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A Precis On Virtual Goods and “Real” Currency

June 3, 2010 by Ian 2 Comments

With his typical aplomb, Mitch Joel just dropped a very fairly written post about the nature of virtual goods, and their impact on the reality of business.

Mitch mentions the common perception of exchanging real currency for virtual goods in MMORPGs, and in other situations, but misses a few essential points that some digital natives are all too achingly aware of.

All currency is virtual. And, virtual goods are nothing new.

First, a note on virtual goods.

I got my first access to a credit card in 1998, a virtual card through a predecessor to PayPal. What did I do with it? Paid for a LiveJournal account. for three years. In advance. It served me very well – I was blogging with my own personal branding far before it was the norm. I also paid for an “Operator” account on the then-well-used chat site, Alamak. For two years. Semi-annually.

Souvenirs? Forget it. This was real virtual goods, eleven years ago. What did these two expenses net me? Temporary access to delimited features on the two sites I, then, frequented most often. Could social networks get away with this kind of thing today? Absolutely – and they do. We like to think of the internet as free, but it’s never been so. Information has been free, but access is not. We poo-poo paywalls, but forget they’re nothing new. During the advent of many of the avant garde tools pioneers used to build their experience, there was a lot of expense involved.

This website? Domain cost of $20 per year. Web hosting cost of $20 per month. Revenue? Naught. I work where I do in part because of this site and its history, but other than that, the monetary benefit has been very limited. As I suspect it is for many people running blogs and websites. We pay for virtual services and goods because they’re par for the course, especially for those of us who live in the cloud. And we’ve been doing so for longer than we give ourselves credit for.

Now, about that real currency thing.

Since even before the internet age, creatives and knowledge workers have essentially rented a virtual good (their brain) to their employers. It’s been called a service – but how can we continue to distinguish between a hands-on service, and the “virtual good” that results from a few weeks, months, or years’ worth of cognitive lease? If I spend a month building a program that collates widgets, and the program is distributed online, virtually, did I build a good, or provide a service? The distinction comes without a difference.

This should be bleedingly obvious to anyone who works in the cloud or any of its aggregates, especially when you make yourself aware of currency backing and comparison across markets. The British pound is worth roughly two dollars Canadian. Each Canadian dollar may be worth between fifty cents and one dollar American on a given day. The American dollar is often compared to the British pound and the Euro. Where is the reality here? We’ve long since scaled our wealth out of production capabilities. How long would it take to print and distribute every dollar even one super-rich entity has? How many acres of trees would have to give their lives for Bill Gates to actually “own” all of his money?

Calling currency anything other than a construct is a false pretence.

Where does this leave us?

With possibility, I think. Recognizing the differences between constructs and virtual goods is an important part of our potential societal growth. I’ll leave my own utopian global-village dreams aside for now (come on, I’m a Millenial, we’re expected to have those), and ask you this more important question instead:

Given the density of online-to-physical business and currency-related-procedure, is there any longer a benefit to distinguishing between virtual and non-virtual value oriented exchanges, unless a physical object is involved?

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