13 Comments

Summary:

At a fundamental level, all money is virtual. (If it’s no longer tied to a precious physical product like gold, that is– but then, what currency is, nowadays?) At root, its worth depends on the value a group invests in it, whether it’s made of paper, […]

At a fundamental level, all money is virtual. (If it’s no longer tied to a precious physical product like gold, that is– but then, what currency is, nowadays?) At root, its worth depends on the value a group invests in it, whether it’s made of paper, metal– or binary code. That fairly abstract principle is becoming more apparent to people, and ironically, it’s taken the growing popularity of online worlds to make it a practical reality.

And a genuine concern for the Chinese government, which now fears that the QQ is deflating the official yuan. “QQ” is the virtual currency created by Tencent, China’s largest instant messaging platform based in Shenzen. Originally, Tencent sold QQ as a fun way for customers to purchase online games, greeting cards, and so on, but as the service became more popular, many started treating it as an alternative to the yuan, using it to, for example, bet in gambling games and (of course) purchase online sex. (For a wild time in Shenzen, you can now IM a “QQ girl”.)
The expanding trade in QQ so worrisome to Chinese officials, they’re issuing warnings against its unauthorized use. “The QQ coin is challenging the status of the renminbi [yuan] as the only legitimate currency in China,” the Asia Times quotes public prosecutor Yang Tao.

As with China’s virtual gold farms, it’s easy to see this as a future international trend in the making. All three next gen consoles– Xbox 360, Nintendo Wii, and Sony PS3– include microcurrency systems, and like the QQ, are designed for purchasing games and other products from their online networks. But with tens of millions of players who find value in these virtual currencies, what’s to stop them from using it for purchasing other goods and services from each other? And given the volatility of real money, should they be stopped?

(Via Salon.com’s How The World Works, an invaluable blog for understanding the future of global business, as explained by my good friend Andrew Leonard.)

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  1. Hmm, does someone else remember Beenz and Flooz? We all know what happened to them (http://www.ecommercetimes.com/story/12892.html)

    In the end people just started to ask themselves ,,what’s wrong with just using dollars?!”

  2. The foremost attribute of currency is its property of being “current.” This is an interesting development that has the potential to spread quickly once the concept is grasped and it could have profound consequenses.

  3. While I understand the premise of this article, I think it isn’t wise to throw out these premises with clearly no empirical evidence to back these conclusions up. Sloppy stuff folks.

    As an aside, with China’s trade in the trillions of dollars, a few billion dollars trade seems unlikely to make any significant impact now.

  4. Paypal’s original goal was to be a new world currency.

  5. Wagner James Au Sunday, December 10, 2006

    Saul, the post’s premise is based on the Asia Times article it links to, which reports this:

    The so-called “QQ” coin – issued by Tencent, China’s largest instant-messaging service provider – has become so popular that the country’s central bank is worried that it could affect the value of the yuan. Li Chao, spokesman and director of the General Office of the People’s Bank of China (PBOC), has expressed his concern in the Chinese media and announced that the central bank will draft regulations next year governing virtual transactions.

  6. Fascinating stuff, there was a lot of this discussion c 1996/7 (before ebay/paypal)

    …so, do we go long on the QQ and short the Linden $ tomorrow ;)

  7. The difference between the dollar and the Chinese yuan is that the renminbi does not float freely; it has a peg against a basket of currencies. (Used to be just the dollar until last year, when US pressure from Congressmen and others forced them to broaden it; fears of it being artificially low against the dollar.)

    For that reason, it’s more susceptible to attacks on the peg, and the freely floating QQ could affect it.

  8. David Scott Lewis Sunday, December 10, 2006

    Something that’s missing from this discussion is the issue of Tencent versus the central government. I wouldn’t expect this to be obvious for those not in China, but in China, it’s clearly a potential issue. QQ even has their own branded cars!! Imagine an ICQ branded car. Things are different in China.

    If it wasn’t Tencent, it may not have been as big of a deal. However, it’s getting ink in the Chinese press, so it’s becoming a bigger deal. Note my words: “becoming” and “bigger.” At this point, it’s still not a big deal.

  9. Tech Headlines Monday, December 11, 2006

    Chinese Yuan No Longer The Only People’s Currency…

    One of the chief policy concerns for the Chinese government, in recent years, has been the value of the…

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