The Banking Executive Magazine - September Issue 2022

INTRODUCTION This article presents a complete overview of virtual economy. Fol- lowing a background overview of the rise of digitalization and virtualiza- tion of the economy, an introduction to the basic economic principles that can help in understanding the con- cept of virtual economy is presented. The article then present a complete overview of virtual economy. This covers the definition of virtual econ- omy, interaction between real and virtual economy, resources in a vir- tual economy, the economic theory of virtual worlds, the definition of a digital economy, virtual versus digital economy, virtual economy technolo- gies, steps to build a virtual econ- omy, virtual economy for businesses, and virtual economy and the rise of the metaverse. The article concludes with a future outlook and prospect of virtual and digital economies. THE RISE OF DIGITALIZATION AND VIRTUALIZATION OF THE ECONOMY The beginning of the 21st century was marked by an amplification of the processes of digitalization and virtualization of the economy. New market leaders do not simply digitize traditional business processes, but use digital platforms and digital tech- nologies as the basis of their business model. Their main assets are infor- mation (databases), algorithms to process databases, and employees' skills in working with data. More- over, the products and services pro- duced are digital and are often provided online, 24 hours a day, 7 days a week. Although information has always played an important role for society and business, the extent of its use and its role for the success- ful development of companies are increasing. Given the intangible na- ture of information, processing infor- mation databases is becoming the main factor in expanding the volume of the entire economy. The explosion of digital technology is rising the interests and expecta- tions of shareholders and investors. As a result, the shares of technology companies, and the entire stock mar- ket are growing steadily. The Stan- dard & Poor S&P 500 index has grown more than 4 times over the 10 years from spring 2009 to spring 2019, while the growth of the US economy and the global economy was 10 times less. the BANKING EXECUTIVE 8 ISSUE 165 SEPTEMBER 2022 VIRTUAL ECONOMY A COMPLETE OVERVIEW BY DR SOHA MAAD