The future of digital currencies is extremely speculative, so what is presented here are simply thoughts for consideration. Technology is overwhelming as it is. Technological advances are accelerating. Many would assert that humanity has a hard time adapting to what we already have, say nothing of what is to come.
Location based advertising coupled with facial recognition will change retail stores. Robotics are replacing many factory jobs and 3-D printers are building not just houses, but human organs. Kickstarter and other crowdfunding sites are making it possible to secure major financing outside conventional financial institutions. Sites like ODesk facilitate international outsourcing. Translation software is making it easy to get the gist of anything in any language. And then we have digital currencies – from MMO Gold Vendors to the disruptive influence of Bitcoin causing consternation in governments.
Add to this the volatility of financial markets, fluctuations of major world currencies, concerns over sovereign debt, the ongoing war on terror coupled with potential for money laundering… the list can go on and on. It pays to occasionally stop focusing on the now and consider where we are going – where the future will take us… or our individual and collective ability to influence the future. It’s logical and natural – as we’ve come accustomed to planting in the spring, harvesting in the fall and saving for the winter.
Of first concern, starting with the United States, there is an interest to tax virtual currencies. It’s not happening yet, it’s been discussed for years, but the basic trend is that more and more money is finding its way into non-standard currencies which can be traded for real money and real products. Online taxation was waived early on in the United States, but as more and more states are taxing online sales, the gap between physical and digital products narrows. Bitcoin, the most notable digital currency, has taken blows of varying degrees of severity from Russia, China, India, Thailand, Korea while the West (USA, Germany, and Switzerland) have started looking at ways to tax it.
The second area of interest relates to ubiquity – not so much of a single digital currency, but their proliferation and potential to be sold or traded for real products or real money. Real products – emphasized because we are talking about the ability to buy in-app or in-network software or even watch movies. Basically, the lines between real and virtual are becoming increasingly difficult to draw.
Numerous other areas of concern and interest apply from the growing reliance upon credit cards and alternative forms of payment; the challenge of many countries to confront their “shadow economies”; and the growing capability of governments to track all online and banking activity. This is not small stuff, nor particularly futuristic. Even religious leaders are weighing in, for different reasons, on the idea of changing monetary systems. Concurrently, at the top strategic level, one of the top issues governments and financial institutions are trying to address is the digital divide.
For the sake of amusement, the idea of digital tax collection spawns images of a gangs of “tax collectors” running around The Barrens in Blizzard’s World of Warcraft, like some government agencies are apparently already doing. Like everyone else, most governments are struggling to catch up with the pace of technology, so some of their efforts are going to be hit or miss. The logical extension of technology gives way to lots of great possibilities along with a lot of things that we may not like. Internet Anonymity is one thing likely to be lost in the process – if not to the government, then to corporations. I’m not saying this is a good thing or bad, or representing this in any other way than a personal view about the long-term consequences and capabilities of technology that already exists.
As local and regional economies become better integrated into the overall global economy, money and currency as we know it is likely to change radically. This may be a long way off, but the talk of a single global currency is not new. In many ways, it is logical. An evaluation of Eastern vs. Western GDP’s will show a gradual process of “evening out”. Singapore and Hong Kong are two very good examples – where a concerted effort can lead to a radical growth in average wages. In the 1970’s, average wages in Singapore were around $600 per year; today – nearly $62,000 considering purchasing power parity. The implications for the rest of the world are there and worthy of being considered as it relates to how the world achieves what we might call economic equality.
This requires a lot of head space – these are all topics being explored by some of the world’s most prestigious think tanks, like Chatham House, and economic leaders like at Davos.
Relevance to mobile apps and online gaming? Imagine if you would being a customer – you have a thousand different games that you might want to try or that you’ve only been playing one game and have a lot invested in it, but get tired of it. What if… What if the money you spent on one game or the value that you have in it could be transferred to… any other game? It matters little if there is just one universal game currency or if there are exchange rates.
That’s just a what if.
Many games have nodes of “digital raw materials” where people can refine them and produce “finished digital goods” – which can be sold for “real money”…. and which game developers ARE selling for real money already. What is the difference? Well, for starters, the designer of the game typically holds all of the rights to everything in the game, can change the dynamics of the game, and alter the value of any given item and so forth. There are games like EVE Online that explore this in much greater depth – where at least the game time can be legally purchased and sold with its in game currency. Then there’s this story…
This topic is deeply philosophical, and all of this may well exceed the specific purpose and function of our blog. Friday though, we will use this as a basis to explore some real, practical applications of at least some of these concepts for mobile app developers.