Eve Online is a strange concept.

On the face of it, Eve Online is a computer game about internet spaceships and trying to blow up everyone else's spaceships. Dive a little below the surface however and you quickly realise there is much more to this world than blowing things up.

Eve Online is a simulation, it is an experiment which mirrors the social interactions and communications of the real world - and just like the real world it has a fully functioning economy.

In fact, it has an economy which could be used and studied in order to help what we do in the real world according to the man charged with overseeing how the $18 million economy operates.

Dr. Eyjólfur Guðmundsson (or Eyjó for as he likes to be called) is the lead economist for Eve Online, the Massively Multiplayer Online game which has over 500,000 active players and he sees himself and his team as a combination of "national economics institute, statistics office and central bank".

Dr. Eyjó has seen the game grow hugely in complexity in recent years which presents its own challenges, but it remains the hugely enticing project he first became aware of over a decade ago.

Economist's dream

In 2004, having completed his doctoral degree in economics in the US, Dr. Eyjó was working at the University of Akureyri in Iceland when Vernon Smith, nobel laureate in experimental economics attended a conference at the university.

One of the presentations at that conference was from Kjartan Pierre Emilsson, lead designer on Eve Online, and sitting in the audience Dr. Eyjó soon realised the potential of what he was hearing:

"This would be any economist's dream, because this is not just an experiment, this is more like a simulation. More like a fully fledged system where you can input to see what happens."

The economist followed the fortunes of the game over the next couple of years and at the end of 2006 CCP Games advertised for an economist, and Dr. Eyjó knew that if he didn't take the opportunity "he would regret it for the rest of his life."

He says that initial he thought "it was a giant social and economic experiment" but now he believes "it is an alternative universe that is just out there and needs to be studied like any other universe."

The Eve sandbox

Eve Online is known within the gaming community as a particularly tough game to play, taking huge amounts of your time and concentration to even get to a point where it becomes enjoyable.

On a basic level, the game sees players mine minerals from planets in the system, which they can use to manufacture ships which can be sold or traded for bigger and better ships.

The game is what is known as a "sandbox" meaning that CCP Games has created the Eve universe, but what happens in the game is entirely up to the players - meaning that initially at least, no one was sure how it would all turn out, and the potential of a single player winning the game was reality, but:

"We realised three to four years ago that [the game] has gotten so big that it is very unlikely that it will happen as this point," Dr. Eyjó says.

Very real implications

While mining planets in far off star systems may not have much relevance in today's world, the way the Eve economy functions could have very real implications:

"I honestly believe that there are a lot of things happening in Eve Online that are a good direction for real life economists to look at, study and use."

One of the main areas which Dr. Ejyó believes real world economists could look at is monetary systems.

Following the economic crisis a few years ago, economists began to look at moving away from fiat currency and looking at different monetary systems, such as returning to the gold standard, with moving to cryptocurrencies such as bitcoin being the most recent alternative mooted.

Interstellar Kredits

In Eve, the currency is ISK (or Interstellar Kredits), and it is operated by the central bank but works simply as a means of exchange and not as a way of increasing your wealth.

"It is not intended to be the cornerstone of investment in the game. We do not charge any interest for it. The supply is fixed, or we try to fix it to the creation of economic value."

Items in Eve cost from a few ISK (such as rounds of ammunition) to many millions or even billions of ISK for rare to powerful equipment.

Bloodbath of B-R5RB

The game hit the headlines earlier this year when a major battle - known as the Bloodbath of B-R5RB - became the biggest in games history, with 11 trillion ISK worth of spaceships destroyed. While converting this into real world currency is not straightforward, CCP suggested that it equated to between $300,000 and $330,000.

However rather than seeing this as money lost, Dr. Eyjó says "this value was not lost it was consumed. In economics there is a big difference between consumption and loss. In Eve, the war is the consumption of the economy. Even though they are giving money away they are not losing value, they are gaining something instead. People were willing to spend that money [in the Battle of B-R5RB] to get this thrill of participating in this battle."

Because the amount of ISK in the game is tied to the creation of economic value, CCP - or "the government" as Dr. Ejyó calls it - cannot simply inject money into the system to stimulate the economy.

Unlike in the real world where quantitive easing sees huge amounts of money injected into a market to stimulate growth, Dr. Eyjó and the Eve central bank has a more subtle approach.

Tweaking

ISK is created by the in-game actions of players including combat missions, mining and manufacturing. By tweaking how much ISK is created by these actions, Dr. Ejyó can change the total amount of ISK in the Eve universe.

To take money out of the system, and therefore avoid hyperinflation, CCP applies a sales tax to transactions, takes brokers' fees and even sells players skill books needed to progress in the game.

"We try to have a relative balance of money coming in and money coming out and the increase per month should represent the net increase in economic value."

Currently, on the active accounts in Eve Online, there are 600 trillion ISK according to Dr. Eyjó - which in real-world currency translates to around $18 million (£10.5 million).

"We function as a national economics institute, statistics office and central bank giving advice to government, with the government being the developers and us being the monitoring authority."