Virtual economies and real economies intersect

[another post for my microeconomics class--kind of geeky but i figured i'd put it here anyway.]

I think it was about 15 years ago that I first read Neil Stephenson's Snow Crash, a sci-fi novel about a once-fictional future in which there were two worlds: meatspace, or the real world we all live in, and the Metaverse, which was a virtual reality hooked into virtually every facet of life in the novel. Individuals existed as avatars in the Metaverse, virtual surrogates for their flesh-and-bone bodies, and using these avatars, people interacted on many levels ranging from entertainment to business. Businesses and entrepreneurs even opened virtual storefronts with which to interact with their customers' avatars. In many ways, Snow Crash was the single most influential book in the lives of many future software developers, and it played a huge role in transforming the internet from the Department of Defense project of its inception to the more consumer-oriented version we all use today.

As is so often the case with science fiction, tomorrow is now today, and we are rapidly approaching a world in which the Metaverse is not merely a figment in the imaginations of sci-fi fans, but a functioning world in its own right. This real-life Metaverse is rooted in many online games known as MMORPG's, a tongue-twister of an acronym that stands for "Massively Multiplayer Online Role Playing Game"s. These MMORPG's pioneered the use of 3-D graphics and computers to allow online interactions between geographically separated players. As they grew in popularity, so too did the value of time spent in-game grow. Many, if not all, MMORPG's share a common trait in that game-time is spent collecting loot of various kinds: armor that gives a character an edge in a fight, a special weapon that might endow the possessor with additional powers, and many other kinds of trinkets. The rarity of some of these items made them valuable not just in the virtual world, but in meatspace as well. Many players began auctioning off their loot on sites like Ebay, allowing other players with enough money to bypass the many hours spent building up a character in-game by purchasing the fruit of another's labor.

The evolution of these virtual economies has led to the creation of virtual worlds whose raison d'etre lies not in gameplay but in building true economies, complete with virtual money, exchange rates, goods, services, and most importantly, interactions between "players". Second Life, the virtual world featured in the article linked above, is one such world created entirely by players using avatars, just as in Snow Crash. Participants, through their avatars, provide services ranging from virtual real estate rental to training for meatspace emergency workers. The potential uses for such virtual worlds is endless. Imagine a day when we attend class not in brick-and-mortar universities, but in just such a virtual environment. Instead of hurrying to beat rush-hour traffic for that 8AM class, students will be able to simply log in from their desktop at home, while enjoying a hot cup of coffee and breakfast. Office meetings too could be easily conducted for offices with many employees spread over a wide geographic range--a commonplace situation in today's world of global services and outsourcing.