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China Bans Gold Farming
InformationWeek is reporting that the Chinese government has declared a ban on the sale of virtual goods for real currency. This move is poised to shut down a several billion yuan a year business that has been growing by leaps and bounds every year. "The trading of virtual currency for real cash employs hundreds of thousands of people worldwide and generates between $200 million and $1 billion annually, according to a 2008 survey conducted by Richard Heeks at the University of Manchester. He estimates that between 80% and 85% of gold farmers are based in China. [...] Game companies typically forbid gold farming but committed virtual currency traders find ways around such rules. Some game companies have recognized the futility of trying to ban the practice and have built virtual commerce into their game infrastructure."
The trading of virtual currency for real cash employs hundreds of thousands of people worldwide and generates between $200 million and $1 billion annually, according to a 2008 survey conducted by Richard Heeks at the University of Manchester. He estimates that between 80% and 85% of gold farmers are based in China.
Dear god! Eight tenths of one billion dollars is a lot of cash!
The Chinese government estimates that trade in virtual currency exceeded several billion yuan last year, a figure that it claims has been growing at a rate of 20% annually. One billion yuan is currently equal to about $146,000.
So what is it, hundreds of millions or hundreds of thousands? Because one is a nice chunk of change while the other is, across China's population, laughable.
These numbers just aren't adding up here. There seems to be a large disparity between what the Chinese government reports and what Heeks' study finds. It's entirely possible that Heeks' is stretching stats to make his research sound more important and news worthy. It's also possible China is understating the impact their ban will have so they can "cure you of your illnesses." The reality is probably both a little of column A and a little of column B.
Some game companies have recognized the futility of trying to ban the practice and have built virtual commerce into their game infrastructure.
And now China will realize that futility. One would think that China would enjoy the tax on those who report this income but now it's just going to all go under-the-table. Hell, I'd say tax it but I'm certain China wants to look like the caring government attempting to heal the afflicted youth.
My work here is dung.
All of the non-gold-selling Internet business that comes to mind involves either selling a real good (although that real good consists of data) or performing a service, not selling a virtual good.
You seem to be confusing real goods on the Internet that consist of data with virtual goods. (Note that a real good consisting of data -- like the contents of a website -- can easily, though perhaps inconveniently, rendered into data in a more "physical" form. I cannot give you WoW gold via any physical means.)
It's not illegal to have sex.
It's not illegal to give money to someone else.
It's not illegal to drive.
It's not illegal to drink.
Things aren't always just the sum of their parts.
Sturgeon was an optimist.
In full disclosure: I work in the financial industry currently.
This ban has nothing to do with gaming, gambling, or local economy.
This is likely a direct response to MASSIVE money laundering.
Joe has $100,000 worth of illicit cash.
Joe strikes a deal to buy $100,000 worth of virtual currency in WoW. Joe smuggles the money. (Many times Joe can even hire the kid down the street and pay him cash...)
Joe turns around and over several months sells the gold BACK to the gold farmers and claims the sales as legitimate income. Selling it at a 50% loss he can convert $100,000 into $50,000 of legitimate funds. Even more so when he acts as a virtual broker (IGN anyone?).
While this is a simplified scenario but we are talking BILLIONS of dollars a year are now going through these kinds of channels.
I've seen locally here in the US $300,000 attempts and laundering money this way (through a combination of FF Online, LOTRO, and Maple).
While it is getting easier to deal with this now that the gaming companies are willing to share some data I can only imagine how hard is must be in Asian markets where channeling cash to chinese gold farmers is easier with the shorter phsyical distances. Oddly though, in my experience, I have seen more Korean and Indian gold farmers then Chinese.
Never had a problem with gold farmers, never will, but I have serious doubts that this ban has anything to do with gameplay.
I think this is in response to the forged bonds that were intercepted in Italy. They are worried about organized crime shifting large sums of money (which require laundering) through the virtual economy.
If I am an evil overlord and I have to get 4 billion to my agents around the world the easiest thing to do is buy a billion dollars worth of WoW gold, have all my agents log in with characters. Divvy up the gold then have them sell it off locally or back to the gold farmers at a loss.
No quicker way to distributed that much real world money then through a network of games.
-=[ Who Is John Galt? ]=-
While they have expressly forbidden the exchange of virtual currency/services for real cash, it does not forbid the exchange of their time (services) for a player's cash. This does not prevent them from offering powerlevelling, honor farming, or item grinding. (Change the term for whatever your MMO of choice terms these services.) These services are normally quoted as a function of time. Anyone who uses a bit of creative wording/pricing can still continue to sell virtual currency. So long as they refer to it as a service, then in theory they should be able to skirt this new ban. Quite a few sites list a time frame in which they can get gold to you. Up to 2 days for larger orders. Let's say someone wants to buy 10,000g. With a 2 day turn around time, that's about ~210g per hour. (Most players with a bit of a clue can easily bang out that much if not more per hour.) Thus, they have sold the player their playing time for a specific goal. I honestly don't think this solves anything. It'll either create an underground market, or sites will start to use more creative wording.