Francois Rey has sent us the following commentary concerning this news item.
Francois Rey:
Anshe Chung Studios, one of the most prominent virtual business, “is preparing to launch a virtual financial market, financial products and a set of services that are going to, for the first time, allow direct capital flow and investment across virtual world boundaries.â€
You may ask how does this relate to P2P?
Well it isn’t directly related except that this is another step taken towards the strengthening of virtual economies and finance hence another step taken towards the weakening of real world centralization of power in real world economy and finance. What’s happening in virtual worlds is bound to impact on what’s happening in real world. Indeed, the link between virtual economy and real world economy are multiple.
First RMT (Real Money Trade) involving virtual assets establish a bridge between the virtual economy and the real one. Ebay contains numerous listing for virtual assets, many other market places exist for such trading, and there is a virtual currency market with published exchange rates, see http://p2pfoundation.net/Virtual_Gaming_Currencies. Another powerful link between the two worlds is the fact that a lot of virtual companies are also real world companies, some with more their own offices and more than one employee. Finally, virtual currencies are starting to be used for trades in real world just like any other real world currencies (see http://virtual-economy.org/blog/qq_coins).
All this is generating great concerns from authorities, notably in China and Korea who are deploying laws to regulate such trade. For now volumes may not be of such concerns, but virtual economies are growing very fast. What if virtual economies were to conquer the huge market of game stations? The last version of Skype contains a “send money†feature, so what would happen if eBay (owner of Skype) were to buy Anshe Chung Studios or even Linden Labs (owner of Second Life)? Clearly the powers of this world are concerned about what’s happening with virtual economies and nobody can say for sure how things will evolve. Many challenging issues are raised, such as the protection of virtual assets, how regulation in virtual worlds should follow those of the real world, how virtual activity should be taxed, etc. Attempts to regulate virtual worlds will also face the same challenges that are faced by regulation of digital media: how to enforce the regulation in the immaterial world? How can one enforce regulation on open source P2P metaverses?
Perhaps what’s more important is not so much all the struggles between virtual worlds and real world, but what comes out of them: the consciousness of the limitations we create for ourselves in both worlds, and the resulting evolution that comes from removing these limitations. Metaverses or virtual worlds are by nature immaterial, and are created out of the minds of designers who are like gods creating universes. In such process, the creation of boundaries and limitations is a conscious choice because no physical limitations (except the availability of computing resources) are there to constrain design choices. So when a virtual world designer chooses to enforce a rule that says nobody can send messages to more than 100 users, he or she is making a conscious choice, not a choice dictated by the laws of the physical world. When sketching out virtual worlds and more generally any computing architecture, the choices are endless and only a conscious act of creation can bring the necessary structures and limitation that make a certain world possible. In the political, economical, and financial spheres, the limits of the real world made it easier for centralized and hierarchical structures to develop, even if that was against the interest of the many. With the advent of a networked economy, virtual or not, P2P architectures are increasingly becoming the most appropriate choice and no longer can one ignore the interest of the many, because we’re now talking of powerful participants in the most important spheres of production who have the ability to reorganize themselves as needed.
It might be wise to follow the developments of virtual worlds. Who knows, maybe the next great social innovation may first take place in these worlds.
In what appears to be Michel Bauwens Says:
May 22nd, 2007 at 11:22 am
Very informative, thanks Francois.
I have 2 very general comments to make.
If such money is created as a result of ‘artificial scarcities’, then I think that is not necessarily an interesting ‘progressive’ development by itself.
A second aspect is the protocals governing such money. Again, if they simply replicate the scarcity-based paradigm, then they end up just replicating the same social relationships in the virtual sphere.
The only, but important benefit, I see is that it is one way to create an economy for creators of immaterial value.
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And my answer is:
I agree, it’s not such a progressive innovation to replicate present monetary systems in virtual worlds, and it’s great to see a virtual economy of immaterial production. My point however is this: the ongoing struggles between virtual and real will certainly yield interesting developments. I could compare this situation to the one of robots and holograms in Star Trek or Matrix: what rights to they have? What legal status can they claim? Can we just turn them off at will or do we give them this ability? Can we clone them?
It’s the same thing with virtual economies: can we just turn them off? Are real world regulations applying to virtual economies? Can virtual assets be copied?
Here is : virtual demonstrations in Second Life against the use of “copybotâ€. People got concerned about the ability to replicate objects in SL, their cherished and unique creations could suddenly be replicated at will, making them less valuable and thus threatening the virtual economy itself. In other words the SL community is concerned about a limitation they find important: maintaining scarcity and property. They are now more conscious about such limitation, not as a given feature of the density of the real world, but as a conscious design choice. Of course people at first tend to recreate what they are familiar with, but once people have played enough, what’s to prevent them from trying out other rules? Who is to prevent the creation of a Third Life in which money, as we know it today, does not exist and in which anything can be replicated? Sounds like Star Trek to me: humans will then endeavor in their own betterment through exploration in science, art, and space.
Virtual economies may not be so big at present, but when you see virtual currencies being used in place of conventional money, and when you imagine virtual economies spreading to game console, you start to comprehend the possibilities. At first the major creator of virtual economies may be large commercial companies subject to real world regulations, so they may “behave†and avoid confrontation with the powers that be (e.g. they may put limitation to users’ behavior), but what’s to prevent the free culture to take on the fight using P2P technology?