Competing currencies, sort of

South Korea has decided that virtual currency is the equivalent of real-world money bringing to light some very real ramifications for users not just in Korea but in other countries as well.

The ruling allowing "cyber money" is the first in Korea and was based on the acquittal of two gamers indicted on charges of illegally making money by selling goods earned in the game Lineage.

The full story is here and I thank Daniel Kent for the pointer.

Addendum: Read the fourth comment for a different take on this story.

Comments

This is a can of worms. On the one hand, if people value virtual goods and use virtual currency for transactions, then of course virtual money is the equivalent of real-world money. On the other hand, this potentially (not actually, since no online world is yet valuable enough) removes control of the currency from the central banks and governments and places it in the hands of game companies: Blizzard can now make real-world money from seignorage.

Second life uses seignorage as a profit model.

David,
Thanks for your explanation. In economies with monetary systems of payments, tokens are used for different purposes, including games and gambling. Tokens are useful for a closed set of transactions, that is, they are not means of payments. Although years ago company towns used tokens for all sorts of "domestic" transactions and they were quite close to currency, to talk about tokens as currencies is misleading.

As a layperson I fail to see a significant difference between a company that sells software (a virtual good) for regular money and a company that sells virtual currency for regular money.

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