(via Ashley Theunissen) The UK’s Fraud Advisory Panel has issued a recommendation asking for regulation of the fledgling economies in virtual worlds. According to this group, virtual costumers are increasingly involved in commercial transactions in virtual environments. These virtual online communities “… are a combination of internet chat room, 3D games and next generation internet environment in which residents can choose what they look like and what they do, with goods and services traded using virtual money.” According to the recommendations, the risks to users are:
- Credit card fraud against genuine customers and suppliers
- Hacking into databases and identity theft
- New opportunities for money laundering via false online identities
- Tax evasion and unregulated cross-border money movements
- Sales of age-restricted goods and services to minors.
Being my cynical self, I just cannot see why more regulation is needed for these activities. We already have regulation for credit card fraud, regardless of the object being purchased. Similarly, hacking and illegal database entry are already covered in the UK’s Computer Misuse Act. Is online money laundering a problem? And if so, how is it any different from offline money laundering? I’m similarly sceptical about calls to treat online currencies as real money. The report’s author stated that virtual money issuers should report to financial regulators, just as other money issuers do.
Perhaps I’m just suffering from the cyber-libertarian bug, but I’m increasingly sceptical of calls to regulate online environments when there is already perfectly serviceable legislation that does the job quite well. Similarly, why should you regulate currency that only operates in a limited private virtual environment? It’s like trying to regulate Monopoly money! Just because some people may ascribe value to the online currency, it does not mean that it should be immediately subject to regulation.
I have been experiencing the intricacies of a nascent virtual economy in City of Heroes. The game was famous amongst other MMOs by its lack of crafting and economic structure. However, the latest update to the game has introduced an invention system that has added an economic value to in-game goods. Players will now receive recipes and salvage that can be used to craft enhancements to their powers and rare costume parts (such as the tech wings pictured above). Not only that, there are now auction houses in which players can blind-bid on items, which has meant that the game has found an economy overnight.
This has been quite an interesting phenomenon to witness. How does an economy assert itself from the start? The markets were crazy early-on, and some people made quite a lot of cyber-cash, but the market has been settling after the initial blip, with truly rare items acquiring disproportionate value, while common items have dropped even below NPC rates. This is community and market regulation at its best, and I cannot see how any governmental regulation would serve to do anything but get in the way of normal enjoyment.
What do you know? I’m turning into John Perry Barlow!