A historical look back, since there is nothing new under the Sun. "So why has China been so quick to embrace the virtual currency? It has been down this road before. In 2009, the government moved to staunch the rapidly rising phenomenon known as QQ, the virtual currency from social juggernaut Tencent (TCEHY). In just a couple of years, QQ had grown to such an extent that some estimates put it at 13% of the Chinese cash economy. It was threatening to supplant the yuan in a viral tsunami that showed no signs of abating. At its height, people similarly gathered in public places to trade QQ, and shopkeepers began accepting it for payment. Because Tencent controlled QQ through central online reserves, the Communist Party's response was swift, hobbling QQ at its knees and bringing it well back into line overnight. How did they do it? Since QQ was centrally managed, all the Chinese government had to do was tell Tencent to limit QQ's use or face a total shutdown of their business. So Tencent reeled it in. Such a move is not so easy with the decentralized cryptography of Bitcoin, and Chinese officials know that." ----------------------------------------------- 2009: "China outlaws virtual currency for real-world items" http://arstechnica.com/gaming/2009/06/china-outlaws-use-of-virtual-currency-for-real-world-items/ ------------------------------------------------- 2007: "QQ finally made headlines in the Wall Street Journal. Largely ignored here in the west, the hottest virtual currency in China is the QQ. Created by Tencent Holdings Ltd, âQQ Coinsâ were originally invented as a means for trading virtual items in online worlds and through their popular instant messaging program. For awhile it was just like any other coupon-trading system, but then third parties started accepting QQ as payment for real world services. The value of QQ began to climb as demand rose, and currency traders began making some quick Yuan buying and selling the virtual currency. Small shops started springing up everywhere offering discount QQ Coins." http://alphavilleherald.com/2007/04/qq_the_skyrocke.html "âThe trouble starts when a virtual currency that isnât backed by a trusted government, becomes linked to a real one that is through an exchange rate. Virtual currency brokers call that RMT, or real-money trade. When that happened to the QQ coin, it effectively turned into a parallel currency operating alongside the yuan, says Yiping Huang, the chief Asia economist of Citibank." -------------------------------------------- And virtually related crimes from 2009: "A Chinese man who extorted virtual items and currency from a fellow Internet cafe user to improve his performance in online games was sentenced over the weekend, local media said. With three friends, the man beat up the victim and forced him to turn over virtual currency worth 100,000 yuan (US$14,700), China's official Xinhua news agency reported late Sunday. The attackers also extorted virtual equipment for online games from the victim, local media said. The men were each fined and the main attacker sentenced to three years in prison by a court in northeastern Liaoning province." http://www.pcworld.com/article/165447/article.html