There’s a new podcast that I like that covers business in China named China Econ Talk. One of the episodes briefly mentions a virtual currency developed by Tencent, and there is not much literature covering its success. Within a few years of operation, Tencent’s virtual QQ coin caught the attention of China’s monetary policy experts. The response to virtual currencies in China is familiar to anyone following bitcoin news therefore I thought I would share a brief story about QQ coin — an early virtual currency.
Tencent launched the QQ instant messaging app in 1999 and operates today with close to 1 billion users. During its early growth, Tencent began to develop infrastructure for the digital goods ecosystem. QQ Coin is a project created by Tencent in 2002 that allowed users to purchase digital goods natively within the QQ app. Soon after launch, it became wildly popular and was traded on secondary markets. Gamblers joined the markets to speculate and drive the price of QQ coin. In a few weeks in 2007, QQ Coin’s price rises by 70%.
“The Bank will strengthen management of the virtual currencies used in online games and will stay on the lookout for any assault by such virtual currencies on the real economic and financial order.” — Bank of China in 2007
There was legitimate worry within China’s central banking circle that Tencent’s virtual currency would have an affect on the price of the Yuan.
“The QQ coin is challenging the status of the renminbi [yuan] as the only legitimate currency in China.” — Public prosecutor Yang Tao
The app in 2006 had more than 200 million users, and users began to accept QQ Coin as a legitimate payment system. Tencent designed QQ coins to be used as a native currency within the app, however a creative spontaneous order developed where QQ coins were traded outside the app with real value. The dramatic price increase led by speculation soon drove adoption. Some retailers accepted QQ coin in exchange for real world goods.
Regulators noticed the mania and imposed regulations on Tencent to drive out gamblers and speculators in the QQ ecosystem.
As an early virtual currency, Tencent’s QQ coin seems familiar with the speculation in cryptocurrency.
Ideas are powerful because they influence the world around us. Reading the original text that shapes the ideology of Bitcoin developers, influencers, and leaders is a great way to start understanding Bitcoin. The philosophical origins of Bitcoin and its strong community can be linked to the ideas found in modern libertarianism. I’m sharing a list of resources that have helped me understand economics and libertarian philosophy and I hope it is useful to you. The motivation of this blog post comes from this blog post on Austrian School economics written by Saifedean Ammous. He’s the author of Bitcoin Standard which is a must-have book.
Henry Hazlitt’s Economics in One Lesson
Economics in One Lesson is the most digestible book on this list with insight on every page. Hazlitt was able to compress an undergraduate degree in economics to this single book.
Frederic Bastiat’s The Law
Frederic Bastiat’s Economic Sophisms
Bastiat was an economist in 19th century France. He wrote about opportunity cost, the problem with protectionism, and how the state condones legal plunder.
Milton Friedman’s Capitalism and Freedom
Milton Friedman’s Free to Choose
Milton Friedman’s Money Mischief
If you cannot find the time to read Milton Friedman’s books, do find the time to watch this incredible PBS series from the 1980.
FA Hayek’s The Constitution of Liberty
FA Hayek’s Road to Serfdom
Ludwig von Mises’ Human Action
One of the definitive texts for the Austrian School of Economics.
James Buchanan’s Politics as Public Choice
Public Choice theory is underrated and helps explain why public institutions behave they way they do.
Murray Rothbard’s Ethics of Liberty
Robert Nozick’s Anarchy, State, and Utopia
Bleeding Heart Libertarians