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Virtual Currency (Virtual Societies: Part 3)

January 26, 2017

 

The ability to use virtual currency (knowledge based), with automatic conversion from-to local currencies (market or resource based) could encapsulate value based systems (and different economies inside) and potentially stabilize a disproportion between virtual abundance and physical scarcity. Virtual currency cannot be centrally managed, however it seems like there is a need for virtual accounts (not just a virtual wallets), thus we can possibly end up with virtual banks controlled by virtual groups or communities. In reality, we already have internet banks, but keep in mind these are owned by physical corporations, paying taxes to local governments and they keep local currencies only.

There have been experiments with virtual currencies which could be categorized into 3 types:

  • Redeemable currency, where you can freely buy and sell virtual currency (good example is Entropia Universe[5] using PED (Project Entropia Dollars). Another example is Sims Online using Simoleans. In January 2004, 1 million Simoleans went for $20.75 on eBay. That's $20.75 in real U.S. currency. Players buy the virtual Simoleans to use them in the game. Exchange rates rise and fall on Internet auction sites.

  • Not redeemable currency used in closed virtual ecosystems where you can acquire this currency with real money but the reverse is not guaranteed, such as in Second Life[4] using L$ (Linden Dollars)

  • Virtual Currency which is “Farmed” or “Mined”  :

    • Acquired inside the virtual world , mostly in MMORPG games such as World of Warcraft

    • Outside of virtual world, by running massive computing in order to compute Hashcash or, in the other words, the mining process involves scanning for a value that when hashed can be verified by executing a single hash. One of the first implementations of this crypto-currency concept (which was first described in 1998 by Wei Dai on the cypherpunks mailing list) is used in virtual currency Bitcoin[6] -  decentralized digital currency based on an open-source protocol, exchanged through physical banknotes and coins. Unlike most currencies, bitcoin does not rely on a central issuer, like a central bank or government. Instead, bitcoin uses a transaction log across a peer-to-peer computer network to record transactions, verifying them and preventing double spending. From a real world perspective, the value of Bitcoins is affected by exchanges, Bitcoins are sold and their price fluctuates relative to goods, services and other currencies.

       

       

       

       

       

       

       

       

       

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