The Logbook: Hyperinflation in virtual economies

The early 2000s saw an explosion of massively multiplayer online role-playing games. Games like Second Life, Entropia, and Gaia Online shot to popularity due to their many social aspects and feature. Furthermore, by allowing users to participate in the ownership of their respective virtual economies, these social games built an ever-engaging userbase.

The virtual economies of games mimic real-world economics. For this column, we take a brief look into the history of Gaia Online (commonly referred to as Gaia) and some of its economic decisions that ultimately led to the hyperinflation of its virtual economy.