Gambling, banking & what next?

A couple of weeks back Second Life decided to place restrictions on banking activities in the Second Life. Let me quote some parts of the announcement:

As of January 22, 2008, it will be prohibited to offer interest or any direct return on an investment (whether in L$ or other currency) from any object, such as an ATM, located in Second Life, without proof of an applicable government registration statement or financial institution charter. We’re implementing this policy after reviewing Resident complaints, banking activities, and the law, and we’re doing it to protect our Residents and the integrity of our economy.

Since the collapse of Ginko Financial in August 2007, Linden Lab has received complaints about several in-world “banks” defaulting on their promises. These banks often promise unusually high rates of L$ return, reaching 20, 40, or even 60 percent annualized.

It is interesting that Second Life does allow 'real banks' to function in Second Life. Since this effectively legitimises banking in Second Life (provided you have a real world bank presence) then does it allows for real world bank transactions via Second Life? For example if I want to transfer money from a bank account, say in London, to another bank account, say in New York, am I subject to any tax by the relevant authorities? I think this opens up another can of worms for Second Life since it now really has to regulate virtual banks in its servers.

This comes right after Second Life bans gambling in the virtual world. Banning gambling is an easier way of complying with regulations since it allows Second Life to outright deny any association with such activities.

By doing the above, Second Life is essentially imposing certain form of regulations due to pressure from real life regulatory frameworks. Not sure how this would pan out for Second Life, but it is likely that Second Life would face more pressure for other 'content regulation' from now on. Guess they have to balance having more 'in-server activities' with vast freedom versus pressure from various regulatory bodies. Wonder if my Second Life avatar consumes a 'drug' which results in some visual / audio manipulation of my screen / speakers to simulate 'drug high', would my avatar be commiting any real world offences?

Online Games Economy - Part 3

Not all is rosy for the trade of virtual currency or items. Even for online games / virtual worlds where such trade is legitimate, the same pitfall of fraud /scam is around.

We've all heard about the case of Eve Intergalatic Bank where almost $170,000 worth of virtual currency is wiped off. The link also provides a download of a video confession of the scammer. This has sparked much debate on slashdot.

Here's a link to the game itself, quite an interesting one:

The scam / fraud is not limited to Eve alone; the other popular virtual world where virtual money has legitimate convertible value is 2nd Life and here's a case about the Ginko Bank. This article has a full explanation of the current developments, including how new laws are used to create trust for such virtual transactions. It is still questionable whether statutory laws or traditional contract laws should be applied, afterall, one has to accept the terms and conditions of use for virtual worlds before one can participate in one.

Of course, the question of enforceability still applies. It is not sure how many of these scams are reported since players are less likely to report on small amounts. If the cases are reported to the authority, how many are acted upon?

Guess the whole virtual world / online games economy is still developing and we will continue to see new changes as people adapts to it. Of course there are many features of online games / virtual worlds worth discussing about, so let's move on.

Online Games Economy - Part 2

Trading of in-game items, gold...etc using real life money (a.k.a Real Money Trade - RMT) is quite a debatable activity from both legal and ethics perspective.

From the legal perspective, it is not clear if the Terms and Conditions for use of the online games would prevent an individual from trading off his in-game items , golds for real life money. Some gaming companies have come out clearly to say they forbid such activities, and any persons found advertising or selling his in-game items, gold would have the account deleted. There are also cases where the company assist players to remove any in-game spams about in-game gold sales. Of course, there are other games / virtual worlds where exchange of in-games gold/ money for real money is allowed, e.g. 2nd Life with an exchange rate of about 265-270 Linden dollars to US$1 (picture below). Some would argue that 2nd Life is not an online- game. Sure, but there is also EVE Online where some form of in-game trade for real life money is allowed when there introduced the 'Eve time Code' prepaid code. Guess real money trade for in-game gold / items is just an arbitrage between those with too much real money but not enough time, and those with too much time but not enough money. Add to the equation is the fact that such trade could take place seamlessly across the globe where income disparity is higher compared to national income disparity and we get flourishing trade.



Having said that, it is not always clear that the gaming company would have absolute say over the games economy or in-game characters' possessions. There are also legal cases where gamers could have an upper hand but I side-tracked.

From an ethical perspective, there are many views about why such RMT should or should not be allowed. Gamers argued that using real life money to power level or get in-game gold / items is not fair to others who have grind their way through to the higher levels or more in-game wealth. While there are also players who said that having the option to 'trade' gold and items among players in the game as an option, means there is an implicit agreement for players to do as they wish with their in-game items. The former group may at times target 'gold farmers' in the game and disturb their 'gold farming'. This Wiki article has a fair bit of description about farming and the reasons why it is a viable business. Picture from a site selling WoW gold shown below.



One downside of such trade is the possibility of fraud, and it is difficult to catch fraud on such online games platform. Would blog about it soon.

Online Games Economy - Part 1

Players of online games, especially the MMORPG types, would recognise that there is some form of economy among players. While there could some non-player characters in the game which act as shopkeepers, there is still some form of trade among players for the simple reason that each player could possess items of sort that are more valuable to other players. trade may also take the form of service, where a player performs some action in exchange for gold, items or other services.

Such trade among could be done via facilitation, example, an auction house in the World of Warcraft, or via provision of a market place, e.g. the Free Market in Maplestory where players could set up their own shop. More basic function of a trade among player would be the offer of trade goods that are announced to other players, e.g. the marketplace function of Travian (browser game). Travian picture shown below.


The interesting thing about such in-game trade is that it is almost like a free economy, where the price of an item / service fluctuates wildly in response to supply and demand. Weekend prices of items in the game of World of Warcraft could vary significantly from the weekday prices. This resulted in people doing arbitrage, i.e. buying of the items when the price is low, for re-sale at other times. Picture of the WoW auction house shown below. Third-party software like Auctioneer could be used to track the prices and calculate profitability.



For games like Maplestory, the player could set up a 'shop' in the Free market and use a bot to help sell its items. This requires real cash to buy the 'shop permit' from the game company. Picture of the Maplestory free market shown below.


The fact that players need to spend time to collect items / golds that are for use in the game spawn a new industry / gaming support service where players could spend real life money to buy in-game items, gold or other services (including player characters). One such website / company that is pretty well-known is the IGE.

Whether these trades are allowed or encouraged depends on the game company and the players. Would blog more about it soon.

Views about Online Games

Computer games, both PC and console versions, have become the mainstream activities of many people, myself included. Years ago, gamers are those who huddled in the computer rooms to play MUD (Multi-User Dungeon). I still remember the times spent using zMUD client to play those free text based games. Of course, as a kid I've my fair share of Nintendo's Zelda and Mario's.

Now as adult I still spend quite a lot of hours playing games, roughly more than 12 hours per week? Online games now are a lot more captivating compared to MUD or some of the console games (for me at least). There are also greater variety of games, from simple ones like Gunbound and MapleStory, to more complex games like Guild Wars and World of Warcraft.
I play browser based games too, like Travian. Here's a screen shot of my Travian village.
Am I a game addict? Lolz. Guess that depends from whose perspective. Online games are captivating because of the interactivity offered. Whether you are a competitive gamer who engages in Player v Player, or the community type who prefer co-operation as a party, there are bound to be multi-player games that suit your taste.

Would blog more about my views of online games in the next few entries. Screenshot of Maplestory:

A blog about games, technology development for online activities and others

Setting up this blog to pen down some thoughts about the various developments in online games, virtual worlds, technology development for such online activities and related issues e.g. associated legal development.

Would have only infrequent updates since this is not my main blog.