[Dave Birch] Studying Korean is soon going to be mandatory for anyone interested in digital money, because it’s turning into an accelerated evolution space where the relationship between money and markets is fascinating. In particular, it is the home of regulators who want to control virtual transactions. In World of Warcraft (WoW), there are some restrictions on what players can and cannot do with items in the game and these restrictions. The market responds, of course, so Korean WoW players have developed a spontaneous auction system that circumvents the logic of the game design. It’s called the “Gold party”, which is a contractual raid team (rather like an Elizabethan voyage of plunder) organised for “non-official” item auctioning. Here’s the description by a Korean person writing in English:

The auctioneer is the head of raid team. The process is almost same to the ordinary auction. The highest bidder gets the item auctioned after paying his Golds to the auctioneer. After this, the head should divide revenue among participants of raid except winner of the bid. If there be no item that any participant want to bid, only division of resource earned is implemented without auctioning as usual. If a player want to get specific items in this “Gold party”, he should have enough money to bid.

The writer also notes that at least one desirable weapon of some kind has already gone for $270 in one of these auctions. Coming next, my top prediction for 2007 is the xenodotori.

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When U.S. regulators tried to control the ownership and trading of U.S. dollars (in the late 1950s) the result was the creation of the eurodollar market in London (there has been a similar boost to the London markets because of Sarbannes Oxley, leading to calls for them to awarded honorary knighthoods by the Queen). The markets trading U.S. dollars outside the U.S. (ie, xenodollars) grew and grew.

The same will happen in Cyworld (one of the biggest online games in Korea, where the currency is “dotori”). The Korean regualtors will implement restrictions on the virtual currency markets and the inevitable (and instant) response will be the creation of xenodotori markets. As this this observer notes, the migration of secondary markets into other places (which need not be real) will not help either the Korean regulators or the industry. The solution must be choice: allow players to choose regulatory environments and make the code the law.

My opinions are my own (I think) and are presented solely in my capacity as an interested member of the general public. [posted with ecto]

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