back to article China bans virtual cash for real-world trade

Officials in China are banning use of virtual money to buy real-world goods and services. Under new regulations released jointly by the Ministry of Commerce and the Ministry of Culture, virtual currency can now only be used for virtual goods and services that are provided by the issuer of the virtual currency. Several sites are …

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Grenade

None of this surprises me

A free market is the last thing any government wants. I'm curious how exactly they define "virtual currency" though. Isn't that was a debit card is really? Or a gift certificate?

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Paris Hilton

possibly off topic...

would paypal/egold et al count as virtual currency?

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Big Brother

Frank Herbert knew about this

From a quote in the Dune series: "Control the coinage and the courts. Let the rabble have the rest."

Here we have the true powerlust of governments out in the open - control all means of trade between people in order to control their lives. A similar thing happened here in Australia back in the 90s - someone came out with the "BarterCard" system, whereby subscribers could do jobs or provide goods for others for "echo points" instead of cash, and these echo points could then be used to obtain goods and services from other BarterCard holders. The government jumped on it real fast, since echo points weren't real currency and thus weren't taxable.

This is the foundation of all loss of freedom - preventing trade between people except by government-controlled means. With that in place, erosion of all other freedoms becomes just a matter of time and propaganda, as we're seeing now.

(Thanks El Reg for the 1984 icon - I've been after one for years now!)

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Paris Hilton

Caught with their pants down .... pleasuring themselves?

"Those caught using virtual money for gambling will also be punished by public security authorities, the Ministry said. The Ministry of Culture added it will step up supervision of of money laundering using virtual money and "other illegal online activities."

Virtual money has been fingered as a source of under-the-table payments, laundering, theft and fraud by China's government."

Would anyone like to comment/deny/agree that the following report is all based on virtual money and when it is so, would then quite naturally guarantee the pricking of more Ponzi bubbles/collapse of its front "companies"/dodgy Systems Administrations ........ http://www.bloomberg.com/apps/news?pid=20601102&sid=acJ7o7Uk9qFg

It is some sort of especially weird trick [Doing AIMadoff ?] to invent/pump hundreds/thousands of billions into a Financial System and witness Deepening Recession and Increasing Depression. Seems like the Laundry is out of Fashion/Vogue/Favour and Kaput and is a Perfect Candidate for ITerative Novel Solutions/Innovative MetaData Programming .......... which would Really be a Virtual Project with IMPerial Promise. And so what if it costs a billion or two, it's only paper for spending on "a Global Applications Program and is designed specifically to regenerate Economies and Societies".......... which is just what AIdDoctor in Cloud would Order Executively to Alleviate/Elevate/Eliminate the Present Quackery which has Descended into the Matinee Farce and Childish Pantomime of Ducking and Diving/Bobbing and Weaving in Banks of Smoke and Mirrors aka Grand Delusion and Pathetic Hubris.

And the PH icon is wwwonderfully appropriate.

Ps. Studiously Avoiding Root and Branch Problem Solutions will always Compound the Felony and Misdemeanours to Expose Scams that are nothing less than Criminal Conspiracies, to Indecently Hard Working Criminals and Law-Abiding Citizens alike. It is Surely Inevitable.

Fortunately though, have we IT for InterNetional Rescues.

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It's all virtual anyway

I mean what makes that piece of paper in your pocket worth anything anyway? They may as well just nationalise it and regulate it, the system is probably just as good as any "real" bank anyway.

I'm surprised with it being China and all that they haven't done that already,

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@AC AC re. virtual currencies

Paypal is a payment management system that does not issue 'currency' and e-gold is an investment system that allows you to buy/sell gold investments but does not issue a currency. They are supposed to operate under various government guidelines for customer background checking to avoid being used as a money laundering channel.

Games like Second Life operate an in-game token system where tokens can be bought and sold by the game operator for real world currency. Tokens are exchanged between players as part of game activity and also between players and the game operator for game services. I know that SL players will say that it's not a game but as far as the money flow is concerned, it operates as a game of skill where you can win money from other players where the money is in the form of tokens issued by the game operator.

These tokens can be freely transferred between players but can never be taken outside the game and so do not count as currency. It is possible to use SL for money laundering but SL places limits on transaction levels and operates a distinction between 'ordinary' accounts and 'merchant' accounts, with transaction limits to detect and prevent this.

A debit card is a tool, under the control of the banks, that enables money in your bank account to be transferred to someone else's bank account under your instructions, so it's nowhere near being a currency. A gift certificate or shop voucher, which is issued by a retailer organisation, is in fact a form of currency (technically) but it is time limited for redemption and there are not many people who would be happy to accept a shop voucher as payment for goods/services; so as such it is useless as a currency.

The problem with 'alternative currencies' as far as governments are concerned, is the possibility of money laundering and forgery. The 'official' banking system has many procedures and checks in place to detect and prevent this but any alternative currency or virtual currency would probably not have this high level of oversight due to the cost of setting up and maintaining it.

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Big Brother

Actually....

All money is virtual, a concept that too few people understand. Even the cash in my pocket is only symbolic, and is only worth anything because of a de facto the social agreement. There is no difference between a Euro in my pocket, some digital bits that mean a Euro in the bank, and some digital bits that mean a Virtual-Euro in Fantasyland - Each one is worth exactly the value that 'the market' is ready to give it.

The real problem that governments have with 'virtual' money is that its not controlled by them through one of their central banks, that's why they're trying to ban it. Think of the consequences if everyone in the world accepted to trade online in a currency that is not one of their standard controlled ones. They can't control the money supply, they can't print as much as they want, they can't tax it. Of course they want to ban it.

Although having a private company issue their own currency is a whole new can of worms...

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Terminator

Yeah lets get...

...rid of taxes by all using virtual money. That way every service that is paied by taxes now could be user payed. Screw anyone that can´t afford those services or are too lazy to work to afford them. Taxes are part of the "old" rule who needs them these days? I´m doing fine and thats all that matters right? no need for a big evil "goverment" using MY money to help those that can´t take care of them self.

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Virutal Currency Is Limitless

The main problem with these virtual currencies is that there is no way to limit their supply.

Take a game like EverQuest. Killing monsters in the game results in coins being dropped and the game makes it relatively easy to take those coins and buy and sell items to make even more coins. Then there are the occasional glitches where it becomes possible to dupe items or coin by vast amounts.

The amount of money you can make in these games is only really limited by time, but unlike in a real world job there are no inflationary pressures or employment pressures to consider.

Essentially, this creates an infinite source of money that is available to anyone who wants it.

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Welcome

Good Idea

I think it's a good idea to limit the use of virtual currency in China. There are a lot of people out there busy trying to trick others out of their cash - and I wouldn't be surprised to hear of countless thousands losing out to a tricky virtual currency pyramid scheme where a company sets a price for their currency and then quietly uses an unlimited amount of the currency to defraud people.

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Stop

Control Freaks

@Steve Roper: You have been reported to the Thought Police and Room 101 is being prepared for your arrival.

@Steve Roper: Joking aside, (well half-joking these days), I totally agree with everything you said. Ultimately they angle everything so that they are in control and they profit from being in control and they are determined to maintain their central importance no matter what comes along.

The problem with the Control Freaks is that they never have enough control, so they are always seeking ever more ways to add to their power to control. Many of them in positions of power show clear signs of Narcissistic personality disorder which in hindsight isn't such as surprise as Narcissism provides a competitive advantage in very competitive environments like politics and business so they are naturally better able to fight to the top in power at the expense of others around them.

Very Narcissistic people spend their lives seeking power over others out of both fear and desire. Fear because Narcissistic people fear anyone having power over them like they suffered when they were a child but they would never admit they are driven by fear and react with anger and deceit when confronted with their behavior. Hence they are never happy when they have money and power (even when they have millions in the bank they are still not happy) and so are always seek ever more money and power and always fear others gaining power over them. Also as they are so preoccupied with their self-righteous lust for ever more for themselves, they are not thinking about how their actions cause harm to others hence their lack empathy towards others. In fact some even resent thinking about others out of anger at how they were once treated so consider it fair game to behave the way they do. (The same logic all criminals use and they also don't want (and fear) others having power over them. Its also why they develop such good acts of being so strong because its actually driven out of fear, but would react with extreme anger if ever confronted about their fear and yet their anger is driven out of fear of anyone ever seeing or knowing about their fear. Its why criminals often show extreme Narcissistics like patterns of behavior. If they show fear then that risks others gaining power over them so they will never show fear).

It makes me wonder if we ever had a world of plenty we would still have extreme unfairness as this troubled minority would still seek to hoard as much money and power as they can for themselves at the expense of everyone around them and then seek to dictate how everyone else should live their lives. Yet wars are fought over which of them want to be in control of us all, with them selling us all FUD to make everyone follow them by demonising the other side, yet they are all showing the same psychological pattern of behavior. This minority of relentlessly power seekers are determined to undermine others so they can gain ever more power over others. Its why the growth of their power has to be reined in from time to time otherwise they become ever more self serving at the expense of everyone else. Its when the pain of their control becomes so unbearable that societies finally rise up and throw them out of power, then the pattern repeats again with more of them getting into power. Its like societies around the world are in oscillation driven by the pressure caused by the behavior of this minority in society and everyone else suffers (and even dies) because of it. When is the world going to wake up from this nightmare and finally stop them being so unfair to everyone.

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@James Micallef

"All money is virtual, a concept that too few people understand."

&&

"Each one is worth exactly the value that 'the market' is ready to give it."

== nonsense

As you so rightly said yourself:

"Although having a private company issue their own currency is a whole new can of worms..."

If it's != nonsense then your last sentence would not make sense. So which is it? Does it have an intrinsic value, or not? :)

Ask: Why was there a gold standard till the 1920/30's? What did it mean to capital to move off of that standard? And why was it born in the first place? The melt down that finance capital has experience over the last x months has to begin to tell you something?

Peace.

PS. That pesky market. So free and so "external" to me. Yeah. "Melt down" springs to mind.

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Anonymous Coward

China <> US

I am surprised they are being quite so restrained over it all. Liberty Dollar and eGold have been raided (the former loosing lots of precious metal to the feds in the process) and criminal charges brought against their owners in the US for daring to offer a stable alternative to fiat national currencies.

With the OCED tax haven blacklist in the picture too and Vanuatu reforming away from completely private banking the options for even attempting a scheme like this via offshoring to get around local legislation doesn’t even exist anymore.

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@codemonkey

>""All money is virtual, a concept that too few people understand." && "Each one is worth exactly the value that 'the market' is ready to give it." == nonsense

>As you so rightly said yourself: "Although having a private company issue their own currency is a whole new can of worms..."

>If it's != nonsense then your last sentence would not make sense. So which is it? Does it have an intrinsic value, or not? :)"

Uh... no, it is not nonsense - none of those quotes state that any money has an intrinisc value. In fact, all of them state or imply that there is no intrinsic value, which is _especially_ true of a "virtual" currency. So, what part of the last sentence does not make sense?

Physical money _can_ have an intrinsic value - I can fold my paper bills into airplanes or wipe my @ss, but the one using a $100 bill is worth as much as the one using a $1 bill, intrinsically. However, it is never in a central bank's (or gov'ment's) best interest for its currency to have any intrinsic value. WWI saw pennies worth more than a penny because of copper shortage, and the gov'ment lost true value. The "value" we place on physical or virtual money _is in exchange for goods or services_, and is based on the amount of money in the system (ie. fiat currency)... In a "market" controlled by the central banks.

We already have a can of worms as the central banks (ie. the Federal Reserve Bank) _is_ a private company... And we see all the time what happens when the sharks in the pond think someone else is getting any fish...

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Dont think so

I do not see this happening… Seeing as how the chinese gold farming operations work, it is nearly impossible for China to pull this off. Sites such as www.MOGS.com are USA based and the games they sell are USA based, granted a majority of the supply there is from players in the USA some comes from China gold farms… if China is going to ban they are going to focus on domestic games to China, however the level of corruption in China at a local level is insane so for the State wide government to do this they have to get through the corrupt local government… All I can say is good luck!

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Troll

Not true

I thought WoW is included and it's a good thing that I read an article which clearly explained that China is after the banning of QQ coins. As a gamer, I was alarmed about this news and I was relieved when I read this article that WoW is not included. Might as well share it with you:

http://www.wowgoldfacts.com/2009/07/06/the-story-behind-the-chinese-brouhaha-lost-in-translation-indeed/

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