As we turned off the Xbox the other day, my son turned to me and said, “I wish we could use all the money we make in video games in real life.”
We’d just pillaged a Skyrim dungeon for a dragon’s weight in gold and were feeling pretty rich with ourselves.
I smiled and nodded at his cute naïveté and mumbled, “Me too.”
And then I paused and thought, “But why not?”
There’s an emerging digital currency called BitCoin, which exists only online and is used to purchase real world goods.
And what do the central bankers of the world really do if not play an extravagant video game involving numbers on a screen?
In Paper Money Collapse: The Folly of Elastic Money and the Coming Monetary Breakdown, author Detlev S. Schlichter writes that, “money is nowhere a commodity. It is everywhere an irredeemable piece of paper that is not backed by anything.”
He explains that the secretive central bankers of the world freely manufacture money as they perceive it to be needed. “Those who have the privilege of legally creating this money,” writes Schlichter, “can produce unlimited quantities of it.”
But the money is never “real” in any sense. It’s rarely printed or physically produced in any form. It’s just a bookkeeping entry in a spreadsheet on a computer screen. Now that sounds like a pretty boring video game, and it’s got the equally boring name of, “Quantitative Easing.” I’d much rather battle goblins for gold in Skyrim. From a video game perspective, then, it’s ironic that currency used to be backed by real gold. Indeed, our contemporary concept of currency is completely atavistic
Many people still find it shocking that the only thing defining value these days is a tacit agreement we are all socially trained to uphold. That is, a dollar is only worth anything because we collude to that fact. So were Canadians to wake up tomorrow and collectively decide that dollars were worthless and Skyrim gold is the way to go, there is nothing to prevent the collapse of the loonie. Because, in theory at least, Skyrim gold is every bit as much a valid currency as the Canadian dollar.
So why can’t my son and I convert all of our video game bounty into loonies? The process often works in advance. One of the key economic drivers of the mobile video game industry is the purchase of in-game goods and currency. Why can’t we resell all of that virtual stuff, or just convert it back to dollars?
In fact, this is precisely what is happening in many developing nations. “Gold farmers” in countries like China spend hours playing video games just to accumulate in-game wealth. They will then resell their virtual commodities and currency to players in the US and other developed nations for real dollars. It’s estimated that over 150,000 people make a living this way, with average monthly earnings of about $145. The gold farming industry was worth almost $2 billion in 2008.
But the trade is largely banned by video game publishers and nations alike. Why? How is gold farming any different than, say, quantitative easing? Whether an ambitious geek wants to earn a few bucks through hours of video game play, or an overpaid suit decides to manufacture billions of dollars on a whim, who’s to say which is the correct way to drive an economy?
Enter the Bitcoin.
First introduced in 2009 by an anonymous developer operating under the pseudonym Satoshi Nakamoto (we still don’t know who this person really is), Bitcoin is a “cryptocurrency.” That term refers to the fact that it’s an unregulated form of money that’s not centrally managed. So it can’t be affected or manufactured by any one person or group, as most nations’ currencies are. Instead, cryptocurrencies are built with self-regulating algorithms, or programs that automatically manage the currencies’ growth based on their use and cumulative volume.
Bitcoin is flourishing. A bitcoin is currently valued at about $113 US. You can actually buy real-world stuff with bitcoins. A guy in Alberta sold his house for bitcoins last month. Again, though, just like dollars and gold in Skyrim, bitcoins are mere numbers on a screen.
Once a critical mass of citizens understands that all modern currencies are just abstract concepts that lack any real value and wholly depend on simple belief systems, the global economy will begin a huge shift. Monies will become less connected to nations, and more dependent on algorithms. And heck, to the absolute delight of millions of youth around the world, playing video games might yet become a profession.
So maybe I can look forward to living out my retirement high on the hog with all that Skyrim gold after all.
Originally published in the Yukon News on Friday, June 7, 2013.