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China Bans Gold Farming 293

Posted by ScuttleMonkey
from the shooting-yourself-in-the-foot dept.
InformationWeek is reporting that the Chinese government has declared a ban on the sale of virtual goods for real currency. This move is poised to shut down a several billion yuan a year business that has been growing by leaps and bounds every year. "The trading of virtual currency for real cash employs hundreds of thousands of people worldwide and generates between $200 million and $1 billion annually, according to a 2008 survey conducted by Richard Heeks at the University of Manchester. He estimates that between 80% and 85% of gold farmers are based in China. [...] Game companies typically forbid gold farming but committed virtual currency traders find ways around such rules. Some game companies have recognized the futility of trying to ban the practice and have built virtual commerce into their game infrastructure."
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China Bans Gold Farming

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  • The trading of virtual currency for real cash employs hundreds of thousands of people worldwide and generates between $200 million and $1 billion annually, according to a 2008 survey conducted by Richard Heeks at the University of Manchester. He estimates that between 80% and 85% of gold farmers are based in China.

    Dear god! Eight tenths of one billion dollars is a lot of cash!

    The Chinese government estimates that trade in virtual currency exceeded several billion yuan last year, a figure that it claims has been growing at a rate of 20% annually. One billion yuan is currently equal to about $146,000.

    So what is it, hundreds of millions or hundreds of thousands? Because one is a nice chunk of change while the other is, across China's population, laughable.

    These numbers just aren't adding up here. There seems to be a large disparity between what the Chinese government reports and what Heeks' study finds. It's entirely possible that Heeks' is stretching stats to make his research sound more important and news worthy. It's also possible China is understating the impact their ban will have so they can "cure you of your illnesses." The reality is probably both a little of column A and a little of column B.

    Some game companies have recognized the futility of trying to ban the practice and have built virtual commerce into their game infrastructure.

    And now China will realize that futility. One would think that China would enjoy the tax on those who report this income [worldwide-tax.com] but now it's just going to all go under-the-table. Hell, I'd say tax it but I'm certain China wants to look like the caring government attempting to heal the afflicted youth [slashdot.org].

  • by Anonymous Coward on Monday June 29, 2009 @03:28PM (#28518189)

    The numbers aren't adding up because the exchange rate for Chinese currency to U.S. Dollars is incorrect and the author dropped some zeroes. One Dollar is equal to ~7 Renminbi, so one billion Renminbi should be $146,000,000.

  • by blueg3 (192743) on Monday June 29, 2009 @03:39PM (#28518331)

    All of the non-gold-selling Internet business that comes to mind involves either selling a real good (although that real good consists of data) or performing a service, not selling a virtual good.

    You seem to be confusing real goods on the Internet that consist of data with virtual goods. (Note that a real good consisting of data -- like the contents of a website -- can easily, though perhaps inconveniently, rendered into data in a more "physical" form. I cannot give you WoW gold via any physical means.)

  • by Chad Birch (1222564) on Monday June 29, 2009 @03:41PM (#28518367)
    It's not illegal to have sex.
    It's not illegal to give money to someone else.

    It's not illegal to drive.
    It's not illegal to drink.

    Things aren't always just the sum of their parts.
  • by Anonymous Coward on Monday June 29, 2009 @03:41PM (#28518379)

    One billion yuan is currently equal to about $146 million, not $146 thousand.

  • by kenp2002 (545495) on Monday June 29, 2009 @03:45PM (#28518425) Homepage Journal

    In full disclosure: I work in the financial industry currently.

    This ban has nothing to do with gaming, gambling, or local economy.

    This is likely a direct response to MASSIVE money laundering.

    Joe has $100,000 worth of illicit cash.
    Joe strikes a deal to buy $100,000 worth of virtual currency in WoW. Joe smuggles the money. (Many times Joe can even hire the kid down the street and pay him cash...)

    Joe turns around and over several months sells the gold BACK to the gold farmers and claims the sales as legitimate income. Selling it at a 50% loss he can convert $100,000 into $50,000 of legitimate funds. Even more so when he acts as a virtual broker (IGN anyone?).

    While this is a simplified scenario but we are talking BILLIONS of dollars a year are now going through these kinds of channels.

    I've seen locally here in the US $300,000 attempts and laundering money this way (through a combination of FF Online, LOTRO, and Maple).

    While it is getting easier to deal with this now that the gaming companies are willing to share some data I can only imagine how hard is must be in Asian markets where channeling cash to chinese gold farmers is easier with the shorter phsyical distances. Oddly though, in my experience, I have seen more Korean and Indian gold farmers then Chinese.

    Never had a problem with gold farmers, never will, but I have serious doubts that this ban has anything to do with gameplay.

    I think this is in response to the forged bonds that were intercepted in Italy. They are worried about organized crime shifting large sums of money (which require laundering) through the virtual economy.

    If I am an evil overlord and I have to get 4 billion to my agents around the world the easiest thing to do is buy a billion dollars worth of WoW gold, have all my agents log in with characters. Divvy up the gold then have them sell it off locally or back to the gold farmers at a loss.

    No quicker way to distributed that much real world money then through a network of games.

  • by Anonymous Coward on Monday June 29, 2009 @03:52PM (#28518511)

    The Chinese Yuan is worth approximately 6.75 USD, depending on when you look. So 1 billion yuan is about 146.34 million USD, not 146 thousand as claimed. So $200 million to $1billion annually is pretty close to "several billion yuan."

  • by tick_and_bash (1256006) on Monday June 29, 2009 @03:52PM (#28518519)
    While they have expressly forbidden the exchange of virtual currency/services for real cash, it does not forbid the exchange of their time (services) for a player's cash. This does not prevent them from offering powerlevelling, honor farming, or item grinding. (Change the term for whatever your MMO of choice terms these services.) These services are normally quoted as a function of time. Anyone who uses a bit of creative wording/pricing can still continue to sell virtual currency. So long as they refer to it as a service, then in theory they should be able to skirt this new ban. Quite a few sites list a time frame in which they can get gold to you. Up to 2 days for larger orders. Let's say someone wants to buy 10,000g. With a 2 day turn around time, that's about ~210g per hour. (Most players with a bit of a clue can easily bang out that much if not more per hour.) Thus, they have sold the player their playing time for a specific goal. I honestly don't think this solves anything. It'll either create an underground market, or sites will start to use more creative wording.
  • by Rewind (138843) on Monday June 29, 2009 @05:17PM (#28520015) Homepage

    I can't speak on Iraq, but WWII isn't a good example. A lot of disarming / gun control did occur there. I am not saying it would have made a difference, but I will say that is a bad example because "They gunna take our guns and then they gonna come fer us!" did sort of go on there.

    Also WWII leaders like Hitler change things. For example Ghandi style non-violent civil disobedience can work in many situations, but I don't think it would have been even remotely effective against a leader who has a goal of genocide. That doesn't mean it is never a viable approach.

  • by ovu (1410823) on Monday June 29, 2009 @05:34PM (#28520279)
    I dig the logic, but there are several people in Iraq and Afghanistan who might disagree with how unstoppable armed troops are against motivated citizens...
  • by CrimsonAvenger (580665) on Monday June 29, 2009 @05:54PM (#28520567)

    Modern body armor doesn't make soldiers invulnerable robo-cops, but it protects most of their vitals from even assault weapons.

    Lucky thing most hunting rifles are more powerful than any "assault weapon".

    A .30-06 will go through any body armour worn today with no difficulty at all. And it's far from the most powerful hunting round in use in the USA.

  • by gad_zuki! (70830) on Monday June 29, 2009 @06:55PM (#28521253)

    >I already mention the reluctance of the soldiers as one of the main factors keeping us safe. We're assuming that went away somehow in the "military kills protesters" scenario.

    No we are not assuming, we saw it at Kent State.

    http://en.wikipedia.org/wiki/Kent_State_shootings [wikipedia.org]

  • by qopax (782239) <s DOT roman AT gmail DOT com> on Monday June 29, 2009 @07:11PM (#28521431) Homepage

    Uhm, yeah, they're usually the ones leading the revolt.

  • by shutdown -p now (807394) on Monday June 29, 2009 @08:09PM (#28522113) Journal

    Indeed practically nothing short of another tank can stop a tank.

    That's patently wrong. Things like RPGs [wikipedia.org] are still quite effective, even against modern tanks. Yes, there are countermeasures, but they can be defeated, too.

    A good example of how vulnerable tanks actually are against infantry is the first Battle of Grozny [wikipedia.org]. Chechen fighters had set up people with RPGs in basements along the main routes which Russian tank columns used to advance towards the city center. They would wait till the column is entirely within reach, and then 4-5 people would hit the first tank in the column, and the same number for the last - thus virtually guaranteeing that tanks would be disabled at the very least, trapping the rest of the column - which would then be destroyed methodically in a similar fashion. And basements were used over roofs because tank gun simply cannot depress low enough to make an aimed shot into a basement.

    Two things to keep in mind: it's much easier to increase armor penetration than it is to increase armor strength (mostly because you have to increase armor strength along the entire surface of the tank, while e.g. a shaped charge only has to punch through a specific point). And also, tanks have very limited visibility and maneuverability in urban environment, especially compared to infantry.

    This sort of thing is why, in modern urban warfare, tanks are always supported by infantry, which defends them against enemy anti-tank infantry.

  • by greyhueofdoubt (1159527) on Monday June 29, 2009 @11:51PM (#28523987) Homepage Journal

    As a veteran of Iraq and someone who would be happy to post pics of the Humvee/APC graveyards if my site was still up let me just say:

    NO. You are wrong. If the U.S. military decided to invade the U.S., for real, not just "security" around a natural disaster area, the war would be over in days or weeks. And the people would win. Do you have any idea how large the U.S. is compared to our military? How vulnerable our forces really are? All of our retirees and guardsmen who would know all our weaknesses and S.O.P... They all LIVE HERE. My base could be effectively shut down by one person doing one thing (yeah, probably dying in the process), and it would be easy. Dead easy.

    And "small arms" is a wide category. My .22-250, a smallish varminting cartridge, can penetrate 3/8+" mild steel, and that's just a plain-jane hollowpoint hunting round. You load a decent penetrator and maybe a little more pep in the powder charge and you're talking about something that could penetrate armored glass, humvee tires, building walls... And then you can move up to the bigger hunting rounds, the .308, the .30-'06, the 7mm-'06, the .338. Insurgents using measly 7.62x39 have taken out APC's in Iraq with horrific consequences- I have firsthand experience here, a human being hell-bent on causing death and damage will typically be very successful.

    >>Put the armored soldiers in an even a lightly armored vehicle and nothing short of high explosives can do much damage to them.

    Nor can they do much to the environment around them, short of yelling through loudspeakers. The turret gunner will be the first target, and his guns can only point in one direction at a time.

    >>Indeed practically nothing short of another tank can stop a tank.

    You know what can stop tanks? Tank barriers. You put your bomb next to the tank barrier and you set it off when the tank is over it figuring out what to do. And when the tankers figure out that trick and call in EOD, you shoot EOD. And when they figure that out and just barrage the barricade from the next corner, you put your bomb under the logical place for the tank to be. Underground fighters and insurgents have known this for decades. Americans are bright enough to figure this stuff out.

    >>You'd never see a Tienanmen Square in this country because the military would simply refuse the order.

    Kent state. Different order of magnitude, but it's the thought that counts. Don't count on units simply refusing orders. There are enough assholes in the military to keep a civil war moving until everything falls apart.

    -b

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