Guild Wars 2

Colonel Kernel.7506:

Yes, the current prices will eventually be reasonable. But not today.

The current prices are always reasonable to someone. The day the prices are reasonable to everyone is the day ANet can no longer sell gems for real money.

As unclear as the inner workings of the gem exchange are, you have to keep the business plan in mind.

I am quite happy with the fees, and if anything I’d like the gap to be larger. Quite a few of you are too focused on free markets and real life comparisons, when neither would benefit the game as a whole. As obfuscated as it is, the gem store serves two purposes: A source of income for ANet through gem-for-cash sales, and a gold sink through gem-for-gold sales. Removing the fees would not only take away the gold sink but indeed open the gem exchange up for speculators.

On top of that, a lot of posters are in favor of a buy/sell order system. As I have mentioned earlier, I think that is a terrible idea. Let us assume that exchange fees are removed and the exchange is based purely on buy/sell orders. Let us also assume that all players spend an equal amount of gems in the gem store. Finally, let us assume that only half the players ever buy gems for real money. At this point, those players would have to trade half their gems for gold for the market to be stable. Now, the problem is that we don’t know how many players actually buy gems for real money versus gems for gold. Personally I think 50% is quite a high estimate and I’m guessing we’re closer to 20% (and even that feels optimistic). Now we are looking at a ratio that says those players must trade 80% of their bought gems for gold to achieve a stable market. I have one question… What would they do with all that gold?!

So what, nobody wants to answer my question why a solid 1 gold = 100 gems idea is bad?

If the currencies were linked at a fixed rate without transaction fees, there would be no need for two separate currencies. You could just buy gold directly from ANet instead of gems, and pay with gold in the gem store. That’s not really an argument either way though.

The gem store is a gold sink. Every time a player exchanges gold into gems, it removes gold from the game. At release, gold was scarce and you could get a lot of gems for it. As the game progresses, gold becomes much more common. The exchange rate has to keep up with the gold inflation, ensuring that gem store items are always priced in such a way that players can justify purchasing gems for real money. If it didn’t, a year or two down the line, players would have no incentive to buy gems for real money as everyone is sitting on hundreds if not thousands of gold.

I wonder if the exchange rate algorithm uses the actual transactions in a 1:1 relationship, a different relationship, or follows market trends over short periods of time.

It is very hard for me to imagine that gems are exchanged into gold at even close to the same rate as gold into gems. It could be that the algorithm works off of the amount of gems bought with real money relative to the amount bought with gold, and more or less ignores the gems to gold conversions. The latter makes more sense to me from a business perspective. If your goal is 20% “paying customers”, then the exchange rates would settle once 20% of gems are bought with real money and 80% with gold. Either way, the point being…

Unless the rates are indeed determined by a 1:1 ratio between gold->gems and gems->gold exchanges, implementing a trading system similar to the trading post, where all gems have to be supplied by other players, would cause a drastic change in the rates. If my hunch is correct then it wouldn’t be a change for the better, if you are on the gold->gems side of things.

I am genuinely curious what everyone’s thoughts are on this.

I for one think the gem exchange prices are controlled by a fairly simple algorithm based on supply and demand. Whether ArenaNet can directly manipulate the flow would come down to speculation but I have seen no evidence to suggest this. Quite the opposite actually. Since release (with the possible exception of the first few days) the prices have only been going one way. This is what we should expect to see as players gain more and more gold from playing the game, causing (expected) inflation. Because the real money price for gems is fixed, the exchange rate really only has one way to go until it settles.

About a month ago there was a brief period (hours or less) where players couldn’t purchase gems for real money but the ingame BLTC gem exchange stayed up. This resulted in a very obvious spike in exchange rates as the supply of gems for gems-to-gold conversions were cut off while gold-to-gems stayed live. When the systems came back, it settled down quickly. This again is exactly what you would expect to see of a supply and demand market, when either one is temporarily removed.

Finally, using the data from http://www.gw2spidy.com/gem, it seems there is a rigid % relationship between exchange rates. The premium on gold-to-gems exchanges is about 38% (X gems costs about 38% more gold than you would get trading X gems into gold). As far as I’m concerned, this helps prevent speculation in the gem exchange rates, leaving only “legitimate” trades to determine the exchange rates. Making the gem exchange a free market (and opening it up for speculation) would not be beneficial for the average player.

Also, although they only have about a week’s worth of data, the graphs clearly show the exchange rate trend people are noticing. Of more interest are the daily variations, with the same peaks and valleys showing up at certain times every day.

Quiqui Earthenborne, elementalist!