Virtual Money

Is there any reason why Canadian law would not enforce value established, earned or conveyed in a virtual world, assuming the appropriate evidence were available? (Speculation on what kinds of evidence might be available is welcome, as is most speculation on this website.)

Here are a couple of articles about Facebook’s “online virtual currency”, the first largely favourable, the second mentioning some enforcement problems. (I can’t access FB from the office to see what its official view might be.)

  • ThinkRisk, “If Only They Were ‘Virtual’ Losses…
    (this one has links to other sources too)
  • Zynga on the Hook for Virtual Currency Ads” by Maria Dinzeo, (class action against FB games developer for misusing personal information collected in exchange for virtual cash. What do you think of the representative plaintiff’s argument that the games are so unattractive without virtual currency that users are almost obliged to apply for it, but it’s unfair for the suppliers to use the PI provided to get it?)

Some virtual worlds (notably Blizzard that runs World of Warcraft) prohibit any out-of-world transactions about in-world property. Why would such provisions be enforceable, or even desirable?

Others (notably Linden Labs that run Second Life) permit and even encourage real-world exchange of in-world money for real-world currency.

The Pillsbury law firm has a practice devoted to virtual worlds, and has a primer [PDF] on legal issues about virtual currency: .

Should the Bank of Canada be taking notice? The Think Risk site says that the value of such currency may be $1 billion or more. I suppose that’s not very large compared to the value of all currency in circulation, and the money supply is more than currency. But it’s enough to attract the attention of entrepreneurs and their lawyers.

Greg Lastowka has perhaps the most recent book on virtual law, called “Virtual Justice”, available in its entirety online [PDF] (no ‘piracy’ required – but note that copyright is (properly) asserted even if the distribution is free). The older book on the topic that I am aware of is by Ben Duranske, “Virtual Law”. Davis LLP in Canada has a ‘video games’ practice that seems to extend to virtual worlds. No doubt there are other sources of information and comment – but what about yours here?


  1. The reason prohibiting real-life currency exchanges for in-game value would be desireable is because it avoids two issues:

    1. The person with the most real-life currency wins. Makes the game less fun.

    2. Gold farming. There is an industry of “gold farmers” in some of these games. People in relatively poor countries “play” the game in order to create in-game wealth, and then sell that in-game wealth for real currency to people in wealthier countries with more money and less time. Game developers want to provide entertainment to their customers, not employment. If people are dependent on gold farming to feed their children, game-balance decisions take on a moral character that the developers would rather avoid, I imagine.

  2. Agreed with above poster.

    Virtual money (coins, acorns etc.) is simply one part of a “position” in a simulation. Restrictions on the purchase of any part of a “position” are valid to enforce for socially responsible reaons.

    A game company establishes rules for its simulations in order to provide a fun (read likely to attract subscribers and $$) simulation and also to limit its own liability – which are both legitimate and reasonable objectives.

    Where the company wishes to target a market of participants who want to interact with others who have “acquired” game positions (which encompasses virtual money, assets, titles what not) only via the “rules of play” that is understandable. Just as in a chess match in the 12th round final, I want to be having the fun of playing someone legimiately at that level and not some bozo who simply purchased the position.

    Many simulations are shared activities where each purchasing participant’s actions also affect the value derived by other purchasers, similar to a golf club or a theater for example. The value of the activity lies often in the interaction with others or can be affected by their actions (in economics these are “club goods”). If the others are incompetent, boorish etc. one’s enjoyment is reduced and thus it is reasonable to impose rules.

    In game terms, I don’t want to form a quest with other 12th level characters and discover that one of them bought his status and is a doofus who has no idea how to run the character effectively.

    To the extent there is gamer status etc. from a position, it is also understandable that allowing that to be obtained by purchase is not respected (should one be able to buy honours)?