Written by: Wang Dong, Phoenix.com Recently, many people have seen posts on social media about "taking in a heartbroken college student." At first glance, it seems like a meme, but a quick browse through QQ groups and forums reveals a large number of heartbroken men are indeed being manufactured. Many of them have just experienced their first major investment failure: However, these male college students neither fully invested in A-shares nor bought gold at high prices. What caused them so much distress was the virtual skin trading market for the shooting game CS2. According to media reports, the market lost $2 billion (approximately RMB 14.2 billion) on the 24th alone. Countless people's assets turned to ashes overnight (this is an exaggeration; in reality, it only took a few hours). Wait a minute, isn't CS2 a shooting game? Why does it sound like the stock market? Well, it's a long story. The collapse was devastating; how many people spent a sleepless night? Many days later, facing empty accounts, CS skin resellers will remember that distant afternoon when Valve (the developer of CS2) announced the opening of skin alchemy. Last Thursday, Valve announced a "regular" game update, which included a clause that surprised many. In summary, top-tier knife and glove skins that were previously only obtainable by opening crates can now be crafted using lower-tier skins. To give an example, what used to be natural diamonds can now be synthesized from glass beads. How can the price not drop? This regulation directly impacted the long-standing CS skin trading market. In CS2, a single case costs approximately 17 RMB, with a mere 0.26% chance of obtaining a top-tier skin. Knife and glove skins are considered top-tier cosmetic items. Obviously, it's too difficult to get knife skins and gloves yourself, so the best way is to just buy them from the market. Scarcity drives up value. If you want to buy a knife skin or gloves in good condition, a few thousand yuan is just enough to make friends. It's not uncommon to find skins that cost hundreds of thousands of yuan. However, under Valve's new policy, lower-quality red skins can now be crafted into top-tier gold skins, which netizens are calling: "Red-skinned Alchemy". Countless players logged into their accounts, dug out their long-forgotten red-tier weapons, and threw themselves into the forging of swords: With the forging technique, those top-tier equipment that were once considered divine have become no longer rare. The price of the popular butterfly knife has been halved: Those who were hit the hardest were the "shopping guides" (a term of endearment used by players to refer to middlemen who resell skins) who had stockpiled large quantities of skins. Someone lost 600,000 in one night: Some college students even put all their living expenses into it. In the group chat, everyone was wailing and lamenting: On social media, people are vehemently criticizing Valve's owner, Gabe Newell. Besides the sales assistants, professional players with a lot of skins also got hit hard. After clearing out his inventory, Spinx of the MOUZ team wrote a heartfelt post on Twitter: "Everyone has dreams, and everyone's life is wonderful." While no snowflake is innocent, some people bravely venture into the avalanche. Sometimes, you simply do nothing, and the game is automatically won at the end. Former professional player Niko escaped the market crash because he never resells game skins. He expressed sympathy for those who invest in jewelry trading: People like NiKo who have a vast mansion are a minority; most players say they just find it noisy. In their view, those dogs that suffered heavy losses deserved their fate. This was originally a game focused on entertainment and competition, but now it's been turned into a mess by these resellers who resell in-game skins. This is a perfect opportunity to eliminate them all and restore order to the CS community. In their view, Gabe Newell's iron-fisted new policies are actually a great benefit to ordinary players. Once exclusive and exclusive skins, they are now available to ordinary people. Players who were wearing straw sandals the day before are now living in villas by the sea. Gabe Newell's latest attack was nothing short of deadly; he could kill a man in ten steps and leave no trace for a thousand miles; he accomplished his task and vanished without a trace. So, is Gabe Newell (GabeN) really a saint who wholeheartedly cares about the players? It's probably not that simple. How was the multi-billion dollar cyber market created? Making money by selling in-game skins is a common profit model for almost all online games. Adding loot box mechanics to games is also very mainstream, and even microtransaction systems in games are nothing new. But it is only Valve's games that have spawned such a huge over-the-counter market. This was not accidental, but rather the result of a careful plan by Gabe Newell and Valve. The "root of all evil" is Team Fortress 2, a game released by Valve in 2007. In this game, Valve introduced a hat system where players can buy all sorts of hats for their characters. These hats do not affect the game's balance and are purely decorative. Some of these hats will drop in-game, some can be crafted, and some require completing quests... Of course, you can also pay money to open the box and get it directly. Due to differences in appearance, special effects, and drop rates, many rare and sought-after hats quickly appeared in the game. Players who couldn't get them simply chose to buy them from other players. Gabe Newell slapped his forehead: "If someone wants to make this money, why can't it be me?" So Valve launched an official trading platform where everyone can buy and sell freely. Valve doesn't interfere; it just takes a cut. The players' enthusiasm far exceeded Gabe Newell's expectations. The trading system became increasingly popular, even leading to inflation and deflation... Gabe Newell (GabeN) realized this wouldn't do and had to take it seriously. In 2012, Valve hired a real economist to help them design and optimize their economic system; this guy is shown below: His name is Yannis Varoufakis, and he is a professor of economics at the University of Athens. During his time at Valve, his title was "Internal Economic Advisor." There are still some articles he published on Valve's official website, but I personally don't understand them very well. In short, Valve has really taken a lot of effort into creating a complex virtual economic system. According to Yannis Varoufakis, this system is more complex than the economic systems of many small countries in the world. He certainly has the right to say that, because two years after leaving Valve, he became the Greek Minister of Finance. CS:GO, released in 2013, can be considered the culmination of this system. In CS:GO, players can obtain skins by opening cases and crafting them. Skins are divided into different tiers such as white, blue, purple, red, and gold. Each skin has a wear level, which affects its rarity. The same skin can have vastly different prices depending on its wear level. In addition to skins, there is also a separate sticker system, which is divided into player signatures, team logos, and patterns. Each type of sticker is further divided into different levels. In addition to stickers, some skins also have unique patterns and textures, "StatTrak (counter)" and various other attributes; ... In short, CS skins can be combined in thousands of different ways, each with a unique ID and even traceable transaction records, several versions ahead of today's NFTs. You see, this thing was born for trading. So, not long after its release, the market surrounding the skins flourished rapidly. Live unboxing videos have become a key to attracting viewers for many streamers. When top-tier items like the Dragon Lore Sniper Rifle or Butterfly Knife are unboxed, a collective frenzy from the streamer and the chat is inevitable. In the market, all sorts of stories of getting rich overnight have begun to appear, such as getting a top-tier gun skin and exchanging it for a house, or a knife that can cover four years of tuition fees. However, at this stage, the stories of getting rich overnight are still limited to unpacking. Around 2020 or 2021, a large number of speculators began to enter the market, and CS skins began to be compared with cryptocurrencies and NFTs, causing prices to suddenly rise. With such frenzied speculation, doubling in value is hardly a big deal, and even a hundredfold increase is not uncommon. Many people are starting to tout CS skins as the next Bitcoin, and those who missed out are in for a rough time: Counter-Strike (CS) has gradually transformed from a competitive game into a massive financial derivatives platform. At its peak, the entire CS skin market was valued at over $6 billion (approximately 43 billion RMB). The main users active in this market have also changed from gamers to speculators. Until that crazy Thursday. As for why Valve would destroy its own foundation, the reason is quite simple: This is not Valve's own Great Wall at all. According to Valve's rules, official transactions not only incur a 15% fee, but also make subsequent withdrawals difficult. Therefore, the main trading venues are currently third-party platforms, and no matter how high the price is driven up, Valve doesn't receive a single penny. These people not only don't pay taxes to Gabe Newell, they don't even log into the game. Now that the new policy is in place, players no longer need to worry about opening worthless red skins; they can simply use them for alchemy. This gives ordinary players even more motivation to open chests. Previously inexpensive skins can now fetch a decent price; previously prohibitively expensive skins are now affordable for ordinary players. The liquidity in the official market has also improved dramatically. Markets fluctuate, and some people will always lose, but Gabe Newell, or the big players, always win. There is nothing new under the sun. Valve's economic system has always been highly controversial. Just a month ago, the CS community was rocked by a shocking scam: the Black Egg incident. The so-called "black egg" refers to a limited-time team sticker released during the 2021 Stockholm Championship. This seemingly ordinary sticker saw its price skyrocket from 5 yuan to 3,000 yuan in just two months, from July to September this year. Many people are saying that Black Egg will become the next "Holographic Titan". Holographic Titan, a sticker exclusive to the Titans team released in 2014, became discontinued after the Titans disbanded. Its price, which started at a few cents, has skyrocketed to hundreds of thousands of RMB. Those worried about missing out on the Holographic Titan went all in on the Black Egg. However, although this skin is no longer available, there is a large number of people who own it, so there is no reason for it to be sold at such a high price. Sure enough, after reaching a high of 3,000 yuan, the price of black eggs plummeted to a few dozen yuan in just two days. Prices may return to rationality, but money will not. As an investment product, CS skins have serious inherent flaws: This market is unregulated; Valve has the final say in everything. In the T+7 market, one wrong move and you're buried in the ground. All products are non-standard, and there is no fundamental basis for their pricing. ... You can list 100 drawbacks, but as long as there is arbitrage opportunity, people will keep coming. In Valve's games, similar "Tulip Incidents" keep repeating themselves, from hats in Team Fortress 2 to Steam Trading Cards and Dota 2 Immortal items. Gabe Newell (GabeN) is certainly not some "people's GabeN." He designed this active system, full of arbitrage opportunities and risks, and exploited human weaknesses to reap huge profits. From building the infrastructure of the Steam Wallet to establishing the community marketplace, opening interfaces to third-party trading platforms, and then controlling supply through the loot box system, Valve has mastered a huge virtual market that can directly interact with the real world. Nowadays, Valve is more like a financial company than a game company. Thus, like all financial derivatives, this place generates stories of sudden wealth and collapse every day. There is nothing new under the sun. Whether in the real world or in the virtual space, humanity is repeating the same melody: the eternal melody of desire and greed. Written by: Wang Dong, Phoenix.com Recently, many people have seen posts on social media about "taking in a heartbroken college student." At first glance, it seems like a meme, but a quick browse through QQ groups and forums reveals a large number of heartbroken men are indeed being manufactured. Many of them have just experienced their first major investment failure: However, these male college students neither fully invested in A-shares nor bought gold at high prices. What caused them so much distress was the virtual skin trading market for the shooting game CS2. According to media reports, the market lost $2 billion (approximately RMB 14.2 billion) on the 24th alone. Countless people's assets turned to ashes overnight (this is an exaggeration; in reality, it only took a few hours). Wait a minute, isn't CS2 a shooting game? Why does it sound like the stock market? Well, it's a long story. The collapse was devastating; how many people spent a sleepless night? Many days later, facing empty accounts, CS skin resellers will remember that distant afternoon when Valve (the developer of CS2) announced the opening of skin alchemy. Last Thursday, Valve announced a "regular" game update, which included a clause that surprised many. In summary, top-tier knife and glove skins that were previously only obtainable by opening crates can now be crafted using lower-tier skins. To give an example, what used to be natural diamonds can now be synthesized from glass beads. How can the price not drop? This regulation directly impacted the long-standing CS skin trading market. In CS2, a single case costs approximately 17 RMB, with a mere 0.26% chance of obtaining a top-tier skin. Knife and glove skins are considered top-tier cosmetic items. Obviously, it's too difficult to get knife skins and gloves yourself, so the best way is to just buy them from the market. Scarcity drives up value. If you want to buy a knife skin or gloves in good condition, a few thousand yuan is just enough to make friends. It's not uncommon to find skins that cost hundreds of thousands of yuan. However, under Valve's new policy, lower-quality red skins can now be crafted into top-tier gold skins, which netizens are calling: "Red-skinned Alchemy". Countless players logged into their accounts, dug out their long-forgotten red-tier weapons, and threw themselves into the forging of swords: With the forging technique, those top-tier equipment that were once considered divine have become no longer rare. The price of the popular butterfly knife has been halved: Those who were hit the hardest were the "shopping guides" (a term of endearment used by players to refer to middlemen who resell skins) who had stockpiled large quantities of skins. Someone lost 600,000 in one night: Some college students even put all their living expenses into it. In the group chat, everyone was wailing and lamenting: On social media, people are vehemently criticizing Valve's owner, Gabe Newell. Besides the sales assistants, professional players with a lot of skins also got hit hard. After clearing out his inventory, Spinx of the MOUZ team wrote a heartfelt post on Twitter: "Everyone has dreams, and everyone's life is wonderful." While no snowflake is innocent, some people bravely venture into the avalanche. Sometimes, you simply do nothing, and the game is automatically won at the end. Former professional player Niko escaped the market crash because he never resells game skins. He expressed sympathy for those who invest in jewelry trading: People like NiKo who have a vast mansion are a minority; most players say they just find it noisy. In their view, those dogs that suffered heavy losses deserved their fate. This was originally a game focused on entertainment and competition, but now it's been turned into a mess by these resellers who resell in-game skins. This is a perfect opportunity to eliminate them all and restore order to the CS community. In their view, Gabe Newell's iron-fisted new policies are actually a great benefit to ordinary players. Once exclusive and exclusive skins, they are now available to ordinary people. Players who were wearing straw sandals the day before are now living in villas by the sea. Gabe Newell's latest attack was nothing short of deadly; he could kill a man in ten steps and leave no trace for a thousand miles; he accomplished his task and vanished without a trace. So, is Gabe Newell (GabeN) really a saint who wholeheartedly cares about the players? It's probably not that simple. How was the multi-billion dollar cyber market created? Making money by selling in-game skins is a common profit model for almost all online games. Adding loot box mechanics to games is also very mainstream, and even microtransaction systems in games are nothing new. But it is only Valve's games that have spawned such a huge over-the-counter market. This was not accidental, but rather the result of a careful plan by Gabe Newell and Valve. The "root of all evil" is Team Fortress 2, a game released by Valve in 2007. In this game, Valve introduced a hat system where players can buy all sorts of hats for their characters. These hats do not affect the game's balance and are purely decorative. Some of these hats will drop in-game, some can be crafted, and some require completing quests... Of course, you can also pay money to open the box and get it directly. Due to differences in appearance, special effects, and drop rates, many rare and sought-after hats quickly appeared in the game. Players who couldn't get them simply chose to buy them from other players. Gabe Newell slapped his forehead: "If someone wants to make this money, why can't it be me?" So Valve launched an official trading platform where everyone can buy and sell freely. Valve doesn't interfere; it just takes a cut. The players' enthusiasm far exceeded Gabe Newell's expectations. The trading system became increasingly popular, even leading to inflation and deflation... Gabe Newell (GabeN) realized this wouldn't do and had to take it seriously. In 2012, Valve hired a real economist to help them design and optimize their economic system; this guy is shown below: His name is Yannis Varoufakis, and he is a professor of economics at the University of Athens. During his time at Valve, his title was "Internal Economic Advisor." There are still some articles he published on Valve's official website, but I personally don't understand them very well. In short, Valve has really taken a lot of effort into creating a complex virtual economic system. According to Yannis Varoufakis, this system is more complex than the economic systems of many small countries in the world. He certainly has the right to say that, because two years after leaving Valve, he became the Greek Minister of Finance. CS:GO, released in 2013, can be considered the culmination of this system. In CS:GO, players can obtain skins by opening cases and crafting them. Skins are divided into different tiers such as white, blue, purple, red, and gold. Each skin has a wear level, which affects its rarity. The same skin can have vastly different prices depending on its wear level. In addition to skins, there is also a separate sticker system, which is divided into player signatures, team logos, and patterns. Each type of sticker is further divided into different levels. In addition to stickers, some skins also have unique patterns and textures, "StatTrak (counter)" and various other attributes; ... In short, CS skins can be combined in thousands of different ways, each with a unique ID and even traceable transaction records, several versions ahead of today's NFTs. You see, this thing was born for trading. So, not long after its release, the market surrounding the skins flourished rapidly. Live unboxing videos have become a key to attracting viewers for many streamers. When top-tier items like the Dragon Lore Sniper Rifle or Butterfly Knife are unboxed, a collective frenzy from the streamer and the chat is inevitable. In the market, all sorts of stories of getting rich overnight have begun to appear, such as getting a top-tier gun skin and exchanging it for a house, or a knife that can cover four years of tuition fees. However, at this stage, the stories of getting rich overnight are still limited to unpacking. Around 2020 or 2021, a large number of speculators began to enter the market, and CS skins began to be compared with cryptocurrencies and NFTs, causing prices to suddenly rise. With such frenzied speculation, doubling in value is hardly a big deal, and even a hundredfold increase is not uncommon. Many people are starting to tout CS skins as the next Bitcoin, and those who missed out are in for a rough time: Counter-Strike (CS) has gradually transformed from a competitive game into a massive financial derivatives platform. At its peak, the entire CS skin market was valued at over $6 billion (approximately 43 billion RMB). The main users active in this market have also changed from gamers to speculators. Until that crazy Thursday. As for why Valve would destroy its own foundation, the reason is quite simple: This is not Valve's own Great Wall at all. According to Valve's rules, official transactions not only incur a 15% fee, but also make subsequent withdrawals difficult. Therefore, the main trading venues are currently third-party platforms, and no matter how high the price is driven up, Valve doesn't receive a single penny. These people not only don't pay taxes to Gabe Newell, they don't even log into the game. Now that the new policy is in place, players no longer need to worry about opening worthless red skins; they can simply use them for alchemy. This gives ordinary players even more motivation to open chests. Previously inexpensive skins can now fetch a decent price; previously prohibitively expensive skins are now affordable for ordinary players. The liquidity in the official market has also improved dramatically. Markets fluctuate, and some people will always lose, but Gabe Newell, or the big players, always win. There is nothing new under the sun. Valve's economic system has always been highly controversial. Just a month ago, the CS community was rocked by a shocking scam: the Black Egg incident. The so-called "black egg" refers to a limited-time team sticker released during the 2021 Stockholm Championship. This seemingly ordinary sticker saw its price skyrocket from 5 yuan to 3,000 yuan in just two months, from July to September this year. Many people are saying that Black Egg will become the next "Holographic Titan". Holographic Titan, a sticker exclusive to the Titans team released in 2014, became discontinued after the Titans disbanded. Its price, which started at a few cents, has skyrocketed to hundreds of thousands of RMB. Those worried about missing out on the Holographic Titan went all in on the Black Egg. However, although this skin is no longer available, there is a large number of people who own it, so there is no reason for it to be sold at such a high price. Sure enough, after reaching a high of 3,000 yuan, the price of black eggs plummeted to a few dozen yuan in just two days. Prices may return to rationality, but money will not. As an investment product, CS skins have serious inherent flaws: This market is unregulated; Valve has the final say in everything. In the T+7 market, one wrong move and you're buried in the ground. All products are non-standard, and there is no fundamental basis for their pricing. ... You can list 100 drawbacks, but as long as there is arbitrage opportunity, people will keep coming. In Valve's games, similar "Tulip Incidents" keep repeating themselves, from hats in Team Fortress 2 to Steam Trading Cards and Dota 2 Immortal items. Gabe Newell (GabeN) is certainly not some "people's GabeN." He designed this active system, full of arbitrage opportunities and risks, and exploited human weaknesses to reap huge profits. From building the infrastructure of the Steam Wallet to establishing the community marketplace, opening interfaces to third-party trading platforms, and then controlling supply through the loot box system, Valve has mastered a huge virtual market that can directly interact with the real world. Nowadays, Valve is more like a financial company than a game company. Thus, like all financial derivatives, this place generates stories of sudden wealth and collapse every day. There is nothing new under the sun. Whether in the real world or in the virtual space, humanity is repeating the same melody: the eternal melody of desire and greed.