China Declares: Game Money Can't Be Spent Outside the Game

This blew my mind the other day.

CNN reports that China has made a decision that all virtual currencies can not be used for any purpose outside of purchasing virtual goods.

An Information Week article came out two days prior, but was more ambiguous whether sale of virtual money for real money was explicitly banned.

What blows my mind on a smaller scale is that I waited two days before continuing to write this blog post, and no other news outlets, including virtual-world specific blogs and website, seem to care.

If what CNN is reporting is accurate, then the following are true:
- While it may be tough to crack down on independent L$ sales, China will certainly press Linden Lab to stop facilitating the sale of L$ for real money for Chinese accounts.
- Gold farming is effectively illegal. Then again, so is copyright theft, but that's rampant in China, too. (Somehow I'm dubious that the government in China will clamp down on its gold-farmers, who effectively break the rules of most MMOGs to bring money into their country. )
- Residents of China will not be able to use virtual money to buy real life goods.
- Effectively, the rule amounts to "This is play money, and only for play."

Side note: I'm curious if China will clamp down on its native HiPiHi, the blatant Second Life ripoff that I'm shocked that has not been sued out of existence for lifting the entire look and feel of the interface and 3-D graphics, err, I mean China's glorious shiny happy virtual world.

Inevitability

CNN interviewed Edward Castronova, who notes:
"These virtual currencies, as they grow, are going to become competitors to real-world currencies -- and apparently that's what happening in China."

And I agree. Whether virtual currencies will be cracked down upon has been a quiet topic of discussion among us developers and platform creators for years, now. A couple years ago, we saw the banning of gambling within Second Life after recommendations from the FBI. Governments are starting to get keen on the idea that there's real value behind virtual economies. And not surprisingly, the L$ economy has been far more stable than the US dollar.

So, it's rather inevitable that we will see more rulings like this in more countries. I think it is a little bit sad that China was tech-savvy enough to enact this law before Western countries, but on the other hand, they are way more about controlling their Internet usage of its citizens, so I am not that surprised. But hopefully before other governments wake up and pass similar rulings, virtual world platform companies like Linden Lab will have made back-up plans - partnerships with PayPal-like systems, etc. Or perhaps a government like the USA will actively engage the platform creators in the discussion of how to best implement regulations. I can hope, right?