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China Bans "Gold Farming" in Games

China has banned the trading of virtual goods for real money, putting hundreds of millions of dollars in economic activity at risk, InformationWeek's Thomas Claburn reports. According to China's Ministries of Culture and Commerce, "The virtual currency, which is converted into real money at a certain exchange rate, will only be allowed to trade in virtual goods and services provided by its issuer, not real goods and services." The Chinese government estimates that trade in virtual currency exceeded several billion yuan last year. One billion yuan is currently about $146 million.

The ruling could have a massive affect on the virtual currency trading industry, which in the context of online role-playing games like World of Warcraft is often called gold farming. The government justified the ban on virtual currency trading as a way to combat gambling and other illegal online activities.

However, it's unclear how exactly the new rule will apply to online role playing games. For example, a report in China Daily claims that in-game gear is not considered virtual currency, so selling items that have actual value inside games may be allowed to continue.

According to a 2008 survey conducted by Richard Heeks at the University of Manchester, the trading of virtual currency for real cash employs hundreds of thousands of people worldwide and generates between $200 million and $1 billion annually. Heeks estimates that between 80% and 85% of gold farmers are based in China

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