First read "The In-game Economics of Ultima Online"[1] which I just submitted to HN for comment[2].
The hiccups of developing UO's in-game economy along the way are incredibly interesting in their own right.
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I'll try to summarize some of UO.
UO was divided into Trammel (safe from PvP) and Felucia (not), and some servers only had Fel. In Fel as soon as you left a city you were more or less fair game to die from an extremely hostile environment, and (I think it was) PC Gamer described the learning curve as "A frozen wall of acid." Brutal, but very exciting. A goddamn wild west MMO.
(In Fel) UO was a rare RPG where anyone could kill anyone, for any reason, but with the repercussion that they would be branded a "Bad person" (visible with a gray or red name instead of blue). Stealing from good people corpses also did this. Anyone can attack and kill bad persons, and if you killed even more people you were a murderer and it took a very long time to return to normal.
This Blue/Gray/Red name system created a sort of cautiousness among travelers. Being near a pack of "blue" people might be safe, since any person that tried to steal or kill would turn gray and they'd immediately kill him.
Unless of course, all those blue-named people were conspiring, and you are the target.
You want to use super awesome powerful gear? None of this sissy MMO stuff. Die and you lose it, and your enemy (or his enemy!) gets the spoils.
The problem I have with a lot of MMOs is that the power of your character is simply how much time you sink into the game. Essentially, MMOs are games that reward wasting time.
UO had so much more than that. UO was a game where treachery and sneakiness really paid off, if you wanted it to. Lots of ways to nearly instantly kill or entrap people lead to a lot of very exciting plots where guilds might be laden with spies. Absolutely nothing like the ridiculously limited PvP found in games like WoW.
In a lot of ways it was the Diplomacy (diplomatic back-stabbing board game) of MMOs. And it was great.
Btw, Trammel and Felucca was a distinction that came later. Apparently, because Origin wanted to attract more players, which would be known as 'carebears'.
There were no classes, no levels. None of this "level 99 guy one shots level 1 guy". Skills did give advantages, but it was nothing that drastic. No real need to farm mobs to get items, as they weren't that important to begin with. Magical weapons did give a minor advantage, but were rare and you could lose them, so most of the time an old fashioned steel sword would suffice (bought from NPCs or crafted by player blacksmiths). Items mostly mattered in quantity: lots of ore, wood, reagents, money, etc.
You learned skills by using them. So, if you wanted to hit things better with a sword, you went out and hit things. If you wanted to become a better magician, you had to cast spells. Wanted to become a better tailor? You had to make lots of clothing :) That wasn't perfect and later gave rise to macroers, but the system itself is awesome.
Death was meaningful: you lost everything you were carrying (changed in later versions with the 'insurance system'), unless you made it back to your body before it decayed and noone got to it first. And your ghost had to find a healer (or a player mage or highly skilled healer) in order to get resurrected. And, while dead, you couldn't speak to anyone, except players with 'Spirit Speak'.
You could own houses (which did occupy real state, they were not instanced), to have a safe place and a way to store items. That eventually became a market by itself, as the world was finite.
There were just a few safe zones, all the rest were automatically PVP areas. Even in "safe" zones, you could get mugged or killed if you didn't pay attention, as you had to call "guards" in order for them to appear (other people could call them for you, so it wasn't wise to leave your character in an deserted place and leave the computer).
You could steal from other people's bags - and get caught or not. You could even steal reagents from mages and prevent them casting. Yes, you had to carry a supply of reagents to cast and could run out if you didn't pay attention, possibly leaving you stranded.
You could create weapons, furniture, potions and whatnot from basic materials. This is very different from, say, WoW crafting system - you didn't have to wait for any drops from monsters. In fact, you didn't have to kill anything (not counting maybe birds for feathers, to use in arrows, or leather)
They even experimented with real ecology and a food chain in the beta. That didn't work, because players are too predatory.
Basically, they did almost everything very differently from MMOs that came later. The end result is that the world felt more 'alive', as you could interact with almost anything, given the right tools. See trees and got an axe? You could chop them. No axe? You could mine those rocks over there, smelt at a forge, then build the axe. And so on.
UO at its high point should have been the best game ever made. The problem is that it was super laggy and buggy the first few years, and then they started making terrible design decisions after 1999 or so. So it never really hit its full potential. I don't play games anymore, but I doubt if there's anything better today.
Yup, the network code wasn't that great in the early days. It definitely seemed tuned to dial-up internet.
I was one of the lucky ones that got a cable modem in the early days (one way cable modem, down was cable, up was 56k!) and had a great advantage in player vs player, as I could outrun their lag, and generally do things faster than them if they were on dialup.
MMOs bore me, and the thought that UO did MMOs somehow better intrigues me. I find it easy to believe, but hard to understand why.