June 20, 2012
Smackers, dough, shekels, loot, greenbacks, coin, moola, scratch, cabbage, bread, clams, no matter what its called, its all money. And its something that we need to begin talking about, gridlings. No matter what anyone thinks, there will be an inter-grid economy and that means money. And that means that we will have currency.
Over at Metapundit, a very important point was raised in his posting which can be summed up by quoting his statement “If they close up shop tomorrow or decide to stop supporting OMC, good luck to all the poor folks who’ve got a balance of OMC. “ OMC is Open Metaverse Currency and it is controlled by Virwox. Nothing against the company, but the point is this; how secure are our funds? Not just with Virwox but with any company that may come along and promote the use of their virtual currency.
In the Real World, our money being held by the banks is protected through such things as deposit insurance and regulation, but there are no such things in place to protect our virtual funds. The closest we have is PayPal and credit cards. I’ve never had a problem with PayPal, but there are many others who have. And using credit cards leaves people’s private financial information open to misuse.
Let’s face reality, gridlings, there will be unscrupulous people who will come along and will setup their own currencies and they will rip us off. So, how do we protect ourselves?
i like google checkout but for in-world purchases, a virtual currency is easy - but, for me, real money and credit cards online work fine =)
With HG 2.0 coming along, this is going to become more and more important. Let's face it, money is how we keep score. I love building, but I do get a happy tingle when something sells.
And there's a lot of things to consider. Not everyone has a credit card. Not all RL currencies are useable/supported. What about fly-by-night operators? One standard virtual currency, or many? How do we manage parity between currencies?
i see that facebook is dumping its currency - anything with virtual money seems risky - even bitcoin's had its issues
there's no simple answer but i agree, it is hugely helpful to have a payment system like Second Life has
Yet, we need one. No matter how we slice it, money is how we "keep score". It doesn't matter that the virtual profit we make is less than a US$.02, its the fact that we Sold Something :-D. Its the satisfaction of knowing that somebody likes our work enough to pay for it :-). And that means having a currency. For now, we have OMC.
The main issue is protecting our selves, and reputation is going to be a major part in that. Virwox certainly seems to have that. But there are events that are out of their control. What happens if one of those events puts Virwox out of business?
But also let me put some perspective on it, though. How much RL money is likely to be involved? It could be quite a bit, realistically, with all those gridlings out there just itching to dive into shopping and all. If just 1,000 gridhopping shopaholics buy US$20 worth of OMC, well, that's US$20,000. How much OMC is likely to be bought every month by how many people? I have no idea, but it will be quite a bit. But, on an individual basis, its not going to be anyone's Life Savings. I hope :-D In fact, I don't think anyone is going to spend any more RL cash than they can afford, especially given the Golden Rule of Metaverse economics "Caveat Emptor".
Was hunting for something else and came across a piece that Maria published on HGBiz regarding Virwox & OMC use.
"In fact, by the end of 2011, there was OMC 677,564 — or US $2,509 — in user wallets, as avatars continued to buy OMC faster than they redeemed it."
Given that amount, the interesting thought is that anyone could post a US$5,000 bond and create a secure virtual currency.
First off, thanks for linking to my article! I'm really glad to see this conversation begin to get off the ground. Secondly, I think that a virtual currency for the Hypergrid is indeed possible, we just haven't seen it yet.
It boils down to a bunch of factors, including a stable, transparent non-profit organization which can act as the central issuing authority without becoming seduced into abusing that position of trust. That organization would have to start out as the central payment service provider, not a trivial task by any stretch of the imagination. The organization would need to act as a trusted bridge between RL currency and the virtual currency, while also acting as an advocacy group for it's adoption.
Ultimately, that organization should work to minimize it's role on the currency as a whole. This would most likely mean a shift away from being the sole payment processor towards innovating a secure distributed currency which individuals and organizations can exchange like cash. While Bitcoin does some of these things already, it is a true wild-west ecosystem which greatly limits the ability of casual users to trust the people they transact coins with.
Why not both? Non-profit(s) & for-profits. Posting a bond would be voluntary, but if done, should be setup as part of public record. That is something that would go a long way towards ensuring that people recoup their funds in the event of failure. By allowing both types, transaction fees/percentages should be kept low. Transparency also becomes a big factor since the 'Net is so fast to spread that word-of-mouth.
At least, at the start, reputation will be the make or break of any virtual currency provider. And could very well be the best check and balance on the system.
Another issue though would be value. How much of the virtual currency against what RL currency? It would likely be the US$, but is that any factor since any RL currency can be exchanged for any other RL currency.
I've given this some thought (if I had the spare time I would totally be leaping at this) and because I'm in favor of the non-profit model, I have an odd take on it. The currency organization, in order to establish a concrete value in the early stages, would conduct exchanges of the currency at a 1virtual currency unit to 1 US cent exchange rate. This rate would go both ways, thereby allowing users to reliably know how much they can exchange their virtual currency for. It would also go a long way towards removing potential conflict of interest problems that would arise from the organization making money through the exchange.
Thoughts?
An addendum to that: As the system grows and other exchanges crop up, that rate is bound to evolve as the currency begins to set its own value. At that point the issuing organization should probably adapt it's exchange rate to mirror the evolving value while still remaining in a no-extraction exchange role.
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