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Virtual Currency Becomes Real In South Korea
garylian writes "Massively is reporting that the South Korean Supreme Court has stated that virtual currency is the equivalent of real-world money. For those of you who might not be drawing the link, the core there is that selling in-game currency for real money is essentially just an exchange of currency and perfectly legal in South Korea. This could have sweeping implications for RMT operations the world over, not to mention free-to-play games and... well, online games in general. The official story is available online from JoongAng Daily."
It's lucrative for the government to say that. After all, now they can add tax between exchanges, in top of the service costs too.
So we can sue Linden Labs for currency manipulation cause... oh wait the US does that all the time so I guess it's legal?
It all starts at 0
Is minting a competing currency legal in South Korea? I thought it was illegal in the States, I seem to remember some libertarians a while back trying to set up a gold standard currency that would have competed with the dollar and they got closed down.
What is the difference between this and the S.K. gov't simply deeming that any money earned on the sale of "virtual currency" would be subject to income tax? That is, assuming they have an income tax there, which I do not know myself. I suspect that the US IRS and respective state gov'ts would take this opinion...
Every time you die in-game you can write off the armor repair costs on your taxes!
I wonder if this will make the value of the South Korean Won drop. Because it would almost make it possible to print money. Of course I guess you'd just need to value different game's currencies differently and then have published exchange rates. Its interesting.
They need to do better jobs keeping track of currency levels in different games. As virtual currency becomes more common in game settings, better cryptography needs to be used to make sure that people don't change the numbers. Similarly, there becomes issues with income taxes and the like. In the long run we should probably all switch to cryptographically anonymous currency anyways which can be easily implemented using blind signatures http://en.wikipedia.org/wiki/Blind_signature so that even the bankers don't know who used which bills for which transactions. Unfortunately, many large institutions (such as governments) will likely resist such systems because they lead to a substantial loss of control.
Can I pay my taxes with it?
Assuming the South Korean currency is not backed something solid (like gold), then their currency is just as virtual as online virtual currency -- it has no actual intrinsic value.
Do daemons dream of electric sleep()?
Given that the "currency" (units, seashells, whatever) have some intrinsic value in that you put labor into the creation of some sort of work product there needs to be a guarantee of the currency, someone or some-thing (government, bank, etc...) who backs up that currency with assets. Also an exchange would need to be established to control the conversion of this new currency into other units. If you do not have these mechanisms in place then your new currency is as valuable as wampum was to the American Indians.
When the European powers moved into the Americas they discovered that wampum was being used as a currency for the exchange of services and commodities and as a means of having portable wealth. The colonies, companies and fur-trappers would bring in mass-produced glass beads from Europe where they had very little value and exchange these to the Indians for furs, food and land. Within a few decades the entire system of wampum devalued itself and had collapsed.
Virtual currency is just 1's and 0's on a computer (our real currency is more like that now than it ever was). How easy would it be to create the equivalent of glass beads in our virtual wampum on-line society?
Tisha Hayes
I can go to a bank in South Korea and exchange my WoW gold for Won? No? Then how about EvE's ISK? No?
Why could that be? Maybe because the issuers of that "currency" are companies, not countries, and no country on this planet backs it with its real economy? And "forging" it is about as trivial as changing a few lines in a database because no game company follows banking standards concerning security (not to mention auditing)? And let's not talk about Blizzard or CCP letting those printing presses roll whenever they feel like without any oversight from any kind of national bank.
In short, the whole deal is BS squared.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
South Korea is going to have to pay for this mistake...
So hacking an account and taking someones gold is now a criminal act the same as mugging is? Cool!
The gamer blog has it wrong, the article poster didn't help, and the Slashdot "editors" blew it as usual. Read the article in JoongAng Daily (which they offer in English). The key issue here is that online gambling is illegal in Korea, and two game players were charged criminally for making money from an online game. The Supreme Court of Korea ruled that they were not gambling, so they don't get fined.
This decision doesn't affect relationships between players and game operators. It's not about EULA enforceability or property rights. It's a criminal law issue. If you trade game currency, you're not going to be fined or go to jail in Korea. Whether a game site can ban you is a separate issue.
I just need to get a job at Blizzard.
Transfer all your WoW gold to me, for me.
This message was brought to you by the Fed.
So I can trade these currencies on any one of a number of currency exchanges, such as Forex? (/sarchasm)
I am recalling all of the statutory and regulatory requirements for currency traders. It goes without saying, they are substantial. Does that mean each player in the game needs to be regulated as a currency trader and follow the same regulatory requirements? What if you have multiple accounts? Does that mean you are now a hedge fund with a whole new set of regs? Can I go short on these currencies? If so, how would the mechanics of that work? etc, etc, etc....
Lastly, what safeguards are in place to make sure it is a fair marketplace and noone can "corner the market" or otherwise manipulate it in an illegal way?
With about 5 minutes of armchair regulatory and legal analysis I can already see this is going to have significant unintended consequences.
(Bonus points: Currency traders --- what other regs do you have to follow that would not work on a virtual currency in a game?)
Is this different than scrip in any meaningful way?
-Peter
taxes were always there. it didnt matter zit if you converted cash into something from virtual currency or from sale of your old underwear. as soon as you have incurred income, it was taxable.
Read radical news here
If virtual currency now has value, a player vs player encounter where you steal someone's gold can land you in jail now for theft?
I can't wait until they give in game characters legal status and start charging people with murder... (though someone founding PETM [People for the Ethical Treatment of Monsters] might be amusing).
This is why realism in games continues to be a bad idea. The next thing you know, we'll be paying real taxes on our purchases of "Gold Spear+1".
Virtual = Not real.
From http://dictionary.reference.com/browse/virtual
(Just one of many definitions)
Existing or resulting in essence or effect though not in actual fact, form, or name: the virtual extinction of the buffalo.
Scenario
You lend person A $20.00, they repay you with electronic credits or virtual gaming money. What if you don't play electronic games? The owner of the game company doesn't give you the physical $20.00 for relinquishing the electronic credits or electronic gaming money. This will not bode well....
Life takes interesting turns, but the most interest is when you're off the beaten path.
So in a game such as EQ (the only MMO I've played) you could kill people (on pvp servers) and take their gold. Clearly this is part of the game, but is it something you could be arrested for now?
Massively is reporting that the South Korean Supreme Court has stated that virtual currency is the equivalent of real-world money.
Um no they didn't...
Dependents bought items and in-game currency then resold those items for cash. The gov got pissed and said it was gambling then fined the 2 guys. The court then ruled that they were not gambling but earning cash by selling/trading a good that held VALUE. This has more to do w/ virtual items/goods having a VALUE and less to do w/ a transfer of currency. I wouldn't go as far to say that Aden = $$$ but more to the likes of Aden = VALUE kind of like how a car has a value, but is not directly $$$, it's a good and not a currency.
Car analogy for the /. crowd...
The core there is that selling in-game currency for real money is essentially just an exchange of currency and perfectly legal in South Korea.
Applying that logic domestically, does that mean that I can mail all my old arcade tokens to the IRS to help pay my taxes?
with wii points.
Does anyone know the current exchange rate?
INSERT INTO Wallet (amount) VALUES (1000000000.00)
GO
UPDATE Player SET Status = ReallyRich
GO
Money is virtual ALREADY. Arguably, money was virtual at its inception but since we moved from gold (tangible) to debt (intangible) money is now virtual.
Furthermore, most the worlds money is exchanged as numbers (now being done with computers) so even the representative objects (cash/coin) have only been a niche player.
Banks don't print money, they practically type a cheat code and the government just gives them a higher number to work with (which is many times higher than the actual virtual amount they are given - see fractional lending.)
Democracies have a weakness: complexity.
The more complex the more removed from the public the issue is for them to manage their employees (public servants.) Like a boss who is clueless about the jobs his workers perform; it just doesn't work out as well in the long term... Power by obscurity primarily using complexity; or one could think of it as security by obscurity. It actually works; obscure something enough and you deter the curious people; unlike computer security, 1 person "getting in" does not cause much change (if any) most of the time (because its not a computer system and it does not behave like one even if the concepts apply to both.)
The solution is to simplify the law... using mostly lawyers elected to office? I know... Seriously, we don't need most the complexity its why judges and juries exist to interpret using "common sense" if we try to program everything explicitly for fear of the judicial branch and the public might think we end up with what we have today (see jury nullification and think about why it exists to counter this mentality of undermining of freedom.)
Democracy Now! - uncensored, anti-establishment news
i wrote a thing about an international virtual currency. The basis was 1 hour of unskilled labor would be 100 credits. Each credit has an entry in the database as to who owns it at the moment. Small transactions could be done with a private/public key transaction. Bigger transactions require more authentication.
The serial of a credit would be 128b. The first eight being the date of it's release into the system in CRC32, leaving 96b for the rest of the serial. That gives us an insane amount of credits even if the population hit 12B. The date would be a quick means to verify that the number of the credit someone is trying to spend isn't some random number.
Money enters the system by an employer and employee agreeing to do the transaction in this system for the minimum wage. Since money enters the system in batches, it could keep value tightly controlled. It would also address some problems with gulfs in currency/labor values ($1 doesn't buy shit here, but could buy a big meal elsewhere). People who are to be paid more than minimum wage must be paid in a transaction of already release currency.
It would be purely virtual and transactions would be tracked, making it less useful for criminal enterprise.
Utilizing the synergization of benchmark e-solutions to pre-workaround action items!
Doing it In game may fall under gambling laws / other laws
Will the NGC have to take a look at the WOW or any game like it source code?
how about laws covering carnival game?
arcade / arcade redemption law? in NJ there are a few laws covering skill games / redemption / claw games that they have NJ roms vs the roms for the same game in other places.
And that is before any TAX / income laws as well.
Koreans trying to be clever but not very..it could create a credit bubble, whereby many people are caught holding aden and other in-game currency.
If Lineage suddenly went out of fashion or another game swept in and became very popular, you'd have a lot of people rushing to sell in-game currency in general, which could even have economic knock-on effects, particularly mp3 players and hand-held gadgets that are popular amongst mmorpg players.
shit just got real
If they make virtual currency and meat world currency identical in the States, does that mean I can pay my rent by farming gold in WoW? 'Cause I can farm gold for a couple hours a day... then I'd never have to work. Sounds like a deal to me.
How long before NCSoft asks for a Government Bail-out?
The supply of the US Dollar is controlled by the Federal Reserve, a private company
Stop it with this "Private Company" bullshit.
The Federal Reserve was established the "Federal Reserve Act", an an Act of Congress. It is Governed by appointees of the US Government.
That's why Representatives like Ron Paul can push for bills like the Federal Reserve Transparency Act of 2009-- the Federal Reserve is within the realm of Congress.
Yes, there are elements of the Federal Reserve which behave like a private company. Why is that wrong? It's a Central Bank, is it wrong for Member Banks to hold nonvoting stock in the Central Bank?
The opposition to the Federal Reserve is purely political. God, I fear a country where the monetary policy is governed by irrational and uncontrolled actions in Congress. Monetary policy needs to be stable, and isolated from politics when possible.
These virtual currencies are more stable than a great many national currencies
Your virtual currencies don't even register in the scale of a real world economy.
The EVE Online Currency is minuscule compared to the Dollar. The GDP of the American economy is over $14 Trillion. The EU economy is worth a similar amount. What is the Eve Online economy worth? A few million dollars, maybe?
And I can readily buy a loaf of bread and a car with my American Dollar. I'd like to see you buy anything with your ISK.
yes there is: food, air, fresh water, security for your family, comfortable shelter, tools, transportation, fuel, weapons. They are the real currencies of the world.
& btw knowing the xenophobic Koreans, they can use this in 2 ways to screw over foreigner living in their coutry (which the little racists tend to do)
1. Devaluation of in-game credit strategy: They can specify in a contract that you be paid in a legal tender to the value of xx korean won.
Of course this would mean you're paid partly in in-game currency. As it devalues, u have nothing. This is exactly what I'd expect from Korean people who are unmatched in treachery. Only the Cambodians are more treacherous. They could always revert to this strategy if things went sour. They're Koreans!
2. Inflation of in-game credit strategy: This would imply that foreigners would never be allowed to get the in-game currency. Koreans would rush to buy the in-game currency and dump won, perhaps to increase economic competitiveness with China through a cheaper won. Crazy as it sounds, Koreans do things in a one for all and all for one way just like this. The danger with this is, you could end up hurting your domestic economy as if the in-game currency collapsed with a panic, mmorpg players (usually the poorer element of Korean society) would become more poor and buy even less mp3 players and hand-held gadgets and other things that mmorpg players buy.
Strangely enough, this seems more likely, as foreigners are already forbidden from being members of Korean-based email, chat, and mmorpg sites! I used to live there! It's a xenophobic society.
My analysis:
Koreans operate socially on the jung system. If you're family you're sacred, otherwise you're less than shit. 'Compassion' in Korea doesn't exist in the way we understand it - it's just nepotism, family, old-boys clubs.
It's a strategy to compete with China by forcing devaluation of the Korean won (hence making exporters more competitive. If you know anything about economics, you'll know a devalued currency is always going to make your exporters cheaper.) at the expense of the poorer elements of Korean society. Korea has a track record of never giving a shi.t about it's poorer citizens/netizens so that would also fit the jigsaw puzzle. The poorer would have less money to buy Korean goods, but it's really the export market that Koreans care about anyway.
In summary, they're going after a devaluation strategy.
Article is horribly misrepresenting the Korean supreme court ruling.
It claimed such an exchange was not criminal.
It did not:
-Create any kind of exchange between virtual/real currencies.
-Create any kind of obligation on gaming companies to be accountable to player's virtual bank accounts.
-Negate the EULAs of the majority of games which state RMT is a violation of your use of their services and will result in your account being banned from their servers.
In other words, Bliz can continue to cancel your WOW account, they just can't arrest you. In Korea.
-.-
You can get 15 minutes of fame, but you can go down in history for infamy.
and taking their gold?
game of skill and your take is a bet / Prize and you can lose if you lose. But it then may fail under gambling laws / other laws. To the point of this game is not legal in this state.
Will there be a NJ ver of WOW and other games like it? like there are for skill arcade redemption games? NGC will have to take a look at the game code be for it can be played in NV?
Many posters rail at "virtual" currency and indicate it is bogus because you can't pay your taxes with WoW gold, or trade it on FOREX.
I would encourage those slashdotters to check up on Philippines Pesos, or even Chinese Yuan.
1) AFAIK You can't pay your taxes in any currency but the legal tender of said country (Euro is an official currency, but can't pay your US taxes with those)
2) You can't exchange certain country's currencies on the FOREX market. If you have Philippine Pesos, you can pretty much only exchange them for something else (including another currency) in the Philippines.
The only difference with most game currency is that those exchanges are not overseen by the "government" (game company), but done on a black market. If Blizz "prints" lots of money (or there is a dupe), value will go down fast. It's happened in many games. A sudden crackdown on gold farmers will drive currency value up. Same with a new expensive gold sink.
With your Chinese Yuan, you can get services in China only. With your WoW gold you can get services in WoW only. I'm pretty sure there's a market for wow gold in nearly every country out there. Likely easier to monetize that, if you really wanted to, than some leftover Chinese yuans you might find in a drawer...
There is well enough activity and services available in MMO's that a lot of those currencies have "real" value and something like an exchange rate. I don't see where the issue is with that though. When you've paid $10 to watch a movie in a theater, you only have the experience of it left afterwards. if you pay $10 to get some wow gold and get a flying mount, you get an experience as well.
Disclaimer: I own http://www.gamersloot.net/ and we -used- to offer in-game gold/services a long while back (now mostly just cd-keys)