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Virtual World, Real Banking
The Opposable Thumbs blog brings news about MindArk PE AB, a Swedish game developer whose MMO Entropia Universe has an in-game economy based on real money. It seems the company has been "granted preliminary approval for a real banking license by the Swedish Finance Supervisory. ... MindArk's going to be just like a bank in the real world: it will be backed by Sweden's $60,000 deposit insurance, offer interest-bearing accounts for its clients, feature direct deposit options, let players pay bills online, and apparently will offer loans to customers." An Associated Press report adds that "The economic activity in Entropia Universe was worth about $420 million last year, about the same as the Pacific island nation of Kiribati, population 110,000. The game has 850,000 player accounts, though not all of them represent active players."
Can you say, 'Money laundering'?
As we've all seen, the financial sector has thousands of man-years of experience playing games with other people's imaginary money. They should find this new line of business a natural fit...
I'm not even sure where to begin.
So what happens if someone hacks your player account and takes out a mortgage on your house?
Some people are only alive because it's against the law for me to hunt them down and kill them.
How is this any different than having a mobile interface or a web interface? It's just a new way to access banking integrated into a virtual world.
At what price learning? At what cost wisdom? The price is a man's peace of mind, and the cost is his life.
A quick trip to Wikipedia tells me that Entropia predates Second Life by more than 6 months. And as far as I know, their underlying model has always been based on real money, just like Second Life's.
The difference is SL is wealth generation is based on the creation of new assets and the flexing of your creativity. Entropia's money-creating scheme is more akin to a casino; the house generally always wins.
The end result may be the same (perhaps 10-20% of all of the creative people in SL actually see a significant profit, and perhaps 10-20% of Entropia's players are the same way), but I'd rather take my chances with creative output that I own the rights to instead of a grindfest stacked against me.
Disclaimer: I'm a semi-dormant SL guru and virtual worlds developer since 2003.
hookers and grits.
Now I want to write a cypherpunk-themed MMORPG, and set up something like this as cover for connecting an cryptographically anonymous digital cash system to the real-world banking infrastructure.
So now if you manage to collect a bunch of money in a game you have to file an FBAR with the IRS.
This system is just open to so many flaws.. both technical and otherwise. Technical side of it, a bug appears, a user somehow managed to make millions in a matter of minute, and.. oh look.. he can just turn it into real money and run away never to be seen again. Otherwise-side of it, the company could easily use this to cover some unlawful transactions, with so many odd and seemingly pointless transactions and deposits, who would notice one rogue equally as useless transaction.. Another thing to note is, who will "own" the bank? Will the company be able to just take money off me whenever they want because it's "their game", dispute it been real money..?
During the 1930s depression, a little town in Austria called Worgl decided to print their own money, since the national currency was in such short supply.
It worked wonders, unemployment went from 30% to less than 5%.
What makes money worth something is the market. Is there a market for it? Since the Worgl money was produced by the local council and accepted for all council payments including taxes, there was a ready market for the money.
The utility of money is that it is readily exchangeable for goods and services.
You use cheques? You use credit cards? Debit cards? None of these are "official" money. They are not US dollars. They are credit, created and supplied by private banks. That credit is exchangeable into paper dollars as required. The current recession is caused by banks denying people access to that credit.
Credit is imaginary money (whereas paper is not) because it vanishes. Credit is created (from nothing) when you take out a loan. Along with the credit, there's a debt. The debt pays interest and the credit vanishes as the debt is paid. Hence credit is "temporary money". Also, there is far more credit than there is real money, about 95% of money is bank created credit, so if everyone went and asked for paper dollars, there wouldn't be enough to pay them all. This is the dirty little secret of banking. Banks don't just hold and loan out money. They create new imaginary/temporary money which they loan out to you.
So. Bankers are people who actually do create monopoly money. On a daily basis and on a massive scale. You now understand why they are always telling you that you "must have confidence in the banking system"?
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You're not missing much. While I haven't tried it in a while when I did the game was basically one big slot machine.
You buy ammo at a cost of about 1 cent a shot, you then shoot animals and hope that whatever they drop is worth more than the ammo you use - it almost always won't be, once in a blue moon you hit the jackpot and make a profit.
You buy mining equipment and survey charges at 10 cents a go, you let off the charges to locate minerals and hope the minerals are worth more than the charges you use - it almost always won't be, once in a blue moon you hit the jackpot and make a profit.
I'm sure you've spotted the pattern by now so I won't waste my time how any of the other "gameplay options" such as crafting work. I'm suprised no one has tried to apply gambling laws to the thing yet because that's all the game is with an admittedly pretty front end dropped over it.
Entropia is a game. It has a rule-set, monsters to kill, etc. Second Life is not a game.