Bind on Account, or BoA designates an item that "binds" to the account of the character who first picks it up. These types of items can usually be passed between different characters on the same account, but could not be traded to another other characters. (Bind on Pickup and Bind on Equip are two other common types of item binding, neither of which is used in Diablo 3 or Reaper of Souls.)

The topic of item binding is a controversial one. Many fans dislike it as it removes most trading and the ability for players to buy or sell or even give away items. Other fans like it, if not for the BoA itself then for what it enables in a game. The logic is that if an item is bound, then it can be more powerful or common than it would be otherwise, since the binding will keep it from spreading throughout the entire game and making every character the same.

Binding in Diablo 3 and Reaper of Souls

There was no item binding of any kind when Diablo III launched.

Binding first entered the game with the Infernal Machine special event, when all materials to create it and the legendary Hellfire Ring itself were Bind on Account. Additional BoA materials (Demonic Essence) and crafting recipes were added in a later patch.

Binding became much more prevalent shortly before Reaper of Souls when D3v2 came in Patch 2.0.1 and added BoA to all newly-found legendary items. At that point older items could still be traded or sold though, as could gems and materials and crafting recipes, and gold could be used in the Auction House until it shut down a week before Reaper of Souls.

Reaper of Souls brought in the real BoA state of affairs. It continued making all legendary items BoA, including crafted items, and it added BoA to any rare item that was enchanted. All gems and materials and new-found crafting recipes were also BoA, and biggest of all, so was gold.

Thus in Reaper of Souls players had essentially zero trading; only white and blue items and rares that had not been enchanted could be exchanged, but with gems and gold all account bound, there was no viable form of currency. Not that currency was needed since legendary items and crafted items were the best gear, and those were all BoA anyhow. (The only exception was the ability to give legendary items to other players who were in the game when the item dropped, but only for two hours after the game ended. "Give" but not "trade" since everything the other player might have used to make a fair trade was account bound.)

Item binding continues to be much debated, with fans who enjoy the system defending it as necessary to keep drop rates high and to spur self-finding. Other players wish there was less or no binding and say they would like to trade items... though few say they'd like to pay the price of a return to Diablo 3 vanilla's much lower legendary drop rates.

Account Binding During Development

While the developers had various forms of item binding in the game during development, they ultimately decided against any form of item binding in the game at launch. (And then brought it back months later, in limited form.)

Game Director Jay Wilson revealed that item binding was in the works for the highest quality items in an interview from BlizzCon 2009. [1]

Jay Wilson: We have no “Soulbound” or bind-on-pickup, except for quest items. We do have bind-on-equip for the highest end items in the game. We targeted, roughly, any item above level 85. These we will do as bind-on-equip. The reason for this is that we want people to be able to trade them, but we also want to remove the high-end items from the economy. One of the greatest ways that you can do that is with bind-on-equip. What we don't want is to have a situation where you find something on the ground like, “Oh, man. This would be a perfect weapon for my Monk. Oh, but I just picked it up and now it's on the wrong character.” We don't want that at all.

Most of our focus on Diablo 3 is as a trading game. So, if you take trading out of the item space, you ruin the core of the game. Finding a really great item that is not for you is still a great event because it means you have a bartering tool to get the item that you do want. We definitely want to make sure that that still exists.

A few months later CM Bashiok addressed this issue during a mini-interview in Blizzcast #13, in February 2010. [2]

Zarhym: Will all Bind on Equip or Bind on Pickup items be bound to account? So you can hand them down to your other characters as you find better gear.

Bashiok: Maybe. It sounds kind of cool. So I asked Jay and some of the other designers about this actually because I wasn’t sure, but Jay’s response was “That sounds awesome!” And he likes things that are awesome. Which is a very Jay Wilson quote. But there could be economic reasons that we don’t do that, there could be gameplay reasons we don’t do that. It’s probably too early to say, but that sounds cool so we’ll have to see.

Bashiok elaborated on this later that same day, when a fan pointed out that BoA could lead to stagnation in the economy, if every account eventually had several of the best items that players could pass around between their different characters. [3]

Totally, which is why I said “But there could be economic reasons that we don’t do that.”

It would probably stagnate the economy… UNLESS, there are other systems in place that could make it attractive for players to essentially destroy their BoAs. So I don’t think it’s without solution at least, but it could get sticky if not balanced or pulled off just right.

Anyway, we’re not really seriously considering BoA items at this point in time.

Binding was finally ruled out in April 2011, by Jay Wilson in an interview with Diablo3.cc. [4]

I’m happy to announce that we recently decided there will be no binding of items in Diablo III. They will be freely traded for the life of the item. The only way we are going to do any kind of binding would be for things that are not progression-sensitive. Like we might say…a quest item. We don’t want you to be able to give to other player to short circuit a quest, but if you find a sword, piece of armor, or gem....anything that you find in the ground, once you pick it up, you can freely trade it... forever.

When item binding began to creep back into Diablo 3 in patches during 2013, the developers kept it limited to just a few special items. The possibility of adding more item binding as a way to create some item churn and remove items from the trading economy was a topic of much discussion, and Blizzard addressed that in July 2013.[5]

Wyatt Cheng: On the topic of the Mystic, we are looking at methods for a Mystic to modify an item. Whether that be adding a property, or allowing you to reroll the stats on a property, or allowing you to roll another property, or you like an item except one of the stats rolled low and you want a shot at getting it higher. WE are looking at that, and I lean towards the idea that you’d want that item to be Soul bound. As a side note on the topic of anything having to do with limited trades or reduced functionality. I tend not to be in favor of soft limits on those types of things. That’s because if you’re going to have a limit, you might as well put the limit in there. When you have a soft limit... basically it still retains all the problems you had before, while feeling negative to the person who has it.

In retrospect it's clear that the developers were planning on heavier item binding in D3v2 and RoS, but weren't willing to tip their hands so far in advance.

Going forward in Reaper of Souls, the developers have suggested allowing more trading, such as within clans, or only for characters in a new Ladder season, but they've given no firm commitments to any relaxation of the binding in the game upon launch.

References

August 2009: Game Director Interview by G4TV.com.
February 2010: Bashiok on Blizzcast #13.
February 2010: Bashiok forum post.
July 2013: Wyatt Cheng and Josh Mosquera interview