China Cracking Down on QQ Economy

Via /., The Wall Street Journal Online reports on the Chinese government's concerns about the QQ coin.

Created by software company Tencent for their QQ instant messenger, the QQ coin is now used by many East Asian online service providers, including MMOs such as Tencent's own "R2Beat," as currency for the purchase of service time and virtual items.

Then last year something happened that Tencent hadn't originally planned. Online game sites beyond Tencent started accepting QQ coins as payment. The coins appeal as a safer, more practical way to conduct small online purchases, because credit cards aren't yet commonplace in China.

At informal online currency marketplaces, thousands of users helped turn the QQ coins back into cash by selling them at a discount that varies based on the laws of supply and demand. Traders began jumping into the QQ coin market as an opportunity to make a quick yuan off of currency speculation.

State-run media reported that some online shoppers began using QQ coins to buy real-world items such as CDs and makeup. So-called QQ Girls started accepting the coins as payment for intimate private chats online. Gamblers caught wind, too, and started using the currency to get around China's anti-gambling laws, converting wins in online mahjong and card games back into cash. Dozens of third-party trading posts sprouted up to ease transactions, turning the QQ coin into a kind of parallel currency.

It can't be easy, trying to segue from Authoritarian Socialism to Authoritarian Capitalism, at the very moment that technology is destroying both traditional Authoritarianism and traditional Capitalism.

Rink.

PS: You find the best things on the Internet. I was Googling "MMO QQ" to find out which MMOs accept QQs, and I found a scientific paper, "Naked singularities, event horizons, and charged particles," which contains the phrase: "when the inverse square gravitational and Coulomb forces are exactly equal, giving the condition Qq = Mmo..."

"Second Life" Proves It: Capitalism Is a FRAUD

Valleywag has posted a examination of "Second Life's" virtual economy by a real, live financial consultant who actually investigated what happens when you use Linden dollars as an investment to make real dollars. He characterizes the Linden economy as a "pyramid scheme," because the richest people at the top determine exactly how much money the investors at the bottom can pull out.

It turns out that inside the game, counterparty risk is tremendous. In fact, entire banks will suddenly disappear. Or banks will simply renege on obligations without recourse. Worse yet, the very people who provide the source of nearly all demand-liquidity within Second Life, those guys at the top of the virtual playpen pyramid, are the same ones who effectively set the SLL/USD exchange rate.

Basically, "Second Life" advertises huge returns in Linden dollars on your investment in US dollars; then they promise you can turn those voluminous Linden dollars back into real cash. It all works, until you try to pull your money out. Then the handful of wealthy SL denizens who control the market change the exchange rate, only letting you have a tiny return on your investment.

The joke of course is this is exactly like real-world capitalism. The SL economy is just an extreme model of a real capitalist economy, minus the few tepid socialist restrictions real governments put in place. The American economy is controlled by a handful of very wealthy individuals, who manipulate markets and lawmakers to protect their wealth and to stifle possible competition. There's no "meritocracy," because the very wealthy will always cheat.

They don't necessarily cheat because they are bad people (although some of them surely are) -- they cheat because the capitalist "ethic" tells them that protecting their own interests is best for everyone, and if they don't do it, someone else will.

Remember -- what this consultant labels a "Ponzi scheme" was not designed that way by the creators of "Second Life." It's just what happens when a few people become very powerful, and look out for their own interests. And unlike in a capitalist model like "EVE Online," SL players believe they are protecting real money. So they act like real plutocrats.

Wouldn't it be nice if we lived in a world where ONLY game players were allowed to behave this way?