Posted by Sulaiman Alhasawi on Nov 18, 2011 in
online games,
Tax,
Virtual Currency,
World of WarCraft
I have some thoughts regarding taxing virtual currencies. Virtual currencies that exist in online games, such as World of Warcraft, Second Life and many others.There two ways to have these currencies: inside-game activity or through an external intermediary such as “Gold faming companies” which you can buy these currencies by shopping in their website.I think once the virtual currency is converted into real money and transferred into your bank account ; the tax man will wave at you because you earning money , have an established website and a business , so you need to declare your income and profits and pay the appropriate tax . The Tax man ( for example the HMRC- the UK Tax authority) does not care where this money come from or what is the nature of the business ! All they care about is that your earned money and its time to give him a piece of your treasure 
. I have looked at the HMRC website and I could not find a law that describes that issue. All I was able to find is online gambling gaming that resembles gambling machines. IF you know any related law please let me know. I also welcome further discussions on that matter as I will be posting more tax topics in the future
Thank you !
Tags: HMRC, Second Life, Tax, Virtual Money, world of warcraft, WoW
In my previous topics I talked about virtual economy and virtual currencies. I mentioned that there are real money transactions between the real and virtual world.As things becoming more obvious , the famous auction house in the cyber world : eBay is depending entirely on PayPal to manage the financial services. There is a a success between the two firms , beside don’t forget that PayPal is owned by EBay now.
In an old topic I explained briefly about the auction house in Wow and how it works and lessons learnt from it. Blizzard company will be releasing (in the future) Diablo 3 which is now under development and Blizzard announced that it will implement real money to Diablo 3 currency. Which means , that you can use real money to purchase items in Diablo 3 and you can cash your Diablo 3 currency into real money.
I thought that Blizzard is going to do that all by itself like other gaming companies “Half life” where you can perform money in/out through the company itself- no intermediaries . But it turned out that Blizzard is learning from the E-auction monster : EBay and joining PayPal the famous E-accountant or E-bank to manage its gaming transactions.
This is going to be interesting , because if you have a real PayPal account you can use it to play Diablo 3 or to buy/sell items or currencies. It was estimated that 70% of gamers world wide have Paypal accounts.The question is and it was raised before in research : will the “Governments” tax the virtual currencies when they are converted to real money ?
Tags: Blizzard, Diablo 3, Ebay, MMORPG, PayPal, Tax, Virtual Money, world of warcraft, WoW
Virtual Economy Research Network (VERN ) is a hub for every one interested in the topic of virtual economy. The virtual economy covers virtual currencies and goods within games and other platforms. The economy of virtual worlds is growing rapidly and caught the interest of academics and researchers. According to some studies the GDP of popular MMORPGS games like World of Warcraft, Second Life and EVE online is similar or exceeds the GPD of many countries (mentioned by money.co.uk), this is serious stuff.
Virtual Goods Insider is an excellent blog that covers the topic “virtual goods” which I found very useful and enlightening. However that blog covers any thing that is digital and virtual not just games such as virtual gifts and digital media. The contents of VERN and the previous blog is big and I wish you can learn from them. Good Luck.
Tags: EVE Online, Second Life, Virtual Economy, Virtual Goods, Virtual Money, world of warcraft
In my post: What can Games teach us about money Part 1 , I introduced some basic elements about money skills and how we can learn these skills from games such as Monopoly and Farmville. This post is a continuation of the same topic and is approached by digging deeper into other games such as World of Warcraft which of – course – is rich of many financial definitions.
What’s the economy inside games such as World of WarCraft (WoW) like. The virtual currencies that they use inside these games is the attention of many gold (a virtual currency term) hunters. Please read my old post Trading Virtual Money for an in-depth coverage of the opportunities of Game currencies. The gaming industry (including game currencies) is milking real money- with huge quantities. Many economists studied the economical signals such as the GDP of these games. In my other posts I wrote about how these games can teach you about money. Its not just that but such skill or craft can be lent to those who want to have virtual money easily (players). I have seen many financial tools being used in MMORPG games such as World of Warcraft which helps you to manage many business aspects inside the game. In wow there is an auction house , trades and crafts which generate goods-that can be sold and you have to deal with expenses and incomes during play time. All these aspects are very similar to real business life. Many skilful players are selling their expertise outside the game in the internet by offering guides on how to make virtual money . The trade tools (addons) being made by players who understand wow money system well are getting popular and a must for any player who wants to profit from the virtual market. For example, there are charts in particular addons, these addons resembles technical analysis charts that are used in IRL (in real world) investing by sophisticated investors. In the case wow, you need these tools to understand the market (auction house). The auction house is very similar to popular auctions in real world and how they operate such as eBay. Like eBay, understanding the market and utilizing the necessary tools is vital in obtaining results.
What does this topic has to do with my blog niche “entrepreneurial tools” you may ask . It does a lot by learning how to understand the multitude of business operations that are being operated in the wow economy , you can learn a lot of concepts that you can apply in real life. You can learn about item pricing and by using some tools you can spot under, fair or over priced goods. You can also learn about bidding and item listing expiry. You can also learn negotiation with other players when they post their items in the trade channel ( a chatting channel). You also learn that you can make money not just by specializing in a trade, but by becoming a trader and profiting from prices arbitrage ( a very important concept in economy). You will also learn the best times to list items and when not to by understanding the market trends and this is also a very important lesson for real world trading. You can also exercise your entrepreneurship skills in wow by being creative in offering new services or unique items for other players. There are many players who learnt from wow lessons and started to play in the real economy. Like Rich dad said : playing (money) games benefits you in real money, which I totally agree with.Being good at it gives you the inspiration to ask your self , if I’m good at virtual money why not apply my skills in real world. It can not be as simple as that but it could be a good start.
Tags: Accounting, Auction House, Ebay, Economy, Finance, Gold, make money online, MMORPG, Virtual Money, world of warcraft, WoW
Making money from virtual money is becoming increasingly a common phenomena. I’m talking about the business of selling and buying GAMES’ currencies (gold) such as World of Warcraft , EverQuest or Ultima Online ..etc. People are willing to pay real money in exchange for virtual money for the sake of having fun and pleasure. I even saw my friend who paid real money to get virtual money to play a game in FaceBook.The number of virtual currencies providers (stores)are increasing exponentially. These stores are spread everywhere in the world. From East-such as China (which has the biggest ratio) to the west. The economy of such games is enormously huge, it was estimated that GOLD money industry is valued in billions of Dollars. However some game providers ban trading gold, because it harms the game’s economy.
The game industry has attracted many of academics’ attention. They came up with many theories from a variety of scientific backgrounds (psychology , economy, sociology, etc.) doing their best to explain what’s happening inside and outside games, as games becoming the information age’s big event. One of the interesting analysis that I came across on Youtube was done by a game researcher and virtual money trader Julian Dibbell. He even wrote a book about making money from games.
I’m wondering, how many other models are similar to the above which are based on making businesses from virtual services or currencies. Some game companies organize tournaments, in which they reward skilled players when they win. This could be a good income source for gamers who are good at playing and are passionate about it. Its like snooker, you get paid for being professional. If you have good experience at testing and developing games, companies might hire/pay you to test their games. You can also sell your service in the form of consultations, by writing for example guides or eBooks. There is the business of “Power Levelling” : this service is provided by some stores to help you achieve the status/rank/gear that you wish to obtain. They charge you real money for it, and it varies depending on the difficulty or other factors.
If you claimed- in the past (correct me if I’m wrong) that you can make money from playing games,nobody would listen to you and they probably would be right. Nowadays its possible to play for fun and make money out of it, thanks to the technology and the internet.
Tags: buy sell gold, Everquest, games theory, make money online, online games, Ultima online, virtaul money, Webpreneur, world of warcraft, wow kuwait
Thank you !
