An article in today’s Asia Times Online explains that the QQ coin, a virtual currency issued by Tencent, China’s largest IM provider, has become so valued that the central bank of China is worried that it will affect the value of the yuan (China’s official currency). Tencent’s services have about 20 million simultaneous users and dominates the Chinese IM market. They’re so popular that there are QQ branded sausages and noodles in internet cafes in China, and soon, QQ-branded sneakers will be available as well.\

QQ coins must originally either be purchased from Tencent at one yuan/QQ or may be gotten via playing some of Tencent’s games. Users spend them on everything from playing games on Tencent’s system to purchasing clothing and decorations for their avatars.

For Iron Realms’ players, this is familiar and not different from our ‘credits.’ What is different is that the popularity of Tencent’s services (as opposed to the ultra-nicheness that is our text MUDs) has resulted in QQ coins being accepted by third parties. Apparently some forum operators are even being paid in QQ coins. In other words, it’s turning from being just a Tencent voucher to being a functioning real-world currency. People are even farming for QQ coins and re-selling them at less than Tencent does, just like gold farmers in WoW.

During part of the 19th century, almost anyone in America could issue his own paper currency. Wikipedia estimates that there were about 8,000 currencies in use in the United States by 1860. Of course, if the issuer went out of business or defaulted, any of his currency became instantly worthless (a big reason to avoid storing value in Linden dollars). Even today (according to same Wikipedia article), private banks in Northern Ireland and Scotland can issue their own currency. For the most part, however, central governments have banned private currencies, preferring to keep money supplies under their control.

What’s different about the QQ coin is that Tencent ostensibly does not intend for it to be a currency. It provides no way to turn the QQ coin back into yuan, and officially, at least, it doesn’t condone these third-party transactions. The Asia Times article comments:

“While there is no reason to doubt the Tencent statement, it is also true that the booming business in third-party sales of QQ coins clearly benefits the company. As there is an official premium on the number of available coins, a certain number of them are regularly removed from circulation, ensuring that new coins are always in demand from Tencent. “

(Sounds a bit like the Blizzards of the world doesn’t it?)

Another relevant passage:

“So far, virtual currency has had no perceptible impact on the yuan. But the central bank is worried about a future in which the popularity of virtual money grows to the point where it jumps from virtual to real goods.

But this possible scenario has drawn skepticism from many analysts - primarily because true convertibility between the yuan and the QQ coin would expose Tencent to enormous financial risks. It’s unlikely the Internet company will want to embrace the role of the Virtual Bank of China.”

Hello Linden Labs!

That’s it. I have no witty or deep analysis to offer. I just thought it was interesting that China’s central bank had become involved in a virtual currency.