World's First Virtual Banking Licenses

An anonymous reader writes to mention a new, unique situation in Massively Multiplayer games. The Entropia Universe title has broken new ground by being granted five virtual banking licenses. These are exactly what you think they are: in-game bankers can transfer Entropia funds directly to your real-world bank account as real world cash. The well-known conversion rate between EU cash and real money allows this; more entertainingly, you can withdraw RL cash into EU notes via the banks as well. From the article: "These two-year exclusive licenses will be available through the public auction within Entropia Universe and will be open for bids beginning mid January 2007. Entropia Universe is the only virtual universe on the internet whose currency has a fixed exchange rate with the US Dollar. Its currency can easily be moved between Entropia Universe and the real world using an ATM card. The Entropia ATM card can be used to instantly withdraw real cash from over 1 million ATM machines worldwide"

PEDs

[Thansal]

a Quick note.
Project Entropia Dolars (PEDs) is the currency in Entropia Universe (Previously reffered to as Project Entropia), not EU notes.

Just to make sure that people don't think that money from the EU isn't real, despite what most of us americans seem to think, they are trouncing us in value currently.

Re:

[DarkGreenNight]

And still most products are sold at parity ($=) or worse. And no, VAT doesn't account for all that difference.

Well, now that really valuable assests are being converted to euros we'll finally overule your economy. What?, PEDs are not comparable to oil?

Damm.

I can't wait to buy my avatar my clothes!

[PrescriptionWarning]

I mean like wouldn't it be like totally rad if I could like buy the same clothes from like the same store... but totally online! It could even be like the same price, but only my online self would wear it, I mean wow! Now I can like totally be popular in school AND online!

Re:

[myowntrueself]

I mean like wouldn't it be like totally rad if I could like buy the same clothes from like the same store

Hey, I just want one of those cool orange shirts, like in There!

Currency

[matr0x_x]

It's not that the Euro is doing well, it's just that the American dollar has been sucking for the past several years

Very interesting because

[Rosco P. Coltrane]

These are exactly what you think they are: in-game bankers can transfer Entropia funds directly to your real-world bank account as real world cash.

So essentially, the Entropia "world" has been given the right to manage a fiduciary mass. A virtual world and a virtual fiduciary system, but a real one nonetheless because it has currency rate with real greenbacks.

Consider the definition of a state: statehood for an entity as having:

- a territory: Entropia is virtual real-estate, but it's not so far-fetched to say it's a real territory, since people use its virtual space
- a population: Entropia has gamers
- a government: the game maker I suppose
- the ability to mint money: well, it has a currency now, backed by a currency rate recognized by another state
- the ability to print its own stamps: that would be easy to implement, with an in-game certified email system separate from regular email
- the capacity to have relationships with other, recognized states: it does de-facto, since an already recognized state recognized its currency

So, I think in international law, Entropia could claim statehood. Their position would be even less shaky than, for example, Sealand. This is a very exciting and new development indeed.

Re:

[arivanov]

- a government: the game maker I suppose

So much for our love for democracy... If that is not the ultimate super absolute dictatorship...

Re:

[Rosco P. Coltrane]

So much for our love for democracy... If that is not the ultimate super absolute dictatorship..

The form of government has nothing to do with statehood: North Korea is a state, so was the USSR.

Re:

[maxume]

Good luck getting somebody declared a resident/citizen/dual citizen though. My body is in France? Why is that a problem, etc, etc.

Re:

[Rosco P. Coltrane]

Good luck getting somebody declared a resident/citizen/dual citizen though. My body is in France? Why is that a problem, etc, etc.

Well that's the interesting bit isn't it? these banking licenses might allow a virtual realm to pursue statehood, thus posing a whole new set of problems and potentially creating many legal precedents. The issues at stake I guess could be the challenging of the definition of residency and citizenship, where it could be necessary to disassociate the fact that someone is physically

Re:

[maxume]

I think the biggest result is that most nations would pass new laws stating that the physical presence of a body within their border established that the person was 'in' their country and subject to its laws.

The other side of the coin is that the banking licenses are quite a lot more likely to be rescinded if someone even smells shenanigans, especially ones with potential for legal quagmires.

No need for new laws

[alienmole]

I think the biggest result is that most nations would pass new laws stating that the physical presence of a body within their border established that the person was 'in' their country and subject to its laws.

That's already what the law looks like in every country I've ever heard of. If you're physically within a jurisdiction, you're subject to its laws. What did you think made you subject to a country's laws? What you do on your computer doesn't exempt you from this in any way, and law enforcement wou

Re:

[mikeasu]

"So, I think in international law, Entropia could claim statehood."

But could Entropia claim sovereignty, by international law? Could they establish their own code of laws? What happens if say, in Entropia, pyramid schemes are legalized. Now let's imagine I'm sitting at my computer in the USA (let's say, pyramid schemes are illegal here - I'm not sure of the technicalities here presently), running a pyramid scheme in Entropia. Where is the scheme taking place? Is it occuring in Entropia where the money

Re:

[KDR_11k]

Complicated? Naah, territory belongs to anyone who claims it belongs to him and has the firepower to back that claim up.

In other new Entropia declares Statehood.

[powerlord]

As part of this declaration, a proclamation was issued by Entropia's in-game elected governing body, declaring a mandatory 10 year maximum for Copyright, and very liberal "Fair Use" rights.

The RIAA and MPAA immediately filed for a DMCA take-down notice against Entropia's ISP.

Entropia in-game governing body could not be reached for comment.

Re:

[alienmole]

The list you gave may correspond to some "definition of a state", but it's not the one used in international law to help determine statehood. International law about states is pretty closely tied to physical territory. Another factor which presents a problem for virtual states is that a state in international law should be substantially independent of other states. A virtual state seems substantially dependent on the physical states which host its "citizens".

A more promising aspect to all this is that th

Re:

[Original Replica]

Can they become a member state of the U.N.?

Oh brave new world...

[PingSpike]

I guess it was only a matter of time before the world with an unstoppable urge to accumulate useless junk, gave its nod of approval to the purchase of useless junk that isn't even real. On the bright side, this new crap I can buy in the game takes up way less space in my garage. What is the going rate for a beer helmet in this game?

EU Conversion Rate

[mattwarden]

The well-known conversion rate between EU cash and real money allows this

For those interested, the EU-to-real-money conversion rate is 1.00 EU = 1.29972 USD according to xe.com.

Not sure how this is news, though. I have been converting between US dollars and Euros for years.

Re:

[Harcion]

The point is that "EU cash" here refers to Entropia Universe cash, more commonly known as PED (Project Entropia Dollars). The fixed rate between these currencies is 1 USD = 10 PED.

Re:

[Rosco P. Coltrane]

The point is that "EU cash" here refers to Entropia Universe cash, more commonly known as PED (Project Entropia Dollars). The fixed rate between these currencies is 1 USD = 10 PED.

Just imagine paying your Verizon bill [consumerist.com] in PED :)

Re:

[mattwarden]

joke.

Hey

[kitsunewarlock]

Your paying to buy data on their servers. Get it? Your paying money to clog their servers... I want to open a website: everyone give me money. "For every $100 I get, I'll drop the servers for an hour. I'll also photoshop special sigs that say how much money you donated. Of course, when the server is down you can't access the sigs...hmmm."

Money Laundering

[cbuskirk]

Its only a matter of time till outfits start attempting to launder money thru virutual economies.

Re:

[El Torico]

A couple of ideas come to mind -

money laudering (drug money, weapons sales, etc.)
extortion (pay up or the server goes away)
donations to "charities" (buy your own suicide bomber)
fraud (the Eve Online bank scam)

If I wasn't such a nice person, I could have some fun with this.

Re:

[KDR_11k]

What about gambling? I think my country defines that as any game that can net you more money than you invest (games that have no costs associated with them are exempt).

Re:

[madhatter256]

Way ahead of you. My contact in Iran are going to be happy. Their frozen accounts can be easily recreated and turned back into real money!

Re:

[Criterion]

Kinda like this?

http://www.knowprose.com/node/17268 [knowprose.com]

The concept of virtual currency exchange is flawed

[Anonymous Coward]

because by definition, the virtual resources to which a virtual currency is pegged have no natural limit or constraint. This is an identical situation to physical paper currencies being printable without limit --- a recipe for astronomic inflation because food and other physical resources within a country obviously have limits, so the relative value of a unit of printed currency goes into freefall.

The same applies in respect of exchange rate with foreign currencies. A fixed exchange rate with the dollar m

Re:The concept of virtual currency exchange is fla

[twistedsymphony]

True, it would be much better if the conversion rate was based on real world items... like the PED value of X amount of Gold, then it could be related as the value of Gold fluctuates against the various world economies.

Another real world asset it could be related to is the trading value of the game developers company, then as the stock prices raise and lower so does the value of PED against other money markets. and if the company goes bankrupt... so does EU.

Re:The concept of virtual currency exchange is fla

[Cthefuture]

But it is backed by something physical. It's backed by real money paid by the subscribers and anything else the company makes real money with. That money then funds the virtual funds and sets the exchange rate.

It's not an unlimited resource. Consider this, if everyone extracted all their in-game funds the company needs to pay those out in real money therefore those funds must be available like at any other bank.

No, it isn't

[Random Walk]

Like it or not, in the 'real' world copyright law generates an artificial shortage of an otherwise unlimited virtual resource. A large fraction of todays 'real' economy is based on selling 'virtual' rather than 'physical' goods. In that respect, copyright isn't such a bad thing - it allows potentially unlimited grow for the (real) economy, because the economy no longer relies completely on physical goods which have natural limits.

Inflation / Deflation

[ADRA]

Can't say much about the game, but how do they -peg- RL currency to the entropia currency? If the US dollar goes up 10% does that mean that the developers all of a sudden are 10% less profitable? Or, is there a system in the game to handle currency volitility? Can one simply hold entropia dollars then sell them off when the dollar is high? Is there a transaction penalty? Ah, too many questions, too little time.

Re:

[SurturZ]

I am not an economist, but many third world countries use US dollars as a de facto currency within the country e.g. Cambodia. The Euro in Europe replaced a lot of individual European currencies. What you will see in-game is the same thing that occurs in those two examples - prices in-game will fluctuate as the US dollar value fluctuates.

Normally when the currency value goes up within a country with a floating exchange rate, the local prices stay numerically the same, but imports/exports change. If you peg t

Sounds like a great way to do money laundering

[artifex2004]

Are these banks subject to the same oversight rules as real banks? What's to stop a terrorist or an embezzler from withdrawing funds from one account, walking over to another avatar run by an accomplice, and giving it all to them? And that second avatar passing it out to the real world through a differently-licensed bank?

Re:

[SinGunner]

Entropian Secret Agents?

Before anybody gets excited...

[sirwired]

Let's just say that I won't be investing my life savings into some MMORPG anytime soon. Unless the universe is STRICTLY limited so that actual cash dollars MUST come in (either through monthly fees or deposits) before money is created (including money "created" by NPC's), this will likely crash 'n burn.

The entirely expected, and disturbing part of the "Cash Card" user agreement is as follows:

"MindArk may, at MindArk's sole discretion refuse a request for authorization of any Entropia Universe Cash Card transaction or may deactivate the Entropia Universe Cash Card without notice and may notify third parties of such refusal or deactivation as MindArk determines is necessary." The Cash Card is one of the ways you get money out of the system (via ATM's), so if it gets deactivated, that hurts. While I wasn't able to find any information on it, I suspect the direct bank-transfer system has a similar caveat.

This whole setup reminds me of "Stock Generation", an online Ponzi scheme set up as a "game" several years ago. Google can probably dig up details.

SirWired

I honestly don't understand it

[EvilGoodGuy]

Any game that requires me to gain mental power by stealing sweat from a monster, isn't quiet up my ally. And I don't intend to invest in this sweat anytime soon either. But kudos to those who have made money off of the people that are hooked on this "game."