Presentation on theme: "Virtual Money Sharon Herman Internet Law & Cyber Commerce June 7, 2012 TAU MBA."— Presentation transcript:
Virtual Money Sharon Herman Internet Law & Cyber Commerce June 7, 2012 TAU MBA
What is Money? Investopedia defines Money as: 1. A commodity or asset, such as gold, an officially issued currency, coin or paper note, that can be legally exchanged for something equivalent, such as goods or services. 2. As defined by common law: a medium of exchange that is authorized or adopted by a domestic or foreign government and includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more nations. Money has a Store Value, is a Medium of Exchange, and a Unit of Account.
Who is eligible to Issue Money? Israel: חוק בנק ישראל 2010, סעיף 44 א ': שום אדם זולת הבנק לא יוציא ולא יפיץ שטרי כסף, מעות, מסמך, או כל דבר אחר, אשר הנגיד קבע כי הם עשויים להיות תחליף מטבע. חוק בנק ישראל 2010, סעיף 41 ב ': מטבע שהוציא הבנק יהא הילך חוקי בישראל כדי הסכום הנקוב בו. חוק מטבע השקל החדש 1985, סעיף 1 א ': המטבע של ישראל יהיה שקל חדש. US: Federal reserve notes are issued at the discretion of the Board of Governors of the Federal Reserve System. (Federal Reserve Act, Section 16 (1) or 12 USC ss.411). US coins and currency are legal tender for all debts, public charges, taxes and dues. Foreign gold or silver coins are not legal tender for debts. (31 USC ss Legal Tender). European Union: Article 128 of the Treaty on the Functioning of the European Union: The European Central Bank shall have the exclusive right to authorize the issue of banknotes within the Union. The ECB and the national central banks may issue such notes. The banknotes issued by the ECB and national central banks shall be the only such notes to have the status of legal tender within the Union.
Exchange… if its Secure The EURO notes include approximately 30 security features, including: See also: Holograms Variable colour ink Checksum Ultraviolet light- EURion constellation Watermarks Infrared and ultraviolet watermarks Security thread Magnetic ink Magnetic serial number Microprinting Matted surface Bar code Digital watermark
Lets talk (Virtual) Money in a…… Closed Circuit Hybrid Circuit Open Circuit
What is a Virtual World? A synchronous, persistent network of people, represented as avatars, facilitated by networked computers. (Mark W. Bell at Indiana University) A 3D computer environment in which users are represented on screen as themselves or as made-up characters (through avatars) and interact in real time with other users and create objects. Persistent- the world must continue to exist even after a user exits the world, and user-made changes to the world should be preserved.
What is a Linden Dollar? "LINDEN DOLLARS" ARE VIRTUAL TOKENS THAT WE LICENSE [ISSUE] 5.1 Each Linden dollar is a virtual token representing contractual permission from Linden Lab to access features of the Service. Linden dollars are available for Purchase or distribution at Linden Lab's discretion, and are not redeemable for monetary value from Linden Lab. The Service includes a component of virtual tokens ("Linden dollars" or "L$"), each of which constitutes a limited license permission to use features of our Service as set forth below. Linden Lab may or may not charge fees to acquire or use Linden dollars, and these fees may change at any time. When you acquire a Linden dollar, Linden Lab hereby grants you a limited license ("Linden Dollar License") to use the Linden dollar as a virtual token to be held, bartered, traded and/or transferred in Second Life with other users [EXCHANGE] (and/or Linden Lab), in exchange for permission to access and use Content, applications, services, and various user-created features, in accordance with these Terms of Service. The Linden Dollar License is transferable by the holder to any other user, provided that both users comply with these Terms of Service, maintain their Accounts in good standing, and are not delinquent on any Account payment requirements. Except as expressly permitted by this Agreement or otherwise expressly permitted by Linden Lab, the Linden Dollar License may not be sublicensed, encumbered, conveyed or made subject to any right of survivorship or other disposition by operation of law or otherwise, and you agree that any attempted disposition in violation of these Terms of Service is null and void. Linden Lab may revoke the Linden Dollar License at any time without notice, refund or compensation in the event that: (i) the Linden dollar program is suspended or discontinued; (ii) Linden Lab determines that fraud or other illegal conduct is associated with the holder's Account; (iii) Linden Lab imposes an expiration date on usage of Linden dollars in compliance with applicable laws and regulations; (iv) the holder's Account is terminated for violation of these Terms of Service; or (v) the holder becomes delinquent on any of that user's Account payment requirements, ceases to maintain an active Account or terminates this Agreement. You acknowledge that Linden dollars are not real currency or any type of financial instrument and are not redeemable for any sum of money from Linden Lab at any time. You agree that Linden Lab has the right to manage, regulate, control, and/or modify the license rights underlying such Linden dollars as it sees fit and that Linden Lab will have no liability to you based on its exercise of this right. Linden Lab makes no guarantee as to the nature, quality or value of the features of the Service that will be accessible through the use of Linden dollars, or the availability or supply of Linden dollars.
Legal Issues in the Virtual World We need to police these lawless frontiers. (Greg Lastowka, author of Virtual Justice) Legal system has not determined whether virtual property should be treated as if it were physical property. Implications for tax laws, criminal proceedings on theft and transfer of ownership, inheritance planning and more…. [Note: January 31, 2012: Supreme Court of the Netherlands found that items in the online game RuneScape had been stolen from a player, subject to criminal law. Note too: China and South Korean courts displayed a trend to grant more rights to players than stated in their contract and to see digital objects as being akin to physical property in certain important respects.] Other Issues: Intellectual PropertyProtect virtual world items and currency from unauthorized copying and marketplaces. Avoid liability by developing and implementing a sound DMCA policy. Terms of Service AgreementsCustomize to take into account your specific business model and features. TaxGains from virtual worlds currency and sale of virtual goods raise tax concerns. Several countries have already taken steps to track and tax such gains. Data Privacy and the Childrens Online Privacy Protection Act (COPPA)Due to the significant use of virtual worlds by children, and unique privacy issues associated with the collection of data from children, understanding and abiding by COPPA are critical.
What is an MMO/MMORPG? MMO: A massively multiplayer online game (also called MMO and MMOG) capable of supporting hundreds or thousands of players simultaneously. Played on the Internet. Game consoles (including the PSP, PlayStation 3, Xbox 360, Nintendo DS, Ps vita and Wii) and Mobile devices and smartphones (with Android, iOS and Windows Phone) can access the Internet and may therefore run MMO games. See: MMORPG: Massively multiplayer online role-playing game where a very large number of players interact with one another within a virtual game world. Examples: World Warcraft, World of Darkness, StarWars: The Old Republic, The Secret World, Guild Wars 2 (the Top 5 MMORPGs of 2012 according to gameranx.com)
Money? Who issues it? How do you earn it? Where can you use it? Buy it? How do you exchange it?
Currency? Who issues? Exchangeable? Auction? Real Auction?
What is a Facebook Credit? The safe and easy way to buy things on Facebook. Use to buy virtual goods in all games on the Facebook platform; can be purchased using credit card, PayPal, mobile phone, etc. Aim: making transactions simpler for users and higher conversion rates for developers. (Facebook retains 30% and developers get 70% of all revenue earned through Credits). In 2011, Facebooks non-advertising revenue was $557 million (15% of total revenues). Users (only 15 million of Facebooks 900 million members) spent close to $2 billion in Credits in 2011….. Acquiring Credits outside of Facebook: Via Gift cards, shopkick (allowing users to earn Credits by checking in to stores with an iPhone or Android application), ifeelgoods (enabling online retailers to offer Credits as incentives for making purchases, signing up for newsletters, and other actions, AppDog (which awards users with an Apple or Android mobile device with free Facebook Credits in exchange for downloading apps, and TrialPay (which issues Credits as an incentive for users to sign up for advertiser services, complete market research surveys or interact with brand-sponsored videos/engagements. Spending Credits outside of Facebook: Warner Brothers this summer offered movie-goers a chance to watch Harry Potter and The Dark Knight for 30 Credits apiece. Miramax and Paramount countered with film-viewing offers, too.
The Virtual Goods Market $2.9 B in 2012 (expected- JUST IN THE USA), up from $2.2 billion in 2011, (Inside Network Report).
What is a BitCoin? See: Bitcoins are a peer-to-peer internet-driven cryptocurrency. A community currency which requires self-policing. Can be used to purchase REAL world goods and services among willing merchants. Advantages: Degree of anonymity provided; divisible (more flexibility in sales); no central monetary authority; no intermediaries and no transaction fees. Disadvantages: Security; Credibility. FBI Concerns: Venue to generate, transfer, launder, and steal illicit funds with some Anonymity; acceptance of Bitcoins as payment by cyber criminals (Silk Road); money laundering; exploitation of services and individuals wallet by compromising personal computers and accounts using malware hacking to steal and botnets to generate; cyber crime- funding illicit activities, useful tool for illegal activities beyond cyber realm.
What is Virtual Money? The future of our civilizations money Virtual World Currency: Circulate within internal virtual world communities. Accumulating fictional money takes time, but helps improve game experience (acquiring accessories, weapons, or land). Buying virtual goods signal players' social standing, showcases their virtual identity, and opens more doors for experience. Virtual world currencies can turn into real money profits. Corporate Value Currency: Acquired by engaging with a company or participating in a loyalty program (points, credits, mileage, and badges). Tied to a company's product or service, not any official tender. Earned by mastery, redeeming prizes, and earning freebies. Facebook Credits, the universal currency for buying social games and applications on Facebook integrates traditional promotions and deals. People perceive their value as higher than their cost. Peer to Peer Currency: Driven by networked communities and serve as an alternatives to centralized bank currency: Bitcoin, system operated by computing networks that collectively encrypt, verify, and process transactions, like a Bittorrent for cash. Mobile Fiat Currency: Mobile fiat currency allow consumers to send and transfer legal tender using their mobile phone (Square- pay by swiping a credit card through a plug-in device on the iPhone; Pay Pals Card.io app scans a credit card number using the phones camera; Google Wallet, Zong, and Isis, invest in Near Field Communication (NFC) technologies- tap smartphone on a reader to complete a transaction).
Future of Virtual Money Virtual currencies and e-commerce platforms have risen and fallen faster than consumers have had time to adopt them. … we have a zillion different ways of doing financial transactions. There's cash, checks, credit cards, debit cards, wiring money, traveler's checks... each of these has a particular point. We're going to see that much diversity in digital money." (Microsofts former CTO Nathan Myhrvold, 1994 Wired) Each type of virtual currency affords unique advantages and disadvantages for specific situations. It is a future not of digital money, but of digital monies. To shape it, we need to better understand where our money system has been, where it is now, and where we would like it to go next…..