The roster of nations is larger than you'd guess from the membership list at the U.N.: There are semi-sovereign statelets at sea, tongue-in-cheek micro-monarchies in the suburbs, even make-believe sultanates on the Web. According to a recent study by Edward Castronova, an economist at Cal State Fullerton, one such virtual polity now has an economy larger than India's or China's.
That nation, Norrath, is the setting for the online game EverQuest; it contains hobbits, monsters, much sword-and-sorcery mayhem, and a bustling business in loot and magic spells. From that trade, Castronova reports, there have emerged labor markets, deflation, and an underground economy, in which players pay for products offline in U.S. currency.
Yes, Norrath is imaginary, but to its citizens it is real enough. It is through a similar shared-but-subjective process that the dollar becomes a valuable token instead of a pretty piece of paper, that a policeman becomes an authority figure instead of a man in a funny blue suit. There's much to be said for life outside cyberspace, but don't get too smug when you think of the Norrathians. Even here in the real world, virtuality is the norm.