I agree that the simExchange could work with real money using other types of securities; my point is that it could never work in its current form. If it could, then the exchange could expect to make a gozillion dollars from IPOs of game shares. In a corporate IPO, the owners give up some of their claim on the assets of the company in exchange for cash. Since game shares aren’t claims on anything tangible, a game stock IPO would generate free money for the exchange.

Again, another advantage of SimExchange is that because of the obsolescence of game titles, while the contracts are perpetual, they effectively are not “perpetuities”, and will react more straightforwardly to incoming data. The data just has to be reasonably accurate and frequent.

How to discount those future sales is a consequence of the play-money / rank-order structure of the exchange. Essentially the risk appetites that such a game causes will lead to a very high discount rate on sales in subsequent years. In other words, traders want to catch the initial high percentage 100,000 to 1 million move, and don’t care so much about the 1.5mm to 1.75mm move in year three.

This is also a consequence of the margining system, whereby it looks as though buyers must freeze the full value of a contract even though the value should not go down in terms of actual sales, barring a restatement. Sellers only need to freeze a certain percentage of the contract value though, and this asymmetry could further mitigate buying manipulations.