In Part One (February 25, 2010) of 'Money', Anthony Funnell examines the changes underway in the finance and banking sector. In Part Two (March 4, 2010) of this series, he looks at the changing nature of currency. Is traditional state-issued tender now losing its monopoly? And how widespread is the use of alternative currencies - be they digital or virtual, or both?
The guest panel for part two includes: Douglas Rushkoff, author of the book Life Incorporated; Edward Castronova, Associate Professor of Telecommunications at Indiana University; Stan Stalnaker, Founder & Creative Director of Hub Culture; and Art Brock, Co-founder of the Meta-Currency Project.Here is an interesting exchange excerpted from part two which revolves around the notion of alternative currencies threatening the authorities' control of economic policy:
Antony Funnell: One thing we haven't really focused on so far has been the response of government to the development of alternative currencies.
While things like frequent flyer points might be deemed OK, would central government really be prepared to let alternative currencies develop to the point where they threaten their control of economic policy?
In China at least there's already been a backlash, with the government in Beijing last year introducing new regulations to restrict the use of virtual money.
The crackdown was prompted after large numbers of people began using a form of online game currency called QQ coins to buy real world products and services.
Edward Castronova from Indiana University, says the Chinese example should give us pause for thought. Because, he says, along with the benefits, there are potential dangers in the development of virtual and alternative currencies.
Edward Castronova: Let's say a virtual currency sort of got out of control. Now everybody's using the virtual currency to do their day-to-day transactions. I don't think we are anywhere near that now, but let's say, it's something that could happen and in that case the people who are managing QQ coins are very influential in the real world economy. And who are they? People who developed a game. They're not elected officials, they're not appointed by any government, they're not trained necessarily in anything. And so that would be a case where the people who run a virtual environment has significant influence on what happened, out here in the real world.
And in the longer run, I think it's something to think about with that you imagine future generations of people who, they grow up and they spend some time in virtual worlds, and they spend some time in the real world, and are sort of back and forth, and they sort of develop this idea of what an economy should be and how things should work, partly by being in the real world and partly by being in the virtual world where the way people have set up the rules, can be totally different. And that might affect their expectations.
So for example, in a virtual world everybody starts out with nothing, equal playing-fields, and everybody starts out poor. Now what if that became kind of a standard cultural expectation? As you went through your life you sort of expected the real world to be like that also. The true worlds and the way they're designed could start to have an effect on what we expect the real world to look like.