Virtual currency exchange 'good idea' yet tough to establish

Virtual currency exchange 'good idea' yet tough to establish

Summary: Platform to trade in virtual monies or cash out for actual cash has niche appeal but difficult to set up due to international monetary regulations and lack of game operators' buy-in, analyst says.


The concept of a virtual currency exchange, in which gamers can sign up with to trade their in-game currency with other types of virtual money as well as real-world ones, may see a "good idea". However, it will be difficult to set up and flourish due to regulatory constraints and lack of game operators' buy-in.

Charlotte Miller, research analyst at Juniper Research, believes that there is a space in the market for such exchange systems to exist. This is because there will be people who wish to convert multiple virtual currencies to relevant ones according to the games they are playing at the moment or to cash out into real money, she noted.

However, this will be a very niche user group, she added.

Furthermore, while there are virtual currency exchanges such as First Meta Exchange in operation currently, and many of them trading in Second Life's Linden dollars, such businesses are difficult to establish, the analyst noted. For one, it would need to comply with anti-money-laundering laws around the world, Miller explained.

Another hurdle they would need to overcome would be online game operators unwillingness to provide an alternative platform to trade in their currency, she added.

"As virtual currency is typically used within the social and games markets for microtransactions, it is used to effectively lock users in to the service," said Miller. Therefore, game operators will strongly resist any attempts to push them to open up their currency, she added.

One gamer ZDNet Asia spoke to supports the idea of such exchange platforms though. Curren Seow, a Singapore-based account executive, said: "Time is money. The time that I have to play games is limited. Any sort of mechanism that can help me enjoy the game by cutting down on the grind will be useful."

Virtual no threat to reality
Asked whether the popularity of virtual currency will affect the actual real-world economy, Miller thinks otherwise.

"This would mean that a virtual currency has become so accepted it can be used to purchase physical goods. You have to ask whether the major social and games players really want to move into the physical goods space," the research analyst said.

Topics: CXO, Browser, Social Enterprise

Liau Yun Qing

About Liau Yun Qing

The only journalist in the team without a Western name, Yun Qing hails from the mountainy Malaysian state, Sabah. She currently covers the hardware and networking beats, as well as everything else that falls into her lap, at ZDNet Asia. Her RSS feed includes tech news sites and most of the Cheezburger network. She is also a cheapskate masquerading as a group-buying addict.

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  • virtual currency

    Nice article about virtual currency.
    Since it is relatively new topic, some people may be skeptical about the concept and that is very natural. However, we would like to emphasize how virtual currency can actually be beneficial for retailers and consumers in general. With this approach, we are building a worldwide network of partners that will accept Bedollars as a method payment and reward them for their loyalty.
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    Recognition of Virtual currency’s value in this win-win-win scenario is rapidly increasing in tech industry and Beintoo has reached nearly to 200 million users in only one year which answers to Charlotte Miller’s concern whether ‘social and games players really want to move into the physical goods space".
    We are improving the virtual wallets of our users to provide an easier way for them to spend their virtual currencies. We would be happy to keep this conversation ongoing with you.