Social Gaming vs. the Nation State

First published September 2, 2009 

Been meaning to post this for a while, but I keep forgetting. Until now.  
 
China has begun to seriously crack down on virtual currencies, due to fear of what this means for "real world" economies. The New York Times covered this in an article from July 1, 2009 [22]. Here's an excerpt:  

The buying and selling of the make-believe currencies used in online gaming has become so widespread that Chinese authorities fear it will affect the real economy.  
 
To quell that threat, those authorities said on Tuesday that they had issued new regulations aimed at restricting the trade and use of virtual money. 

So here we see government protecting the monopoly on currency issuance that is currently granted to the world's privately owned central banks.  
 
Readers of my blog are well aware of my stance on this issue, which is that virtual currencies represent the solution to the global economic crisis. As money supply is largely a political issue, this is also how online communities disrupt the nation-state.

 
So where do we go from here? 
 
Well of course most gaming/virtual currency companies will bow to government, regardless of how corrupt and immoral government will be. In that case, we can expect the political/economic woes to worsen -- or at least we can disregard the idea that virtual currencies will be a solution.  
 
Alternatively, we can look for ways to challenge legislation. This would be through the election of a different kind of government officials. Ron Paul is, of course, the role model here. Paul has already encouraged competing currencies to the US dollar [23]. Folks who have tried to launch competing currencies have gone so far as to put his face on the currency [24]. 
 
Of course, most people simply are not educated enough, the mainstream media can get by with ignoring Paul, and Paul lacks the rock star charisma that enables an empty candidate like Barack Obama to win. Coupled with the corruption inherent in the electoral process – see the election fraud archive on KidMercuryBlog.com as just one example [25] -- reform through the legislative process seems a long shot. (Although I do encourage people to get active and support it, as we should try a variety of tactics to get our liberty and economic freedom back).  
 
Alternatively, a peaceful, albeit controversial, solution can be found when we think of how communities compete online -- something Umair Haque refers to as anti-defense. The basic idea is to attack by creating a decentralized approach which lacks a single point of failure. Haque explains [26]: 

You can't defend a centralized structure against a network attack in the traditional sense (just ask Twitter). But you can anti-defend against a network attack, by decentralizing your own resources to the edges — something that, in physical warfare, is a big no-no. When resources are spread and replicated across as broad, diverse network of your own as possible, if one node goes down, the others stay up.  

When we think about this in terms of how virtual currencies can survive when attacked by real world economies, we should look for a solution that creates multiple virtual currencies, so that there is no single point of failure. At the same time we should look for ways in which these virtual currencies can be exchanged for one another, so that the markets can be small and very fragmented but still liquid and easily turned into another currency when necessary.