A Chinese Virtual Currency Challenges the Yuan

Radon360 writes "A Wall Street Journal article reports that China's fastest-rising currency isn't the yuan. It's the QQ coin — online play money created by marketers to sell such things as virtual flowers for instant-message buddies, cellphone ringtones and magical swords for online games. In recent weeks, the QQ coin's real-world value has risen as much as 70%. It's the most extreme case of a so-called virtual currency blurring the boundaries between the online and real worlds — and challenging legal limits. A Chinese Internet company called Tencent Holdings Ltd. designed the payment system in 2002 to allow its 233 million regular registered users to shop for treats in its virtual world. Virtual currencies are in use in many countries — but nowhere have they taken root more deeply than in China."

Comments

Nope! All currency is a commodity...

[Colin Smith]

Currency is just an agreement on a medium to symbolize value. Common misconception, but one which governments are happy to foster. Actually, currency is a commodity in exactly the same way as coffee, bread, oil, gold, pork bellies.

You see if currency were really a medium which symbolised value, it wouldn't change much. Bread, coffee, gold etc would pretty much always cost the same, they would always have the same value throughout time. Instead what happens is that over time, everything becomes more expensive, inflation. What's happening is that the currency is losing it's value. It does that because there's more of it; supply and demand. When the government('s bankers) print money, all the existing money in circulation decreases in value because there is more of it around.

So, no, there's no fundamental difference between real and virtual money, just as there's no fundamental difference between real money and a kg of coffee.

Re:Nope! All currency is a commodity...

[Colin Smith]

That's just plain stupid. Coffee has intrinsic value, money does not. Just because the "value" of money fluctuates, does not make money a commodity. It isn't stupid, it's the nature of money. The intrinsic value of money is it's market value, as the intrinsic value of coffee is it's flavour and high caffeine content.

A currency is only as strong as the government that issued it. Nope... I live in Scotland, we have several notes, issued by private banks (not the government) which are accepted as currency, nobody even thinks about it.

http://www.rampantscotland.com/know/blknow_money.h tm
http://en.wikipedia.org/wiki/Banknotes_of_the_poun d_sterling#Scotland

Have a read:
http://www.mises.org/money.asp

Originally almost all money was privately issued, governments acquired the process because it allows them to create and spend money without having to tax the populace. Doing so devalues the existing currency and so is a subtle form of taxation. You've been taken in by your local government's propaganda over the nature of money.