How To Stop Gold Farming

Former Mythic Entertainment and NCsoft developer Scott Jennings has penned an article on his personal blog that confronts the growing issue with "gold farming" in MMORPGs and weighs the advantages and disadvantages to prohibiting and legalizing the third-party gold market. It's a good thought-provoker and worth a read:
Do you, as part of your design, prohibit or enable the buying and/or selling of in-game assets for real-world cash?

Most Western MMO players will insist on prohibition. This is the (moral) position. Gold farming is cheating, cheating is wrong, players should not cheat, we will not enable cheating. And since most MMO developers are also MMO players, this is by default the decision they take as well.

...

To date, most subscription MMOs (all but Ultima Online and special Everquest 2 servers) have made the decision for prohibition. This is popular with their users (see the reaction to Warhammer's naming and shaming) but is costly - someone has to stop all those gold farmers. The extreme example of prohibition is probably World of Warcraft, which has the operational budget to afford a truly massive customer service organization which has as a priority finding and banning gold farmers, and has gone to great lengths to automatically detect and suppress gold spamming in-game.

Yet it still happens. People still farm gold in World of Warcraft, still advertise it via means subtle and gross. Prohibition will never win. You will simply spend a given amount of money, and in turn gain a given level of suppression. That suppression will never reach 100%.

Which, again, should not be a surprise, since in the real world despite the huge budgets and judicial powers given agencies like the DEA, vice in the real world still exists. You cannot legislate the marketplace out of existence. You can suppress it, much as the Soviet Union tried to suppress their own free market. But there will be costs, and if you do not pay those costs, the reaction from your players will be that your game is overrun with farmers and spammers and that you just don't care.