By now, the financial woes of Lehman, Bear Stearns, Washington Mutual, and the many other troubled banks is old news.
But we may need to start preparing for another round of bank failures … in the virtual world.
If indeed it happens, a character named Ricdic will likely be to blame. Ricdic is part of Eve Online, which I have never heard of, but according to this BBC news report “has about 300,000 players all of whom inhabit the same online universe. The game revolves around trade, mining asteroids, and the efforts of different player-controlled corporations to take control of swathes of virtual space.”
Ricdic, according to the article, runs a large ebank at the site, and pilfered some virtual funds, traded them to other players for real money, and made a down payment on a house and paid off medical bills.
In response to the news of the scandal, there has been a run on Ricdic’s bank. As consumers lose confidence in Ricdic’s banks, it won’t be long before people get the idea that they should take their money out of any bank in Eve Online. And why should this banking panic not spill over to other virtual
worlds? The entire virtual banking system may be brought down by Ricdic.
There is some irony in Eve Online’s banking crisis: Eve online is run by an Icelandic company. The real Icelandic banks were some of the worst casualties in the financial crisis, and as far as I can tell, not through any fault of their own. Unlike the American banks which crashed because of sub-prime debt
exposure, the Icelandic banks fell prey to an old-fashioned bank run. Because the Icelandic banks were so big relative to the size of the Icelandic G.D.P., there was no way for the government to guarantee the banks, and therefore nothing to slow the bank run once it got started.
Again according to the BBC, this isn’t the first time there has been trouble in Eve Online. Apparently earlier this year one of the game’s biggest corporations was “brought down by industrial espionage.”
(Hat tip: Clayton A.)
and 
. You can also watch it on 
Thank you for finally explaining that so well. This is just one more reminder that the only real way to keep our economy strong is not by raising taxes, but by keeping taxes low, fair and simple. I’ve been looking for a way to take action and contact our legislators and sign petitions and found some good policy the U.S. Chamber of Commerce backs (here). I don’t have a lot of money or time, but I figure this will help other people do good.
I didn’t really follow this when it happened but the BBC article seems mostly right. But “industrial espionage”? That’s not what happened. A Band of Brothers director realized his alliance is full of terrible people and he disbanded it just to have a lol. There was no espionage until Mittens came in at the end and kind of took credit for it. While this does cause the alliance to temporarily lose the in-game advantages of the solar system sovereignty system they still could have reformed and fought off the invading alliances without their defensive advantage. The deciding factor in most alliance level warfare is moral. The killing blow on the collection of corporations formerly know as Band of Brothers came from the increase in moral this story imparts in GoonSwarm’s, Pandemic Legion’s, Razor Alliance’s, and others’ common members to drop everything and move to Delve to stomp on their enemy’s face 23/7 for a month straight. “Brought down by industrial espionage” is misunderstanding Mittens’s role and overlooking a long history of war and corporate culture.
For more reading, try this article on Star Wars Galaxies economy,…
http://www.wired.com/gaming/gamingreviews/news/2004/05/63363
… and the Terra Nova blog, which tracks this more often than most.
http://terranova.blogs.com/
Sounds like most games use a “faucet-drain” economy, which would have most funds passing from “in-game faucets” (ways to earn) through one player to “in-game drains” (ways to spend money).
Eve Online, by contrast, actually has banks created by players, suggesting that its developers are much closer to structuring (not “running”) an economic system in which the player participate.
The best description I’ve heard of the difference is that in most games, the game provides the stories, and players provide the activities. In Eve Online, the players provide both the activities AND the stories.
Although most of these are not realistic economies, perhaps they are a better environment to allow some form of experimentation with economics and economic theory – something that is hard to do in the real world.
If the radical right crazies take control of this country, all former citizens will become…
Virtual humanoids.
Suggesting the Icelandic banks were the victims of forces beyond their control is a real whopper. The banks banks were the authors of their own misfortune. They took hot money. The collateral was worthless. Thier drank their own kool-aid. They played crony capitalism. The collapse was swift and inevitable.
“Apparently earlier this year one of the game’s biggest corporations was “brought down by industrial espionage.”
This statement is slightly incorrect.
And this is the truth:
The games largest _ALLIANCE_ (formed by plenty corporations) was brought down by _ESPIONAGE_
(there was no industry involved)
One hostile player gained trust and sneaked up to alliance leadership power until he obtained
aministrative Access to the “dissolve alliance” button that would technically
disolve it, and all their common assets lose their defence
systems.
summary: “corporation” and “industry” was false, the rest was okish.
best regards, zool
EVE Online has industrial espionage all the time. In a game where a wild-west aesthetic is deliberately cultivated and there is a hard limit on resources, eventually large organisations like the player-run ones in the game have to start duking it out. Espionage is seen as a risky, but effective, means to do this.
I’d be surprised if it causes a bank run because players know more about the banks they put their money in than most consumers in real-world economies do. Players know who runs the bank, they can socialise with them and maybe even get out-of-game contact details – they can certainly contact them in-game if they know the name. It’s rare that bank customers have the phone numbers of the CEOs.
EVE Online is fascinating, although not to my personal tastes. I’m told they employ an economist to keep an eye on the game’s economy, and I can easily imagine the economist chipping in on the game design aspects as well – there’s more similarities between the two fields than one would think.
“The real Icelandic banks were some of the worst casualties in the financial crisis, and as far as I can tell, not through any fault of their own.”
You obviously know very little about the Icelandic bank collapse.
The Icelandic banks were robbed from the inside by their owners. There were no external forces that collapsed the worthless garbage Icelandic banks. They were doomed from the very beginning after corrupt politicians decided to sell the government run banks to their friends in 2003. Their “friends” turned out to be bunch of criminals.
Although it may not be obvious, Iceland is more corrupt than Nigeria!
The reason I know this. Well I have to live on this sorry island.