Wouldn’t it be kind of cool of Monopoly money was real? Strangely, it isn’t far from the truth. QQ coins, a kind of virtual money initially invented by the Chinese company Tencent Holdings, Ltd, was initially designed to allow users to buy digital commodities, such as virtual flowers, but has taken on a real market value.
It started a few years ago when the company started selling QQ coins for one yuan each, about 13 cents. The use of the coin took off, and then something very strange happened: online vendors started accepting the virtual currency in exchange for real world items. The artificially designed virtual currency had become real money. Its use took off, with massive online trade. It came to be used for gambling and prostitution, things that would be illegal in the realm of real money. Over the past month alone, the value of QQ coins has gone up 70%.
This is indeed a strange phenomenon, but not something entirely unforeseen. Last year, in china alone, virtual money was a 900 million dollar business. It all started when pretend currencies like those in games such as WarCraft took on a real world value when people began selling them on eBay. As the industry developed, companies came to offer products like SecondLife, an entire virtual world, in which people pay real money to be able to buy digital clothes for their digital character. The industry took off, to the point that it now poses a problem.
Suppose the company behind the QQ coin were increase the volume of the virtual currency in circulation. Due to the scale of the entire operation, the result would be actual inflation. There would be more money on the market, and it would be harmful in the realm of real people and real commodities. It is a very real problem. Recently, former CEO of Shanda Interactive Entertainment was sentenced to five years in jail for coining $250,000 worth of virtual money for himself.
The People’s Bank of China is worried, and says that it will crack down on virtual money. Restrictions similar to the restrictions on real money will be necessary, since virtual money has essentially come to be a real currency. Not for much longer will virtual money allow for money laundering and gambling, they say.
The matter of virtual money is certainly an extremely strange one, and shows us just what an “information” economy means. If we are no longer even spending our money on the production of real things, what’s the point? How much labor would be freed up if digital economies did not have to exist? The matter does point out some problems with capitalism.