Saturday, February 23, 2008
Evaluating Virtual Currencies
Zachary Scheidt of the China Stock Blog wrote an interesting article on how evaluating virtual currencies with respect to real ones creates a few interesting problems to solve. He takes the example of GA, a buzzing new Virtual world teeming with Chinese gamers, to make his point on whether evaluating virtual currencies is as simple as it looks. I like what he says here .. "what happens when the currency is virtual, such as in a role playing game with “virtual” goods and services and no physical “real world” transactions taking place. Do the laws of supply and demand still apply?" I believe they still do - only as long as there is value in “saving” the virtual currency in its indigenous shape, however. In other words, if there is a bank out there that pays people interest, no matter how small, for saving their virtual dollars (yemen or sprutzi or bucks or whatever u want to call it), I think there will be a residual value associated with the currency. The bank may, in turn, double as a marketplace for gamers to trade virtual goods and virtual currencies from one game to another for a ’small’ transaction fee. This will make it a viable revenue model for the bank to sustain on. Also, it can offer ‘virtual loans’ to gamers to be repaid over a fixed time span.