing an online game and collecting them. They may be amateurs, meaning they do it as a hobby or as a way to make a little extra money, or they could be professionals, who do it for a living. There are some professionals who work alone, but the trend since the early 2000s has been toward businesses that employ multiple gold farmers, also known as gaming workshops. These operations are found in countries across the globe, including Mexico, Romania, Russia and Indonesia — though most are located in China. That country boasted an estimated 2,000 gaming workshops that employed some 500,000 gold farmers in 2007 [source: Heeks].

Next, gold farmers have to let players know about their services, and just like any business, they do this through advertising. To get the word out, gold farmers will advertise on fan sites or search engines and will even create characters that will go around and engage other players through the in-game chat feature. In one gruesome but creative example, "World of Warcraft" gold farmers spelled out their website's name using dead bodies.

Interested buyers then contact the gold farmer and pay real money for the virtual currency or goods that they need. This used to be done over sites like eBay, but the e-commerce company banned the practice in January 2007 [source: Dibbell]. Now, most gold farmers have websites where buyers can make payments through PayPal. Delivery then happens in a couple of ways. Either the buyer can meet the gold farmer in the game and exchange the virtual goods, or, in some cases, the trade can be made using an in-game mail function.

How many players actually use these services? Surveys indicate between 22 and 25 percent, depending on the region of the world [source: Lehdonvirta and Ernkvist]. That's surprising, especially because gold farming doesn't have the best reputation.