Method 1: Taxes and Ship Replacement Programs (The Basic Way)#

The game world is home to these gigantic groups of players that are run totally by players. Think of them kind of like guilds in World of Warcraft, but way, way bigger. The biggest ones are pretty much like tiny nation-states. They’ve got their own borders, a standing military, they collect taxes, run industries, and have clear command structures.

Naturally, these big groups are going to bump heads with others like them. Maybe it’s over stuff they need, territory, or sometimes, you know, just for the fun of it. At the end of the day, it is a video game, so sometimes the only reason for a war is just to keep the members entertained.

Normally, here’s how it goes: the players taking part in these wars usually have to bring their own combat ships, bought with the money they earned in the game themselves. BUT, if they lose a ship in battle, the big player corporation will pay to replace it. They do this because winning these wars needs lots of people flying ships. Making sure players aren’t too scared of losing their ride means they’ll keep logging in and flying headfirst (or ‘yoloing’) into those huge space fights.

These systems, called Ship Replacement Programs, or SRP, are usually paid for by the taxes the corporations collect when things are peaceful. The players who focus on building stuff and running businesses get safe space to do their thing, and in return, they pay a part of what they earn to the central group. This group then uses that money to fund the military side of things, either to protect the area they have or maybe grab some more. It’s basically exactly how governments work in the real world.

Now, that works fine most of the time. But sometimes, the player groups focused on industry aren’t set up to fight wars themselves. When that happens, they can hire mercenary entities. These groups literally do nothing but fight wars for other people, for a fee. Again, not too different from what happens sometimes in the real world with companies like Academi doing a very similar job.

Up to this point, we’ve been talking about wars that are pretty big deals if you play the game or spend time posting on R/EVE (that’s “Arr Slash Eve”), but for someone just looking in from the outside, they weren’t exactly headline-grabbing. That all started to change about five years ago.

A Shift in Funding: The Rise of Virtual Casinos#

See, EVE’s economy is so detailed and realistic that for a while, there were even virtual casinos inside the game! These weren’t put there by the game developers; they were started, paid for, and run completely by regular players using the game’s money. And just like real casinos, these virtual ones made absolutely massive profits.

Making tons of ISK was great and all, but individually, players with that much money didn’t have much to spend it on in-game. You could buy pretty much every spaceship in the game many times over with that kind of cash. They needed something bigger to do with their money. The most obvious thing was to sell that in-game money for real cash, whether the game rules allowed it or not. Sure, they might get banned from a video game, but these casinos collectively generated ISK worth millions of real dollars. That was a risk a lot of casino owners were willing to take.

What made this even easier was that the thousands of transactions these casinos handled every day were a perfect cover for in-game money laundering. It was nearly impossible to tell which transactions were legit casino winnings and which were something else. Again, very much like real-world casinos, which are often in the news for being places where money gets laundered.

However, some of the more… let’s say, “honorable” casino owners decided to use their huge space dollars for something you couldn’t just buy publicly: influence.

This led to what’s known as The Casino Wars, kicking off in 2016. The “I Want ISK” Online Casino used its vast fortune to fund a group of player corporations. Their goal? Wage war on the single most powerful player corporation in the game at the time, known as “the Imperium”. Why? Because the Imperium had apparently crossed the casino in a past business deal.

In reality, pretty much all the other player groups were just looking for any excuse to go to war and try to take the Imperium down a peg. They just didn’t have the deep pockets needed for such a massive challenge. But with the casino literally “writing the cheques” (partly just to show everyone what happens if you mess with their business), it enabled one of the most devastating wars in the game’s history. That’s what got us those articles in PC Gamer about spectacular space battles. And yeah, the money side might not sound as flashy as spaceship explosions, but it’s definitely just as interesting!

Developer Intervention and the Search for a New Model#

Not long after The Casino Wars wrapped up, the folks who make EVE Online decided to shut down these player-run casinos. They said they had their own reasons, but most players figure it was probably a mix of wanting to crack down on the trading of in-game money for real money and also reacting to players complaining that these casino groups had way too much power in the game.

The big consequence was that by 2020, a completely new way of funding wars was needed. The same big players from the Casino War were getting ready to go at it again, but a few things were different this time. For one, the casinos were gone, meaning neither side was going to have effectively limitless money handed to them. Plus, 2020 was the year most people were stuck working from home with not much to do for fun besides, well, playing video games. All these factors were lining up to create what could be the biggest conflict ever in the game, and it was going to be the most expensive, too.

The most important battles in this war were definitely going to come down to which side could bring more of the biggest ships in the game – the Titans – into the fight. These ships are incredibly powerful, and until pretty recently, they were super rare. But changes in the game over the years meant that the big industrial players could now build these ships, which used to be legendary, almost like they were mass-produced cars (the original text says “ford model t’s”). They weren’t any cheaper to build, though. It just meant the big player powers had to make more of them to keep up with the other side.

The side that had been funded by the casinos in the previous war was happy to just pay for this new conflict the old-fashioned way: using the tax money they’d saved up during years of peace and making money to cover the costs of battle. But the Imperium, having learned their lesson about how finance decided their fate back in 2016, had a smarter idea. They wanted to make sure they were in a strong economic position going into the 2020 war.

Method 3: War Bonds (The Latest Innovation)#

The Imperium looked to the real world for inspiration again. Governments often sell War Bonds when there’s a huge conflict going on. This is because modern wars cost a fortune, and it’s often impossible to just raise taxes when everyone’s efforts are focused on the war itself. So, governments issue bonds – basically loans from their own people – allowing citizens to invest in their country’s victory.

The Imperium did this exact same thing. They sold a series of bonds to their own members. These bonds would promise to pay interest back to the members who bought them. This was great for the Imperium because it got the big chunk of money it needed right away to go fight the war. But it was also good for the members of the group, too.

You see, scams and financial fraud are super common in EVE. It’s probably the third thing the game is best known for, after wars and the economy. There are no rules saying you can’t just take someone’s stuff and never give it back. While having a completely unregulated financial system makes for some cool stories, it’s really bad if you want to invest in anything, because anything you put money into can, and probably will, just get stolen from you. So, why even bother?

These war bonds offered players a chance to invest in something that didn’t have quite the same massive risk of being stolen. Just to be clear, the Imperium would legally be perfectly allowed to just turn around and tell the people who bought bonds to get lost. But the damage that would do to their reputation would likely be too big a cost, especially if they ever wanted to sell war bonds again for future wars.

Now, that doesn’t mean these in-game financial tools are totally safe. If the Imperium gets wiped out in this ongoing war, well, those bonds aren’t going to get paid back. In the real world, financial experts call this sovereign risk – the risk that the government issuing the bond might fail. It’s just as real here in the land of internet spaceships as it is anywhere else.

For right now, this war is still happening. It’s likely going to give gaming magazines and aspiring YouTube channels like this one a whole lot more to talk about. Like the fact that this game’s financial market actually predicted the weird short squeeze thing with Gamestop!

So, make sure to like and subscribe if you want to see us make a video on that. And in the meantime, you can go check out our video where we look into whether the World Bank is actually an evil empire.

Thanks for learning about How Money Works!