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Virtual currency proves real issue
Last Updated(Beijing Time):2007-03-09 09:48

Uses include purchasing software downloads, music and movies, and sometimes real goods. For instance, one site that sells sex-health medicine allows buyers to pay in Q coin.

"It's convenient and safer than paying by bankcard online," said Dai Weihui, a professor with Fudan University specializing in e-commerce study.

"It has become sort of a 'universal equivalent' among traders, but in fact it's not, for it can't be converted into the real money through legal exchanges."

However, e-commerce sites have provided a place for Q coin owners to cash in. On Taobao.com, China's most popular online auction site that accounts for more than 60 percent of consumer-to-consumer trading, more than 500,000 yuan (62,500 U.S. dollars) worth of Q money is traded each day.

Apart from Q coin, there are other variations of virtual money in circulation on the Internet, but they are much less popular.

Baidu.com Inc, China's most popular search engine, once proposed that different virtual money be exchanged through its Baidu coin, but to no avail.

Dai estimated that there is 10 billion yuan worth of virtual money being traded each year in China and the trading volume is expanding 20 percent annually.

In comparison, total individual consumer spending last year was 277 billion yuan, according to the Internet Society of China.

"Large amounts of virtual currency in circulation could hurt the real-world financial system, providing opportunities for criminal activities like money laundering, and it would cause instability in the real-world money supply," said Shaun Rein, managing director of Shanghai-based China Market Research Group.

   

As virtual money is issued by an enterprise, not the central bank, the supply is not subject to the country's monetary policy.

Source:Xinhuanet 
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