Comment by DanielBMarkham | Hacker News Reader

Comment by DanielBMarkham | Hacker News Reader

Four years ago one of my first startup ideas I pursued was setting up an arbitrage between virtual economies. I believed then (and still believe) that it is a huge chunk of the future. Everything that is tangible now will become software and intangible in the future. That means the virtual economy is set to eclipse the current one.

I spoke with some somewhat famous startup-type people; several I met on HN. None of them seemed interested in my pitch (I was looking for a cofounder). One basically said "I've already got my FU money. This just doesn't excite me that much."

I'm looking for some cool things to happen in this space over the next decade. When I was kicking this around we had all sorts of things we wanted to try. It'll be interesting to see if any of them come to fruition. One of the key questions in this space is whether it's even possible to manage virtual economies as this guy wants to do, or it there's always some level of abstraction that's remains out of reach. My money says the thrill of being able to finally experiment will be short-lived. Odds are each economy we create with gaming rules will simply be a small subset of a much larger informal economy. Cool stuff.

I would argue that the virtual economy is already eclipsing the material economy, just not in the way you think of it. Compare the trends in value creation and employment between U.S. manufacturing and U.S. financial services.

Modern finance is largely computerized or computer-assisted arbitrage based on asymmetric information...the "objects" being traded are virtual. And over the past 20 years it has greatly outpaced manufacturing in job and value growth.

And this does not even consider the growth in product design and software products and services, which are also virtual.

edit: I a word.

Interesting. I have some questions. (If you don't mind answering.)

> Everything that is tangible now will become software and intangible in the future.

When you say this what exactly do you have in mind? Virtual reality? Living substances made through bio-hacking?

> or it there's always some level of abstraction that's remains out of reach.

What sort of abstraction do you feel would be prohibitive in this environment?

> That means the virtual economy is set to eclipse the current one.

In what capacity? Like bitcoin, or like for the win[0]?

[0]: http://en.wikipedia.org/wiki/For_the_win

Thanks in advance.

Manufacturing of tangible goods will become a commodity as 3-D printing becomes mainstream. In addition, many services that were verbally or physically contracted will be handled completely in virtual reality. Think home robots cutting hair, or auto-drive cars.

And as you point out, that's not even touching bio-hacking, which is also converging to digital/created lifeforms.

Call me cynical, but this article struck me as nerd candy. It's a totally-awesome idea: we finally get to really measure and experiment with economies! But in my research several years ago I was already uncovering hundreds of millions of dollars in a virtual goods black-market. People will take a character of yours and spend all of their time leveling him up and getting lots of goodies. Then you log in and take over. You pay them through some back channel. Or you leave an item where somebody else can pick it up, etc. No matter how you design a virtual world, there are plenty of ways to make economic transactions outside the walls. The illusion that you somehow have a god-like view and can see and observe everything of important is just that, an illusion. But I'm willing to wait a few decades for the economists to figure that one out :)

The virtual economy will merge along multiple different lines. I don't think there's any one answer here. There's no reason your WoW character can't be traded for BitCoin and used as a downpayment on a VR piece of real-estate that you then later sell at a profit for options on a futures market in some rare item coming out in a game next year. Thinking in a linear fashion can really handicap the possible solution sets out there.

> arbitrage between virtual economies

Exchange between virtual currencies is discussed somewhat in the 2009 documentary "Another Perfect World"

http://www.youtube.com/watch?v=NxZP_ur_Tvo#t=25m

Near the end they interview the CEO of a South Korean company called ItemBay.com who says it's his dream to setup such a market.

I'd like to see reputation or karma or achievement based currencies that are convertible between online communities, and a currency exchange that lets me buy and sell equivalent values. I could then take Reddit karma and exchange it for Stack Exchange points and "buy in" to another community at the going exchange rate, transferring the good will or community mindedness I earned on one site into another.

Given what you've said, what do you think about bitcoin? If you are so interested in virtual economies/currencies, this should be right up your alley.

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