The Value of Virtual Assets in an Evolving Economy
We were used to a purely physical economy where people used bills and coins to buy physical goods from stores, either online or offline. Everything about those transactions was physical: the product bought was tangible, the method of payment was traditional currency, and the sale required an actual place, like a brick-and-mortar store or a warehouse.
Gaming, with in-game purchases of virtual assets, taught us that goods can be valuable even if they’re intangible. We could then buy virtual assets using virtual money in virtual stores to make gaming more enjoyable. Entropia, a multiplayer online game by MindArk, is a great example of this. Entropia is a massive online universe where players can live virtually. Users can do everything from hunting to going to bars, meeting people, and playing sports.
Like in the real world, users need money to do things, like play sports. Using PED (Project Entropia Dollars), users can also buy all kinds of virtual assets like cars, buildings, and machinery. Some people just play the game to amuse themselves, spending PED on recreational activities. Others invest their PED on business ventures. One can, for example, buy machinery to mine and then hire others to mine for you, splitting the revenue.
A man by the username “Neverdie” took this to another level. He bought an entire planet on Entropia for $100,000, mortgaging his home to get enough money. Initially, one might think that a virtual planet could not be worth that much money. It is, in the end, not “real”. What is “real”, however, is the money this man-made from the planet. By building stadiums and other infrastructure on the planet, “Neverdie” attracted thousands of online players to visit his planet and spend PED on his facilities. He made around $200,000 a year for 5 years through this planet. It wasn’t a “real” planet, PED isn’t “real” money, and the activities users were doing weren’t “really” happening. The value of a virtual economy, though, comes from its usefulness, not its “realness.” People entertain themselves on Entropia, and that has “real” world value.
Now that DLT networks are introducing new types of virtual economies, the same comments that were made towards gaming economies are being made about cryptocurrencies. Some think that coins like Bitcoin and ETH don’t have any “real” value. But what is value if not the usefulness that it provides? Just like in-game assets provide entertainment, decentralized networks also provide utility. DLTs power payment solutions, computing, and storage, which can only be accessed using cryptocurrencies. The value that their services and security providers are what brings value to their coins, even if they’re not backed by gold or governments, like traditional currencies.
Sources: https://www.forbes.com/sites/oliverchiang/2010/11/13/meet-the-man-who-just-made-a-cool-half-million-from-the-sale-of-virtual-property/#32ffb7bd21c, https://www.youtube.com/watch?v=PjhHazg5GRY
