Tuesday, March 27, 2007

$7b in Virtual Assets by 2009

According to an article at Bankrate.com, lenders in Europe have started setting up branches inside virtual environments, such as SecondLife, in order to support real money transactions for virtual assets, such as virtual real estate and laser swords.

No, this isn't a pre-April First article. It's actually happening.

One such virtual world, Project Entropia (PE), created by MindArk, based in Sweden, already features a separate virtual currency, the Project Entropia Dollar (PED) that is pegged to the US dollar at a fixed exchange rate of 10 PEDs to the greenback.

The size of Entropia and its PED economy is no secret: according to a senior executive at the company, David Simmons, more than $350 million dollars changed hands "inside" their virtual world during 2006. There were 565,218 users online when I visited PE this evening. Assuming two thirds of those folks were registered community members six months ago, that's $1,000 in spending per active member. That's an incredible amount. I'm sure teenagers are not exactly spending to that level at my corner store.

So what can I buy with PEDs? I went and took a look. Most of the items on offer were in the cents to dollars range (46 Gazzurdite stones for $1.15, a genuine RepEdge Battle Axe 2x0 for $0.43, a pair of Shogun gloves for a buck twenty), but prime real estate located in Calypso, PE's version of an upscale neighborhood, was selling for far more - hundreds of dollars per structure.

The bargain of the night? An online shopping mall in downtown PE. The price? $179,668.

Simmons says you can put money in and take it out freely, and goes so far to say that while your money exists inside their world, it is "guaranteed", which, the history of the US economy suggests, is a great recipe for growth. And it isn't like banks are standing back - ABN AMRO already has a branch up and running inside SecondLife, and ING has a SecondLife branch "under construction".

According to IGE, more than $7b in assets will be bought and sold using real dollars in the virtual world, by 2009. "We are convinced that within one year from its release on the market, Project Entropia will have its first dollar millionaire," MindArk's Patric Sundström told gaming site RPGPlanet.

A virtual economy, populated by real millionaires, where one of the primary requirements is moving money securely between banks located in online and offline worlds. Sounds like a job for VirtualATM!

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