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The most recent Twisted Nether shared topic asks what would happen if Blizzard allowed you to buy game time with in-game currency. One of the responses was from the upstanding gentleman over at Honor’s Code. What he was quoted as saying on the Twisted Nether page struck an uneasy chord with me.

“You really are spending something of tangible value (your money) for something without tangible value (1s and 0s in a computer server somewhere).” -Honorshammer

This issue of tangible value and the distinction between 1′s and 0′s vs. paper currency seemed off to me and called to mind a great post written by Matt Mihaly about this very thing.

He posted an article on his blog about value and virtual goods a few years back that I think is worth reading again in light of this shared topic. You should go read the whole article as its a quick and easy read but here are some selections. The emphasis is my own.

Ok, first, consider that money itself is completely virtual. The paper you hold has no inherent value and serves merely as a symbol of the value itself. That paper hasn’t been backed by anything physical (like gold) in the US since Bretton Woods fell apart in ‘71. Money is entirely virtual and exists only by consensus enforced by the threat of physical force. In no way does the physical object represent any appreciable amount of the value of a $100 bill. What would you use a $100 bill for if the pattern of ink on it wasn’t exactly the same? You’d burn it for fuel or throw it away. In either case, it has virtually no value on its own.

…

The context is the value. It’s not the item itself. The item only has value when reflected back from the context. Remove the context and you remove the value. Shut down World of Warcraft and your items have just as little value as your golf clubs would have if every culture on earth suddenly lost all interest in golf.

Really, go read the whole thing. In context its much better ;)