China blocks Virtual Currency Trading

In what is probably no surprise given China's many attempts to block internet usage and search engines, blogs and other news sources, It came to light today that China is now restricting the sale of virtual currencies, including the Linden Dollar and the QQ coin. (have to love that name, QQ!)

http://www.cnn.com/2009/TECH/07/01/china.virtual.currency/index.html

The article says people aren't prevented from buying virtual currencies, but simply from selling them. It appears the stated motivation is to stop Gold Farming like you see in WoW, but of course applying that to Second Life is kind of silly. Many think the real motivation is to prevent the undermining of the government's own currency, as these virtual currencies become more popular. I wonder if this would ever come to pass in other developed countries. Australia maybe?

Edit: I just noticed that in the article they quote Edward Castronova, a professor at the University of Indiana who studies virtual currency, as saying that This restriction is a forward-thinking move to protect China's national economies, and other governments should take notice and eventually follow suit.

Killing off the linden dollar, that would be a sad day.

Australia is certainly a "developed country". There is some doubt about the inhabitants.

Seriously, this ban is targeted at the QQ coin, whch is the virtual currency of Tencent QQ, a popular instant messaging system in Mainland China.

QQ coins are now accepted by some online stores in exchange for "real" merchandise. So, this is a danger that it might at sometime in the future become an alternative to the official currency. This is what the authorities are trying to prevent.

See http://en.wikipedia.org/wiki/Tencent_QQ.



Anyone know a RL shop that accepts Linden dollars?

Maybe it's their opening overture in a strategy aimed at GOM'ing virtual world currencies. We'll know for sure if and when the Chinese gov't decides to allow virtual world trade so long as it's conducted in Remnimbi. Given the size and rate of growth of the Chinese online & gaming community they could pull it off. Whether that would be a good thing is another matter altogether.

China's definitely right to be concerned, but anyone familiar at all with mainland China can tell you they can't even control their real black market. There are hundreds of millions living with no papers, outside the system, in all manner of officially disallowed businesses.

They have purposely manipulated the RMB to keep it on par with the USD, thus ensuring that there were good conditions for trade imbalance for years. Now that "look at us, we have such cheap labour!" lie is coming to roost, with the global economic collapse.

Last I checked, the typical white collar full time worker was making something like 5000 USD annual equvalent per capita, about 1/10th of the US equivalent. China's more addicted to steady high growth than even the western world, and *any* avenue that allows its workers to earn money on a par with people in developed countries (thus not giving them world trade advantage) is an extreme threat to their development plans.

Where Mao failed (besides communism) was industrialisation, and China's legacy in his wake was to recover that dream... and for decades it sure seemed like they were doing it. At least in the south, northeast China has its own set of problems. If they suddenly have people running around making 30 or 40,000 USD annual they will have to face the toughest challenge of them all: survival via their own domestic market.

QQ coin may seem to be a small thing, but it's a hole in the dam. $L, adena, Warcraft gold are all labour equalisers ~ it doesn't matter where you come from, your government can't force your labour to be worth a fraction of what it is worth elsewhere. Although it seems they are trying. But really, China's regular black market is so efficient it will probably end up just being a kind of perverse 'smuggling tax' to cash out on the stuff.

That's a pretty good analysis., Desmond. I don't expect this change will affect most that use Second Life, but it could be a harbinger of things to come.

Peter, please don't take the stupidity and grandstanding of Stephen Conroy as representative of the rest of us. And Australia does have a few bogons, certainly, but honestly not *that* many.

We are not more likely than any other developed country to ban the Linden dollar. Despite what the Sydney Morning Herald recently made up/reported, we are a very liberal country.

well there is talk about them weening out the dollar as well as about 20 other countries..
so we'll see i guess down the road..