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The History of Private Servers
Private Servers of FlyForFun have been around for an unknown time, the early private servers were closed for the public and were mostly sandboxes without a real purpose.
Private servers are illegal because they take copyrighted material from official files. Most private servers are located in international countries whose rules are not as strict to copyright.
The creator and hosts of private servers take a risk when creating them and can be punished by the law. However in many cases most companies do not charge but when a private server gets "big" there have been several cases where the company will go to certain extents to take down those servers and have succeeded.
One should be careful with private servers. They can install unwanted programs such as Trojans and Key loggers into your computer.
Around the time before the launch of the now largest private server; FlyForFame , there was also another project going on - "LevelMe! FlyFF", it was a server coded from scratch by a person going under the alias "ClockWork", using the Japanese FlyFF client. The reason ClockWork and his team decided to use the Japanese client was because it had no anti-cheat system like GameGuard. The last known version of LevelMe! FlyFF was pretty bugged, and that is also probably the reason why LevelMe! FlyFF suddenly disappeared. In May 2009, ClockWork announced a re-launch of LevelMe! FlyFF, but it had a very short timespan without any activity and died almost immediately.
Kittonkicker of the Cheat Engine forums announced at some date that he was developing server files based on the v6 client. He named it Nerugiland and it was coded in C++ based on TitanMS source(MapleStory private server). Someone update this if they have info on it.
A set of files, popularly named after it's creator - Caali, were leaked some time around the new-year of 2009, it is based off the v11 client. Caali, annoyed at his files being leaked, purposely let his new files leak - this time with viruses planted to it. He also released a server crasher for crashing his own files, due to the massive amount of Private Servers being spawned utilizing his files.
There are a number of FlyFF server emulators as of today, many of which are Open Source and also some Closed Source. Many of these emulators are open for public, and there are quite a few promising emulators. The good thing about emulators developed from scratch is that people will have the source code and therefore being able to easily modify the in game experience.