Virtual World, Real Banking 65
The Opposable Thumbs blog brings news about MindArk PE AB, a Swedish game developer whose MMO Entropia Universe has an in-game economy based on real money. It seems the company has been "granted preliminary approval for a real banking license by the Swedish Finance Supervisory. ... MindArk's going to be just like a bank in the real world: it will be backed by Sweden's $60,000 deposit insurance, offer interest-bearing accounts for its clients, feature direct deposit options, let players pay bills online, and apparently will offer loans to customers." An Associated Press report adds that "The economic activity in Entropia Universe was worth about $420 million last year, about the same as the Pacific island nation of Kiribati, population 110,000. The game has 850,000 player accounts, though not all of them represent active players."
There's so much wrong with that... (Score:2, Interesting)
So what happens if someone hacks your player account and takes out a mortgage on your house?
Digital cash (Score:5, Interesting)
Now I want to write a cypherpunk-themed MMORPG, and set up something like this as cover for connecting an cryptographically anonymous digital cash system to the real-world banking infrastructure.
Re:Digital cash (Score:4, Interesting)
Re:There's so much wrong with that... (Score:3, Interesting)
As michaelhood pointed out (I think)... it's probably just as likely as hacking your normal bank account.
As for mortgages, or purchasing a house/car/etc, I presume that those will still require face-to-face meetings and signatures, at least until an assortment of biometric nonsense improves.
It seems for now, or at least according to the article it's mostly an inward sort of thing, money comes in, but doesnt go out except for (what's now) somewhat normal things you may already do online, pay bills, which will already have an established record, and verification, probably in tandem with your current setup.
Although, that probably wouldnt stop a hacker that happens to already work for one of the companies you are billed from (Ph., rent, electricity), etc, cause they would know both sides of it, but that too isn't much different from normal non-game-world, but online banking.
It's basically like, instead of doing your banking with Firefox, and www.bank.com, you are using Game, and 11.22.33.44, both can be secure, or not, all depends on how it's implemented.
The miracle of Worgl (Score:4, Interesting)
During the 1930s depression, a little town in Austria called Worgl decided to print their own money, since the national currency was in such short supply.
It worked wonders, unemployment went from 30% to less than 5%.
What makes money worth something is the market. Is there a market for it? Since the Worgl money was produced by the local council and accepted for all council payments including taxes, there was a ready market for the money.
The utility of money is that it is readily exchangeable for goods and services.
You use cheques? You use credit cards? Debit cards? None of these are "official" money. They are not US dollars. They are credit, created and supplied by private banks. That credit is exchangeable into paper dollars as required. The current recession is caused by banks denying people access to that credit.
Credit is imaginary money (whereas paper is not) because it vanishes. Credit is created (from nothing) when you take out a loan. Along with the credit, there's a debt. The debt pays interest and the credit vanishes as the debt is paid. Hence credit is "temporary money". Also, there is far more credit than there is real money, about 95% of money is bank created credit, so if everyone went and asked for paper dollars, there wouldn't be enough to pay them all. This is the dirty little secret of banking. Banks don't just hold and loan out money. They create new imaginary/temporary money which they loan out to you.
So. Bankers are people who actually do create monopoly money. On a daily basis and on a massive scale. You now understand why they are always telling you that you "must have confidence in the banking system"?
Re:There's so much wrong with that... (Score:3, Interesting)
Kind of OT, but...
The simplest scheme in real estate fraud is to rent a house, fill out some fake land title transfer paperwork, and then impersonate the lawful owner and either (A) sell the house to an unsuspecting, honest buyer, or (B) take out a bank mortgage on the house. Either way, you walk off with cash-in-hand.
Read and learn: http://www.abanet.org/genpractice/newsletter/lawtrends/0709/realestate/realestatefraud101.html . Google for many more news stories.
The really nasty part, here, is that the original homeowner is, in legal terms, cold fucked. In the case of an outright sale, the unsuspecting buyer actually has a stronger title claim to the property than the original owner--fraud notwithstanding. If the crook mortgaged the house, that bank has a possible (though weaker) legal claim on seizing the collateral (house) if nobody makes the payments.
The fundamental legal problem: In the US and Canada, the criminal offense of fraud is a totally separate matter from the civil property issue (the title claims, or the mortgage). A subsequent civil transaction isn't automatically voided, just because a criminal act created the conditions for the transaction.
Moreover, the civil court generally has an obligation to uphold the honest interests of every party that acted in good faith. The buyer of the house or the bank are honest, unsuspecting victims, just like the house's original owner. The law can't just say "Screw the buyer or bank!" and leave them out in the cold.
To an intelligent lay person, this all seems absurd, and rightly so. It demands constant vigilance of all homeowners, every day, every hour. A crook might do it during your two-week vacation, even--could it even happen while you're at work for the day? It seems much more reasonable to burden the buyer or bank--while it requires increased caution, it's limited to the period of their investigation. They can spot the fraud with homework: compare signatures, visit the neighbors, background check the seller/mortgage-holder, etc. When it's done, they can stop worrying about it.
It's like King Solomon and splitting the baby--the legal answer and the intuitively "right" answer are quite different. Lucky for the honest homeowners, it's very likely that as judges and lawyers become aware of these problems and reflect on them further, subsequent case law will start to get it right. Or the legislatures might change the law, but I wouldn't bet on that, first.