The first kind of question that we need to keep in mind when designing an economy for a multi-player game is “Who will be mostly driving the economy?”.
When it comes to multi player games, there are mostly 2 types of economy: Player Led Economy and Environment Economy.
Player Led Economy
A Player Led Economy is a system where most of the transactions are generated among players. The players purchase goods and services more frequently from other players than they do from NPCs.
In this type of economy, the currency never really leaves the system. It simply keep changing hands. In other words, the amount of currency remains pretty much the same at all time and the new coins that are inserted never get disposed of.
For a simple example, we can imagine a system with 3 players where Player A kill dragons, Player B is a tanner and Player C makes armors. In That case, Player A sells the dragon skin to player B who then sells the Dragon Leather to Player C who makes a set of Armor out of it and sell it to Player A. In that system, we can basically imagine that the coins that were used by Player A to purchase the set of armor are the same coins that Player B used to purchase the Dragon Skin and ultimately they will get back to Player B when Player C needs to purchase more leather.
If we want to give a concrete example, society is a player-led economy system where the coins keep changing hands without increasing on reducing.
Player Led economies require extra care from the developers because there are not many ways to make currency appear or disappear easily and every coin added or taken out has a strong impact.
Environment Economy
An environment economy is, on the other hand, a system where most of the transactions are realized between a player and an NPC. In that case, purchasing items from NPC is often more possible and/or interesting than doing it from other players.
In an Environment economy, the currency is coming in and out more aggressively. It is introduced automatically when the player earns it by completing a quest or by collecting it in some form or another and it is removed from the system when the player spends it at a NPC shop.
Let’s imagine a game where I am a hunter. I kill the legendary dragon (yeah there is a lot of dragon slaying in this article, my apologies to the dragon community) which gives me a decent amount of gold coins and a legendary dragon hide. If I go to the nearest NPC shop, I can sell my hide for a few more gold coins. These gold coins have been introduced into the system because, before I had killed the dragon and sold the hide, they didn’t exist. Then, if I go to the same NPC shop and purchase a legendary sword with the money I got from the dragon killing, the gold coins are taken out of the system since no new entity or person will be able to use the same gold coins.
Having the economy based on interaction with NPCs gives a lot more freedom to the developer as it gives them control over how much money is inserted into the economy and how much goes out of it. Still need to be careful but there are at least more ways to sponge up a fuck up.