This is the second step in setting up a virtual money system.
The first step of the second step is allow exchange among the virtual currencies that can be exchanged for one US dollar (see table, courtesy Ivan Walsh). These will have, I think, to include the Facebook credit, which can be purchased at a rate of 10FC to the dollar (I use “FC” because no-one seems to be using it).
There is no virtual currency exchange that I could find. Gaming Open Market launched a Virtual World Currency Exchange in 2003 and closed it in 2005. In this post (July 30/Wagner James Au) discusses the introduction of a new virtual currency in an “increasingly competitive and crowded” market as Facebook’s system is introduced with an “inevitable” “standards war” to follow.
Let’s assume that gets going.
Then assume that Facebook sets up a virtual bank, using the tools created by the Virtual World industry, backed by the American government – this is a big assumption, but as we have seen there is precedent. Or not backed by the American government, but funded by Facebook and a group of investors. Or funded somehow else.
The question is then what will the Users of Facebook (the inhabitants of facebook) use their Credits for, since it is not accepted in the Real World as a Real Currency. Unlike the Virtual Worlds in which inhabitants can spend money on virtual goods there are no virtual goods on Facebook to buy.
Well, not on Facebook but we have plenty of digital goods lying around on cldwrld sitting on the infinite shelves of the infinite storage. WordPress themes, for example. Not usable in the Real World. Ebooks. TV episodes. Digital Music.
All available for purchase with Credits, withdrawn and deposited in the Facebook or MySpace or independent virtual banks, without touching Real World currency at all.
So here’s a scenario. I earn credits in a virtual game world. I put them in a virtual bank. I use them, using a virtual credit card to buy digital goods and my seller puts them into her virtual bank. Until those Credits are exchanged for dollars (or other currencies) the Real World has no jurisdiction over them. As far as I can see.
So there we have it. A completely free-floating virtual money system (as far as I can see. Let me know what your thoughts are).
And if you want Real World currency you exchange the Credits for dollars and if your bank doesn’t off that facility you exchange your credits at the monetary exchange for another currency which does have an exchange rate with real currency and off you go.
And all of this would be unregulated. At the simplest level consider trying to implement some kind of sales tax ….
But how would all this get started? The banks just print virtual money and control the supply like OPEC controls the supply of oil to keep this virtual money system on an even keel? I don’t know.
Well, that’s just my two cents on the whole thing. What ever happens there are exciting times ahead.
NB: As this post was going to press, someone pointed me to this video report by Andy Jordan at The Wall Street Journal entitled The Coming Currency Revolution and slugged: “A digital currency for Microsoft Outlook? Social Networks? WSJ’s Andy Jordan talks to currency renegades tired of big-government centralized cash, and desperate to make their own (legal) money systems.”
The report is dated Sept 8 2009. It’s pretty cool.