Edward Castronova had hit bottom. Three years ago, the thirty-eight-year-old economist was, by his own account, an academic failure. He had chosen an unpopular field — welfare research — and published only a handful of papers that, as far as he could tell, "had never influenced anybody." He'd scraped together a professorship at the Fullerton campus of California State University, a school that did not even grant Ph.D.s. He lived in a lunar, vacant suburb. He'd once dreamed of being a major economics thinker, but now faced the grim sense that he might already have hit his plateau. "I'm a schmo at a state school," he thought. And since his wife worked in another city, he was, on top of it all, lonely.
To fill his evenings, Castronova did what he'd always done: he played video games. In April, 2001, he paid a $10 monthly fee to a multiplayer on-line game called EverQuest. More than 450,000 players worldwide log into EverQuest's "virtual world." They each pick a medieval character to play, such as a warrior or a blacksmith or a "healer," then band together in errant quests to slay magical beasts; their avatars appear as tiny, inch-tall characters striding across a Tolkienesque land. Soon, Castronova was playing EverQuest several hours a night.
Then he noticed something curious: EverQuest had its own economy, a bustling trade in virtual goods. Players generate goods as they play, often by killing creatures for their treasure and trading it. The longer they play, the more powerful they get — but everyone starts the game at Level 1, barely strong enough to kill rats or bunnies and harvest their fur. Castronova would sell his fur to other characters who'd pay him with "platinum pieces," the artificial currency inside the game. It was a tough slog, so he was always stunned by the opulence of the richest players. EverQuest had been launched in 1999, and some veteran players now owned entire castles filled with treasures from their quests.
http://www.walrusmagazine.com/04/05/06/1929205.shtml