Virtual Money; Real Money

Most people who read this blog don’t need to be told that money is a virtual concept. That the piece of paper we routinely exchange for food, fuel and other goods has little or no intrinsic value; it’s just a piece of paper representing a stored value. That the stockmarket is one big virtual game; and that Sun Microsystems professes to run the world’s biggest MMOG by virtue of providing the backbone on which Wall Street plays that game.

However, I would venture that a vast majority of people don’t give the institutions and processes that provide the foundation for currency exchange a second thought. They don’t know the history of currency and don’t likely care. These are sometimes – maybe oftentimes – the same people struggling to understand how a person can pay “real” money for virtual goods… while they shell out hundreds of dollars for good seats at a concert.

My interest in currency probably peaked shortly after reading Stephenson’s Cryptonomicon, but my fascination with what the public perceives as real and what it considers virtual continues unabated; especially as the two continue to collide.

For that reason I’ve been following a thread on Terra Nova, “Property Rights in Virtual Worlds” (Link) which, like other discussions, somehow seems disconnected. It’s not that it isn’t interesting for those of us who pay attention to such topics, but Terra Nova attracts the kind of crowd that would find it interesting. What you likely won’t find is Joe Average consumer spending any time on Terra Nova (unless the headline contains the word “s-e-x”).

Joe Average just isn’t interested in ideas or discussions about where currency comes from or debates on something as esoteric as virtual property rights. Nope. Joe is probably searching for stuff that’s practical (like where he can get a part for his car), sports-related, videogame-related, or something he doesn’t want Mrs. Average to discover in the computer’s cache.

It’s because the Joe Average’s of the world are blissfully ignorant that I wanted to point instead to a story on Reuters, “New age town in U.S. embraces dollar alternative” (Link). I’d seen this reported on television a few weeks/months ago, but with the Bragg vs Linden Lab case moving forward, it seemed a good time to point out now how some Americans are beginning to get a real life education in currency.

Now if only there was an exchange rate between Lindens and BerkShares to really mix things up.

7 thoughts on “Virtual Money; Real Money

  1. Much appreciated.

    I don’t know if you’ve seen the recent repeated airing of a story about one household that uses coupons, but I recall a story some time back about small groups of consumers who were using coupons as a form of currency. Very limited stuff, almost certainly before most Americans were surfing the net, so social connections were on the neighborhood level.

    No telling if that’s still around or if it’s faded away.

    Reminds me that I should pay some attention to online coupons; to connections with ad-supported downloads and the rest.

  2. Ah, the Berkshare story was interesting. The journalist pointed at the community-thing as being the most important aspect. Perhaps also a feeling of contributing to something of greater soccial value than business.

    Coming from a rather small country this idea is somewhat foreign for me though, but I think many here would get rather upset if they had to convert to Euro. Most EU countries have converted though.

    You seem to be mostly concerned about americans, just a note: if an economy-realted issue is a hard sell on americans, it probably will be even harder in other nations who are less focused on private economy/work.

  3. Not so much “concerned” with Americans as unable to speak to other examples where there is an established, state-backed currency and a population that has probably taken that system for granted to the point they don’t even understand it. I think America is like that. There are plenty in the U.S. who still believe we’re on the gold standard. Not what I would expect under the circumstances.

    I’m actually interested in what’s going on in Asia and wish I knew more. The QQ currency is especially interesting. But other than what I’ve learned from my own travels, I don’t know if they have the same disconnect. By virtue of the QQ’s popularity though, I’d guess they don’t. Hence, I’m not sure your assumption holds. On my first trip to SE Asia in the mid-80’s, I was struck by how much more capitalistic they seemed to me. And this was before the boom hit China.

    I’d be interested in hearing your thoughts on how Norwegians and perhaps some other Europeans view this issue.

    (And btw, what’s with grannies in Japan investing in the kiwi and causing a surge? Gotta love the mental image that conjures.)

  4. Hmm… I don’t know anything about QQ (had to google it) and not a lot about asia either :-). But, asians are more group oriented than the west and these QQ’s appear to be used to purchase small cute things which probably also appeal to their culture. Sounds more like it is viewed a big game to me than a separate economy, but I could be wrong.

    My thoughts on the issue? Highly practical. I think we are better off having our own currency due to the oil industry which is different from european industry. Our economic trends doesn’t have to track (possibly negative) european trends that closely I think… Though, I think it would be nice if all shops accepted both currencies.

    Or maybe you meant virtual. It would probably be illegal to trade game-related “virtual currencies” for real money. You would quickly get in trouble with lottery laws and what not. And I don’t think many people would see the point, gamblers would, obviously… ;-) Then again, I could be wrong. There have been some debit-like systems for cell-phones and micro-payment, but the motivation there is more to protect your real account. So yes, maybe, if you sell the “virtual currency” as a Internet-Safety-Device (protect your kids from overspending).

  5. The QQ is apparently expanding beyond “cute things”.

    Asia Times Online: China’s virtual currency threatens the yuan

    As to my inquiring about your country, I was wondering more about whether or not Norwegians understood the underpinnings of their currency system; that they grasped the ethereal nature of it. It’s this lack of understanding that I see as partly the reason so many people – in the U.S., at least – react negatively to the mere concept of purchasing “virtual” goods.

    I sometimes read comments citing the lack of tangibility as the litmus test for whether it makes sense.

    “You can’t touch it.”
    “You can’t eat or drink it.”
    “You can’t wear it, drive it, pet it.”

    But people pay for intangible things all the time without giving it a second thought. At least I can take the 3D object I bought in Second Life and convert it into a tangible product.

  6. Just wanted to add this comment I found while looking for info on Weblo:

    I own REAL things in weblo

    I’m a big WOW fan and i spend my time at where i own a bunch of real world cities and properties and I make real world money from then…time better spent in my opinion… – Link

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