Professor Joshua A.T. Fairfield, a videogames, e-commerce and law expert from Washington and Lee University School of Law, recently presented a lecture to the Intellectual Property and Entertainment Law Society on the need for the regulation of the use of virtual currencies in real-world economies.
Fairfield began his talk highlighting the work of economist Ted Castronova who measured the GDP of EverQuest, a popular virtual game world, and discovered it had a larger economy than any real-world nation.
While for Fairfield, the idea that people on EverQuest were paying thousands of real dollars for imaginary spaceships was shocking in itself, he claims the era we find ourselves in now is even more so.
"What is more startling than people paying real money for fake objects is people using virtual currency to buy real goods," he said, pointing to the recent "Kut Ku" coin crisis in China. In that instance, virtual coins actually competed with government backed, or "fiat currency," as Fairfield terms it, forcing China to shut down the operation.
"Money doesn’t exist. It’s a consensual hallucination," said Fairfield. According to Fairfield, we could say the same about virtual worlds and currencies, a policy that the United States has taken towards financial game fraud.
However, when real money is inserted into a virtual system, it means that people can and are getting ripped off, with the perpetrators of some schemes being convicted and sentenced to jail.
"Yes, it’s a real jail," Fairfield clarified in response to a student query.
A self-proclaimed libertarian, Fairfield believes government regulation of virtual currencies should be minimal, with the government possibly "granting immunity" to game worlds that use their freedom wisely and for good purposes.
Regardless of the level of government intervention, however, Fairfield believes virtual currencies that compete with government-backed currencies are worth immediate attention.
The hour-long luncheon was hosted by the Intellectual Property and Entertainment Law Society.
By Mallory Hitt
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