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MUD1 (referred to as MUD1, to distinguish from its successor, MUD2) is the oldest virtual world in existence. It was created in 1978 by Roy Trubshaw at Essex University on a DEC PDP-10 in the UK, using the MACRO-10 assembly language. He named the game Multi-User Dungeon, in tribute to the Dungeon variant of Zork, which Trubshaw had greatly enjoyed playing. Zork in turn was inspired by an older text-adventure game known as Colossal Cave Adventure or ADVENT.

In 1980 Roy Traubshaw created MUD version 3 in BCPL (the predecessor of C), to conserve memory and make the program easier to maintain. Richard Bartle, a fellow Essex student, contributed much work on the game database, introducing many of the locations and puzzles that survive to this day. Later that year Roy Traubshaw graduated from Essex University, handing over MUD to Richard Bartle, who continued developing the game.

In 1983 Essex University allowed remote access to its DEC-10 via British Telecom's Packet Switch Stream network between 2 am and 7 am each night. MUD became popular with players around the world, and several magazines wrote articles on this new trend.

In 1984 Roy Trubshaw and Richard Bartle were approached by book editor and gamer Simon Dally to form a company to promote and market MUD, and to produce and market the next generation of multi-user games. As a result Multi User Entertainment (MUSE) Ltd was formed in 1985.

In 1984 Compunet, a UK-based network primarily for Commodore 64 users, licenses MUD1 and ran it from late 1984 until 1987, when CompuNet abandoned the DEC-10 platform they were using.

In 1985 Richard Bartle created MUD1 version 4, better known as MUD2. It was intended to be run as a service for British Telecom.

In 1987 MUD1 was licensed by CompuServe, who pressured Richard Bartle to close down the instance of MUD1, better known as Essex MUD'', that was still running at Essex University. This resulted in the deletion of the MUD account in October 1987. MUD1 ran under the name British Legends until late 1999 and was retired along with other software during CompuServe's Y2K cleanup efforts.

In 2000 Viktor Toth rewrote the BCPL source code for MUD1 to C++ and opened it alongside MUD2 on british-legends.com.