By Greg Bayles

This essay examines virtual governance and economy as essential components in the foundations of virtual and digitally-hybridized civilizations. It looks at existing social and political systems in two online worlds, EVE Online and Second Life, and examines the virtual currency Bitcoin as a potential model for robust, independent virtual economies. This essay closes with commentary on the increasing hybridization of real and virtual worlds and calls for exploration of these novel environments.

Recent years have witnessed a flourishing of digital spaces, and with the onset of Web 2.0 services like Facebook, YouTube, and Twitter, the digital world is becoming increasingly pertinent within real-world spaces. With a majority of the world’s physical frontiers swallowed up in expansionism, many people are looking to digital spaces as a new frontier—a place wherein they can establish their own culture and stake their claim in the rich and vibrant future of the Digital Age. Already we see the close integration of real and virtual civilizations as we know them, and while it is yet to be determined whether independent, digital civilizations will arise from this new frontier, the future will surely witness further advances in this line of thinking. Although, at this stage of its progression, the Internet and its constituent communities are still very much dependent on real-world authorities and spaces, the foundations are already in place for the eventual emergence of virtual civilizations. Virtual spaces are becoming increasingly independent, and while they necessarily remain linked to the real world, virtual spaces nonetheless provide the social underpinnings for the genesis of digital civilizations through their facilitation of virtual government and economy.

The concept of digital governance is already taking root among many Internet communities, providing a key foundation for the future emergence of digital civilizations. In fact, a number of hybrid forms of digital governance are already emerging in various online communities, virtual worlds, and video games. For example, in Second Life, Linden Lab’s online virtual world wherein users can do everything from buying and developing virtual property to organizing in-game academic conferences, there have been numerous attempts to establish sovereign states or collectives of Second Life users. The oldest and most well-known is the Confederation of Democratic Simulators (CDS), a loose affiliation of five sims, or virtual geographical regions, which operates cooperatively under a sophisticated, republican system of government (“The Confederation of Democratic Simulators”). Citizens take part in biannual elections to select representatives for the Scientific Council, Executive Branch, Civil Service, and Representative Assembly, which are the Confederation’s respective judiciary, executive, administrative, and legislative organs. The members of CDS, who hail primarily from North America and Europe, voted to adopt a constitutional government based loosely on the United States Constitution and likewise ratified the Universal Declaration of Human Rights as one of the nation’s founding documents (the CDS Constitution). Thus, though Linden Lab maintains actual governance of the system as a whole, users within CDS have managed to create, in some sense, their own civilization despite its inherent dependence upon real-world legal structures, cultural influences, and server space.

A similar push toward digital sovereignty found its roots in a more primitive, though accelerated, development of virtual civilization in the popular, multiplayer online–role-playing game EVE Online. As Pétur Óskarsson notes in the white paper for EVE’s elected representative council (the Council of Stellar Management), EVE’s current system of governance progressed through various stages of cultural and social development, beginning with small, hunter-gatherer groups of players and evolving rapidly through tribal societies, increasingly stratified social structures, and at last, complex, multi-regional civilizations with sophisticated social hierarchies and administrative institutions. Óskarsson writes, “When the game was officially launched in May 2003, no established player infrastructure existed,” but as players flocked to EVE’s seemingly limitless science-fiction, space universe, the need to provide more sophisticated modes of governance and conflict resolution quickly became apparent (2). This in turn gave rise to formal institutions, corporations, law-keeping groups, and diplomatic bodies. What had once been dominated by small bands of loosely organized individuals evolved into a complex network of universities, manufacturers, trade organizations, political entities, and religious groups, all with their own intersecting interests and modes of governance. As in Second Life, the EVE universe is nonetheless maintained and regulated by a real-world entity (in this case, the Reykjavik, Iceland based game company, Crowd Control Productions ) but EVE has nonetheless facilitated the emergence of highly developed sociopolitical systems and has demonstrated online communities’ potential for self-governance and civilization.

In some sense, modes of governance within Second Life, EVE Online, and other digital realms have brought the virtual and real worlds together. In Second Life, for example, numerous player-run sociopolitical groups have sought social change through petitioning game designers and facilitators at Linden Lab. On November 11, 2013, the United Content Creators of Second Life (UCCSL) wrote to Peter Gray, Linden Lab’s Director of Global Communications, to contest certain provisions of Second Life’s terms of service as pertaining to content ownership within the virtual world (Sabra). The introductory address, however simple, represents a unique union of virtual and real interests and demonstrates the principle of self-organization and governance within the Second Life community. Second Life content creators not only organized themselves into a sort of council or interest group but also elected council facilitators, tactical teams, and guild representatives for animators, machinimists, sculptors, scriptwriters, and other organized creative bodies. The list of grievances that they submitted to Linden Lab should ring familiar in light of real-world colonial entreaties for rights and freedoms. Some have, admittedly, expressed apprehension as to the position of virtual citizens toward seemingly despotic world-builders and server hosts. This group suggests, as does Richard Knol, that in seeking to moderate virtual interactions based on real-world models for ownership, sociality, trade, and influence, we only perpetuate disparities and injustices existent within physical spaces. Knol writes, “This can become a big barrier for civilizations during the first few years, and can only slowly be settled as the civilization matures.” However, as groups like the UCCSL have demonstrated, little by little those barriers are coming down as virtual citizens recognize and assert their rights to self-governance within virtual worlds.

In EVE Online, Crowd Control Productions (CCP) took user feedback in a different direction, but their solution illustrates an even more intriguing union of virtual and real spheres with regard to governance within digital spaces. In the white paper for EVE’s Council of Stellar Management, Óskarsson writes simply, “individuals have the right to influence how society is legislated. . . . The goal of CCP is to provide EVE’s individuals with societal governance rights.” Rather than using end-user license agreements and terms of service to limit players, CCP Games has created a sort of opt-in citizenship intended to both protect players and incorporate player feedback into the macro- and micro-level development of the gaming universe. This is facilitated through “direct contact and dialogue with CCP” by a council of elected representatives from various in-game legal institutions, corporations, religious factions, and interest groups (Óskarsson ). The Council of Stellar Management, made up of players from all ages and backgrounds, meets with CCP biannually at multi-day summits in Reykjavik in order to discuss user interactions and social initiatives (Schiesel). The interesting part, though, is that these summits are hosted and funded entirely by CCP, and travel expenditures and accommodations for Council members are covered in full. CCP has realized that players not only want to self-govern but actually do self-govern within virtual worlds. Providing this real-world means of influencing and shaping the virtual player-universe has become a powerful tool in promoting digital governance and improving the overall quality and pertinence of EVE’s sociopolitical structures.

Even more interesting is the way in which virtual or online paradigms have been applied to real-world settings with regard to governance and citizens’s rights. Iceland, for example, built upon the idea of crowd-sourcing and social media communities in drafting its 2008 constitution. Finnur Magnusson, Iceland’s Chief Technology Officer for its Constitutional Council, notes that although efforts to organize drafting committees and revisionary groups had been underway for almost forty years, little had come about as a direct result of parliamentary action (qtd. in Kazoka). On the wake of economic disaster and broad unrest, however, Parliament turned to Facebook and Twitter for constitutional reform. Registered voters elected twenty-five everyday citizens to, in effect, draft the nation’s new constitution, but any of Iceland’s 320,000 citizens could send in comments and feedback through Twitter, Facebook, or an interactive government website dedicated to the new grass-roots constitution (Morris). When the constitution was put to vote for ratification by the people, it was approved by a supermajority (more than two-thirds of the vote) and would have taken effect in 2012 if not for parliamentary opposition. Although in many instances, people are still unable or unwilling to take social media and other digital environments seriously, especially not in terms of weightier matters, like politics, this case demonstrates the power of digital communities to effect meaningful change in the world and to bring people together in new modes of self-governance. Although most digital worlds and communities find their sociopolitical foundations in real-world models, we see nonetheless that if given a chance, digital paradigms can serve as models for democratic governance within real states. This fact also hints at their broader application as a foundation for digital governance and hybridized virtual civilizations.

Virtual economies have likewise demonstrated the potential for the emergence of digital states within online worlds and social communities. While virtual economies still exist primarily as subsidiaries to real economies, emerging currencies and globalized economic paradigms have provided the necessary underpinnings for independent, digital monetary systems and nascent sociopolitical bodies. One fairly recent system of this sort is the digital currency Bitcoin. Bitcoin in some sense serves as the heir to a long line of failed virtual currencies, but many people have hopes that this year-old system will prove at last the potential for the stability and independence of virtual economies from real-world systems. Already, Bitcoin is gaining acceptance among established institutions, the first Bitcoin ATM having opened just months ago in Vancouver, Canada (Wagner). A number of restaurants and commercial establishments in various places, such as the United States, Japan, and France, have begun accepting the online currency as payment. Bitcoin hopefuls likewise bank on the currency’s recent surges in both value and circulation on online platforms like Mt. Gox, a Bitcoin exchange site, and Baidu, one of China’s largest search engines and media hosts. Aside from this surge, Bitcoin was recently recognized by a US federal court as legal tender, a fact that has some Bitcoin users celebrating and others worrying about the possible legal implications in terms of government regulation and taxation (Coldeway).

The reality is that Bitcoin and other virtual currencies remain necessarily attached to real-world regulatory powers and market conditions, but the relationship is by no means one way. Virtual and real-world economies are highly interconnected, and especially within the modern world of online shopping and banking, digital economies are proving their relevance despite overt skepticism among economists, politicians, and the broader traditionalist body. Various forward-looking thinkers, however, have recognized the profound influence of digital economies and currencies on real-world systems, even suggesting digital causes for recent trends in real-world markets. For example, Edward Castranova, a professor of telecommunications at Indiana University Bloomington, suggests that the recent global recession finds its roots in a flow of real money into virtual economies. In “An Exodus Recession,” he explains that with more and more Internet users taking up residence in online worlds and virtual economies, it is only natural that we should see a recession in terms of real-world market values, as intellectual and virtual properties are being created and marketed in spheres external or inaccessible to regular modes of market analysis. Joe McKendrick, an independent analyst and writer for Forbes magazine, notes a similar trend, suggesting that GDP fails to account for a great many virtual transactions, which compose a vast and profitable subset of the global market: “Potentially, the economic value in free digital goods—regarded as a big ‘zero’ in traditional GDP measurements—is actually worth quite a bit to the economy in terms of advertising (the consumer ‘attention’ factor) and the enhanced innovation delivered across various business sectors.” Some have sought to quantify, albeit roughly, the impact of this oversight, and the data are staggering. Erik Brynjolfsson, an MIT professor of management science, estimates this value at approximately $300 billion per year in the US economy alone (qtd. in McKendrick). The impact on foreign economies is, perhaps, harder to determine, but is no doubt in the range of hundreds of billions of dollars if not more. If, as many socialists and anthropologists propose, capital or social surplus is a prerequisite for the emergence of civilizations, then virtual economies’ multi-billion dollar assets demonstrate not only the robustness of digital economies and virtual currencies in influencing real-world markets, but also their potential for stability and greater independence in purely virtual settings and hybridized models of government and civilization.

If that on its own is not sufficient to demonstrate the impact of virtual economies on real-world markets, then the 2006 devaluation of the Chinese Yuan by QQ coins (virtual play money) should thoroughly illustrate the point. When Tencent, China’s leading instant message service-provider, began selling virtual QQ coins as a way for users to buy computer games, ringtones, and other similar items, few could have predicted that virtual play money could have any kind of impact on China’s real-money market (Ewing). However, the virtual currency grew rapidly in circulation, and Tencent customers began using QQ Coins as payment for other services and for products like clothing and flowers. Many still expressed skepticism toward the possibility of a virtual currency having any significant effect on a real-world market, but eventually, it became necessary for Chinese officials to put an end to the QQ economy. As Jane McGonigal notes, “Young adults in China . . . spent so much play money, or ‘QQ coins,’ on magical swords and other powerful game objects that the People’s Bank of China intervened to prevent the devaluation of the yuan (sic)” (16). This episode reveals both the utility and versatility of virtual currencies and provides an interesting look at modernity’s evolving thought processes as to legitimacy and authority of these currencies. In previous times, the authority to issue currencies was reserved almost solely by formal governmental institutions. Today, those barriers are coming down. People are becoming more and more comfortable with the idea of robust, independent virtual markets, and with this shift comes the potential for the emergence of not only viable virtual currencies but also complex digital marketplaces, nations, and states.

Perhaps this notion of virtual nations is still unrealistic in a practical sense, but in a profound way, digital economies and currencies have become representative of sorts for sociopolitical groups and nations, rallying people from all across the globe around common cultures and ways of thinking. For example, on bitcointalk.org, a forum for discussing this currency phenomenon, a Bitcoin user known as Bitsalame suggested that in maintaining a currency distinct from other world currencies, the Bitcoin community had defined itself as an independent nation (as distinguished from a state, which occupies a defined territory). Bitsalame wrote, “Currencies have always represented a nation and I think that we ARE a nascent nation, albeit a virtual one, a legitimate one nevertheless.” The concept as a whole is perhaps a bit underdeveloped, but Bitsalame’s contention raises an interesting question: are nations defined by their currencies? What is the role of a currency (think of the Euro, for example) in uniting disparate groups with collaborative improvement? With the growth of the global market and the increasing prevalence of virtual currencies, the potential for independent, digital civilizations is becoming more and more pronounced. And while digital economies necessarily remain linked to the real world, the economic and social underpinnings are nonetheless in place for the eventual genesis of hybridized digital civilizations within real and virtual spaces.

As new technologies make virtual spaces more immersive and integrated, we will increasingly witness the interplay of virtual and real worlds. Already, new technologies like 3D printing are allowing for the externalization of the digital world and its integration into physicality. Smart phones, tablets, laptops, and other devices have also made the Internet an essential part of everyday life for a large portion of the global population. The 20th century saw the development of film, but the 21st century will see the increasing ubiquity of augmented reality, wearable computing, and other advancements that are now only dreams. Luke McKinney perhaps phrased it best when he said, “if you’re noticing wire frame graphics in your peripheral vision, don’t worry, that’s just the borders between reality and fantasy breaking down.” With the rise of augmented reality and new technologies like Google Glass and the Occulus Rift headset, the virtual realm is becoming a sub-layer of our real-world space. Part of the future of civilization will entail coming to terms with the hybrid nature of our daily realities. If the Internet represents modern civilization’s primary institution of power as William McGaughey suggests, then only those who are able to navigate the Internet’s varied virtual spaces will be prepared to meaningfully impact civilization as we know it and to stake a claim in the bright future of the Digital Age.

Works Cited

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