WASHINGTON -- A recent change in a video game has wiped out over $2 billion in value from online markets overnight, as the market cap for in-game "Counter-Strike 2" cosmetics crashed.
The newest patch for the game, which is developed and published by Valve, radically reworks how cosmetics - the ability to customize a player's in-game look - work in the game.
"Counter-Strike 2" is a multiplayer shooter, where players control members of two teams aiming to beat the other team and control certain objectives on the map. It's an entirely skill-based game, so the only way to progress is to "get good" without leveling up in-game skills.
But one of the key components of the game, which was originally released as "Counter-Strike" in 1999, is the lootbox system. Players earn points by playing matches, and use those points -- or real world cash -- to buy a digital blind box. The boxes can contain a variety of in-game cosmetics, usually skins that change how a gun looks. Because some are more rare than others, they are more coveted.
That's where the skin marketplace comes in.
The marketplace is a digital bazaar on Steam (the game-purchasing platform also owned by Valve) where players can buy, sell or trade cosmetic items for real money. most of the skins go for a few cents, but some are worth an estimated $1.5 million.
The market cap for the marketplace, meaning the price if every item up for sale sold, was around $6 billion Wednesday.
By Thursday morning, that market cap had crashed to $4 billion, and looks to be plummeting even further.
But on Wednesday night, Valve released the latest update to the "Counter-Strike 2: game. Hidden among the patch notes was a change to skins that fundamentally changes how they work.
For the first time, players became able to craft skins on their own. Here's the relevant note:
"Extended functionality of the "Trade Up Contract" to allow exchanging 5 items of Covert quality as follows:
While that may not mean much to the average person, it was a big change to the way the game's economy works.
Essentially, players can now use five "Covert" quality items, which are somewhat rare but not particularly valuable, to craft a knife or glove item, which traditionally has a higher price on the market.
Some of the high-cost knife and glove skins on the market dropped by hundreds of dollars within a few hours.
And the problem didn't stop there. It's surprisingly similar to the stock market. When one stock goes down on Wall Street, it's likely that investors will dump similar stocks, reducing the prices overall. Eventually, it snowballs into a market crash, exactly like what happened Thursday to the "Counter-Strike 2" marketplace.
Valve wasn't the first company to introduce paid cosmetics into their games, but they are one of the first companies to use the loot box system.
Multiplayer games are particularly famous for using the system, which critics have compared to gambling for children. The fact that real money can be spent without the guarantee of a high-rarity item has led to accusations that companies such as Valve and Overwatch developer Blizzard are preying on children.
The controversy has led to political backlash around the globe. In Europe, loot boxes are regulated or banned outright in certain countries. And in the U.S., bills have been put forward by Congress to regulate the use of loot boxes in games.
The change has led to speculation that Valve is attempting to stay ahead of the legislative curve, reducing the cash market for skins while still giving players a chance to open the cosmetics on their own, without crafting.
Earlier in the year, Valve released a new kind of loot box that allows customers to see the items inside for free, but requires them to pay a set price to actually get what's inside.
Valve has not publicly commented since the patch went live Wednesday night.