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the economy of OSRS
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Introduction to Economics – Old School Runescape Edition

It is the year 2007. The school bell has rung and you’ve jumped on your bike and are sprinting home as fast as possible. At home you fire up the Windows Vista powered desktop computer, you launch the game client, and “Jungle Island” starts to play. It is time to fish an inventory full of lobsters. Afterward, the long walk to Varrock west bank starts. Luckily, you have just finished your typing courses, so you can start spamming your offer as fast as possible: “Selling lobsters 200 ea”. And now you just have to wait for a buyer…

 

We are, of course, talking about the early days of Old School RuneScape (OSRS), one of the largest massively multiplayer online role-playing games (MMORPGs). In these kinds of games, one takes the role of an in-game ‘avatar’ whose actions can be controlled. With this avatar, you can enter a massive online world in which you can interact with other players and the environment.

 

In Old School RuneScape, you will be exploring the continents of Gielinor and Zeah while uncovering fascinating lore, defeating mighty enemies, and improving your avatars’ skills. During your journey, you will obtain many different items and even gold pieces (GP), the currency of OSRS. When obtained, you will be able to progress your account by buying better equipment or skilling repeating actions that give experience in a skill, until enough experience is earned to advance to the next level. For example, cooking food, chopping trees or burning logs.  supplies. This is done by participating in the lively economy of the game, which has had an eventful history and is still captivating today. In this article, we will explore the economy of Old School RuneScape.

skills OSRS
The skills of OSRS

 

Trade and trading

The early days

Just like in the real world, the in-game currency can be used as a medium of exchange, to measure the value of items relative to each other and to store wealth for future use. However, as credits or loans are non-existent, it is not possible to accumulate money by putting it in the bank. Although banks do exist in OSRS, they are only used to store items or GP. This fact made banks, and especially the bank in western Varrock, a popular gathering spot for people looking to buy or sell items. Players typed their buy/sell offer in the game chat while simultaneously searching the chat for a suitable trading partner. Besides attracting unwanted behavior, which will be covered in a later section, this form of trading was very time-consuming. Withal, this created the opportunity for players to become merchants. Staying put at Varrock west bank for hours and hours, offering a buy and a sell price at all times, profiting from the margin between their prices. Although this increased the fluidity of the market, trading was still cumbersome and changes were applied.

 

The Grand Exchange

The end of 2007 marked the introduction of the Grand Exchange (GE), a central trading system similar to real-life commodity exchanges. In the GE, players can place their bid and sell price on almost every item, after which the system matches players anonymously. After placing your bid or offer, the GE does the work and you can do other activities or even log out of the game. When your trade comes through, a message appears in your chatbox. This can happen within minutes, but could also take multiple days, depending on your bid/sell price. The GE made the economy of OSRS even more fluid. Buyers and sellers could be matched up easily and the prices began to reflect value much better.

 

Merching

The GE evaporated the role of the street merchants, but other merching methods became more viable because of items becoming available more easily and prices becoming more stable. First of all, one could invest in items when an accurate prediction on future prices could be made. Such predictions are often based on announcements of game updates. However, one big difference between OSRS trading and real-life trading should be noted, and that is the absence of shorting: One must own an item in-game to offer it on the GE. Therefore, investing is only viable when one predicts prices to go up. Another merching method is flipping. This method exploits the varying degree of patience between players, which causes a spread in buy and sell prices. So on the one hand a player might by stoked to buy a rune armour set to complete the quest ‘Dragon Slayer’, resulting in a high buy price being put into the GE. On the other hand another player might have obtained multiple rune armour sets while making money by defeating a high-level boss, resulting in a low sell price being put into the GE. Like merchants in the pre-GE era, flippers profit by buying low and selling high. Merching and flipping have become a popular practice in OSRS and there are even YouTube channels mainly dedicated to it, for example FlippingOldSchool.

 

Market watch

While trading has been a way to make money in OSRS at all times, the introduction of the GE professionalized the practice. The GE shows guide prices, which are the equivalent of real-world commodity prices, however, they are often very inaccurate. Hence, like in the real world, Bloomberg-like platforms emerged to track the OSRS market and even individual products. GE Tracker is the most famous example of such a platform. In collaboration with a game client, this website accumulates price data, which can be used to uncover trends. Among other things, they have created a market index, consisting of heavily traded items, showing the general health of the OSRS economy. Many players use their services to find the best items to flip, as the buy and sell prices of all items can be found with ease. You can even track your performance and compete in merchant competitions by logging all your transactions, which reveals that millions of GP are made each day purely by trading items. 

Market index by GE tracker - March 15th
Market index by GE tracker – March 15th

 

 

The economy

The key differences

While many similarities between the in-game and real-world economy exist, many game-specific factors affect how the economy behaves. As stated before, it is not possible to receive interest rates and traders are not able to short any commodities. Next to that, many players only have limited time each day to roam the game world. Combining this with the goal to progress in the game can result in very different behavior than would be expected in a real-world economy. Another interesting feature is the limitation of the computer system behind the game. Players can only have a limited amount of any item. Each so-called ‘stack’ consisting of one kind of item, can consist of a maximum of 2^{31}-1 items, due to the 32-bit back-end of the game. This results in the highest amount of GP one can hold at a time is 2,147,483,647. So if one wants to accumulate more wealth, it has to be stored by investing in items.

 

Controlling the economy

As opposed to real-world economies, the OSRS economy lacks a central bank controlling prices. Therefore, game developer Jagex has to use other means to control inflation and deflation. Firstly, to limit large price fluctuations OSRS updates its guide prices only once every 24 hours on average, while in the real world these are updated every 5 minutes. Secondly, inflation must be tackled. Due to the many existing methods of bringing new GP into the game (Killing other players, killing monsters, etc.) purchasing power of GP decreases. To counter these effects, ‘gold sinks’ are put into the game. These are methods that remove GP from the game and consist of the cost of recharging certain weaponry or fees encountered when training certain skills. The last problem that can be encountered is deflation. It occurs when large amounts of one item come into the game, while the demand does not increase. The main solution for this is adding new content to the game, which yields other items than existing content. In this way, the player-base will be distributed evenly and no items will become oversupplied. Unfortunately, high-priced items will always attract unwanted attention…

 

The Dark side of GP

Real-world trade

Until now we considered GP to be an in-game currency. However, that does not mean it has no real-world value. Officially, you can only convert real-world currencies into GP. This is done by purchasing an “Old School Bond” from the OSRS website, which will cost €5,69. These bonds can be activated to receive 14 days of membership, or they can be converted and sold to other players. At current prices selling a bond results in 4,238,484 GP. So effectively, you will be paying €1.34 per million GP. However, the fact that players are willing to spend real money to acquire GP has resulted in other manners of buying GP. It is fairly easy to find websites offering one million GP for around €0.52, which will be traded to you by another player after making the purchase. Participating in such behavior is forbidden and bannable. Despite that, this is an active market and a way to convert in-game currency into real money. Therefore, some people in the player-base take part in money-making strategies to accumulate GP for selling purposes: Gold farming.

 

Botting

Many methods of gold farming include the use of third-party software to automatically perform tasks. This could be as easy as just gathering skilling supplies, but could as well be defeating a high-level monster to collect valuable drops Items monsters leave for the killer when they are defeated or die. Drops can be picked up by players. . Often one person controls many accounts completing the same task over and over again. These bots accumulate GP, after which they trade it to a dedicated account for storing the GP, known as the ‘mule’. This account is then used to sell the GP to other accounts in the game. Not only do bots aid in enabling illegal real-world trading, but they also drive down the prices of the items they are botting. Therefore, Jagex actively bans accounts associated with botting, and even some players dedicate time to uncovering botting activity, for example, SirPugger.

Lobster fishing bots
Lobster fishing bots

 

Working 9 to 5

Not every account that is gold farming, is a bot. Some accounts are controlled by real-life players, using OSRS as their real-life job. Often such people participate in high-level content, where human intelligence is needed to succeed. Although less effective than running a massive bot farm, playing OSRS like this is still seen as viable for some people since real players will be banned less often. Other 9 to 5 OSRS jobs exist, for example training accounts for people running bot farms or completing cumbersome tasks for other players. However, this is not seen as gold farming but rather earning direct real money.

 

The effect of the real world

Venezuela

One of the most famous examples of the real-world economy affecting the OSRS economy is the effect of the economic crisis in Venezuela. At some point, monthly wages in Venezuela dropped to approximately $4 a month, mainly due to the inflation rate of the local currency. Many people transferred to other methods of earning money, preferably with higher purchasing power. One of the methods became playing OSRS, which increased monthly earnings to around $150 for some people. Problems began to occur in 2019 when Venezuela encountered power outages more often than not. Many players in Venezuela shifted from gold farming to training accounts, which resulted in a large decrease in formerly farmed items coming into the game. This scarcity has led to considerable inflation in these items and the power outages still cause heavy fluctuations. For a more in-depth article on Venezuela and OSRS one could, for example, read the article of Mat Ombler.

 

COVID-19

Since the start of the COVID-19 pandemic, many countries have implemented lockdowns and obligated employees to work at home. This has led to an overall increase of time put into gaming. This also holds for OSRS, and it is characterized by a growth in player-base and an increase of active hours per player. Especially the latter has resulted in more players participating in so-called ‘end-game’ content. Such content is identified by having very challenging game mechanics. However, when one succeeds, there is a very small chance of receiving expensive ‘end-game’ items. The increase in players indulged in this kind of content logically results in more supply of the ‘end-game’ items. Therefore, due to the COVID-19 pandemic, OSRS saw a massive deflation in ‘end-game’ item prices.

 

GameStop effect

Market manipulation is not a new phenomenon in OSRS, however, following the GameStop hype of the beginning of 2021 a new approach has been used. Using the OSRS-themed Reddit page, a certain item was marketed as the OSRS equivalent of GameStop shares. Wizard boots, normally trading for almost 200,000 GP were said to skyrocket in price, with rumors of the price going to over 30 million GP! Within a day, the price shot up to 800,000 GP. Unfortunately, one day later the price plummeted back to 300,000 GP. The GameStop effect could not be recreated. There are two main reasons for this. Firstly, shorting is impossible, so no one had a short position on wizard boots. Secondly, there exist many items in OSRS, so people who need a ‘wizard boots’-like item will switch to alternatives when the prices rise too much. Hence, we will probably never encounter such GameStop effects in OSRS.

Wizard Boots are going to be worth the same as Ranger Boots! - Reddit post by u/Silvontoff
Wizard Boots are going to be worth the same as Ranger Boots! – Reddit post by u/Silvontoff

 

Conclusion

The in-game economy of OSRS went through developments similar to real-world economies. Even profitable manners of participating in the economy are similar to the real world. However, it is much more difficult to keep an in-game economy healthy and stable. Not only does the economy lack an institution managing monetary policy, but it must also deal with many forms of illegal behavior and manipulations caused by real-world events. In short, the OSRS economy is a captivating and complex entity and only one of the many reasons to play the game.


Dit artikel is geschreven door Jochem Hak

Jochem Hak

 

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