China Has Growing Monetary Concern

By Israel Rivers, President, Barter of America

We thank Mr. Rivers for sending us the following story on virtual economies:

At a fundamental level, all money is virtual. (If it�s no longer tied to a precious physical product like gold, that is�but then, what currency is, nowadays?) At root, its worth depends on the value a group invests in it...whether it�s made of paper, metal, or binary code. That fairly abstract principle is becoming more apparent to people, and ironically, it has taken the growing popularity of online worlds to make it a practical reality.

And a genuine concern for the Chinese government, which now fears that the QQ is deflating the official yuan. QQ is the virtual currency created by Tencent, China�s largest instant messaging platform, based in Shenzen. Originally, Tencent sold QQ as a fun way for customers to purchase online games, greeting cards, and so on.

As the service became more popular, many started treating it as an alternative to the yuan...using it to, for example, bet in gambling games and purchase online sex (IM a QQ-girl). The expanding trade in QQ is so worrisome to Chinese officials they�re issuing warnings against its unauthorized use.

�The QQ coin is challenging the status of the renminbi [yuan] as the only legitimate currency in China,� the Asia Times quotes public prosecutor Yang Tao.

As with China�s virtual gold farms, it�s easy to see this as a future international trend in the making. All three next generation consoles�Xbox 360, Nintendo Wii, and Sony PS3�include microcurrency systems and, like the QQ, are designed for purchasing games and other products from their online networks.

But with tens of millions of players who find value in these virtual currencies, what�s to stop them from using it for purchasing other goods and services from each other? And given the volatility of real money, should they be stopped?