Best of the Week
Most Popular
1.Bitcoin War Begins – Bitcoin Cash Rises 50% While Bitcoin Drops $1,000 In 24 Hours - Jeff_Berwick
2.Fragile Stock Market Bull in a China Shop -James_Quinn
3.Sheffield Leafy Suburbs Tree Felling's Triggering House Prices CRASH! - Nadeem_Walayat
4.Bank of England Hikes UK Interest Rates 100%, Reversing BREXIT PANIC Cut! - Nadeem_Walayat
5.Government Finances and Gold - Cautionary Tale told in Four Charts - Michael_J_Kosares
6.Gold Stocks Winter Rally - Zeal_LLC
7.The Stock Market- From Here to Infinity? - Plunger
8.Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - MarketsToday
9.Electronic Gold: The Deep State’s Corrupt Threat to Human Prosperity and Freedom - Stewart_Dougherty
10.Finally, The Fall Of The House Of Saud - Jim_Willie_CB
Last 7 days
Universal Credit Doomsday for Tax Credits Cash ISA Savers, Here's What to Do - 18th Nov 17
Gold Mining Stocks Fundamentals Q3 2017 - 17th Nov 17
The Social Security Inflation Lag Calendar - Partial Indexing - 17th Nov 17
Mystery of Inflation and Gold - 17th Nov 17
Stock Market Ready To Pull The Rug Out From Under You! - 17th Nov 17
Crude Oil – Gold Link in November 2017 - 17th Nov 17
Play Free Online Games and Save Money Free Virtual Online Games - 17th Nov 17
Stock Market Crash Omens & Predictions: Another Day Another Lie - 16th Nov 17
Deepening Crisis In Hyper-inflationary Venezuela and Zimbabwe - 16th Nov 17
Announcing Free Trader's Workshop: Battle-Tested Tools to Boost Your Trading Confidence - 16th Nov 17
Instructions to Stop a Dispossession Home Sale and How to Purchase Astutely at Abandonment Home - 16th Nov 17
Trump’s Asia Tour: From Old Conflicts to New Prospects - 16th Nov 17
Bonds And Stocks Will Crash Together In The Next Crisis (Meanwhile, Bond Yields Are Going Up) - 16th Nov 17
A Generational Reset That Will Redistribute Wealth to the Bottom 60% Is Near - 16th Nov 17
Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - 16th Nov 17
Gold’s Long-term Analogies - 16th Nov 17
Does Stripping Streets of ALL of their Trees Impact House Prices (Sheffield Example)? - 15th Nov 17
The Trump Administration’s IP Battle Against China - 15th Nov 17
5 Ways Bitcoin can Improve its Odds of Becoming the Future of Money - 15th Nov 17
These Headlines Say Gold is Building a Base for Something Big - 15th Nov 17
Protect Your Savings With Gold: ECB Propose End To Deposit Protection - 14th Nov 17
Gold on the Ledge, Trend Forecast - 14th Nov 17
The Unbearable Slowness Of Fourth Turnings - 14th Nov 17
Silver Sign’s Confirmation & More - 14th Nov 17
Could This Be The End for Tesla? - 14th Nov 17
Harry Dent’s Fourth Cycle: More Evidence of Stock Market Downturn - 14th Nov 17
Why Having Good Credit Is Important If You Want to Invest - 14th Nov 17
The Bitcoin Bubble Explained in 4 Charts - 13th Nov 17
How the US Has Secretly Subsidized China to Produce Eco-Unfriendly Solar Panels - 13th Nov 17
The Increasingly Unstable Middle East Must Be On Every Investor’s Radar - 13th Nov 17
Stock Market Critical Supports are Being Challenged - 13th Nov 17
The One Chart All Investors Should See Before 2018 - 13th Nov 17
Short-Term Stock Market Uncertainty Following Recent Rally, Will Stocks Continue Higher? - 13th Nov 17
Is Hillary Just the “Fall Guy” for the Intel Agencies and their Moneybags Bosses? - 12th Nov 17
Stock Market Correction Phase - 12th Nov 17
Finally, The Fall Of The House Of Saud - 12th Nov 17
Bitcoin War Begins – Bitcoin Cash Rises 50% While Bitcoin Drops $1,000 In 24 Hours - 11th Nov 17
E-franc, E-krona... E-volution? - 11th Nov 17
Gold Investment Stalled - 11th Nov 17
Smart Ways to Get Loans Online - 11th Nov 17
What Can Pot Teach Us About Economics and Government? - 10th Nov 17
Can Stocks and Bonds go Down at the Same Time? - 10th Nov 17
Gold Market 2017 Will We See a Replay of 2015 and 2016? - 10th Nov 17
Oil markets turn bullish with shift to backwardation - 10th Nov 17
The Strange Behavior of Gold Investors from Monday to Thursday - 10th Nov 17
Where to Start Your Cryptocurrency Company - 10th Nov 17

Market Oracle FREE Newsletter

Forex Trading Free Week

Facebook Nation Unveils its New Currency

Companies / Tech Stocks Jan 31, 2011 - 09:40 AM GMT

By: Patrick_Henningsen

Companies

Best Financial Markets Analysis ArticleThe 21st century has certainly witnessed a progression towards a ‘cashless society’, but social networking giant Facebook are taking things a step further, throwing their hat into the ring with the introduction of a new compulsory monetary policy that will initially govern its share of the multi-billion dollar online games industry.


Imagine a virtual world where all goods and services are to be offered, bought and paid for by a new virtual-local form of electron currency. Facebook will be piloting such a scheme for their multimillion dollar online games market. As of July 2011, every social game developer on Facebook will have to offer the social network’s “virtual currency credits”.

According to a recent news release from Marketing Week, “Over the next five months developers will have to implement credits as a payment method within their games”. The games industry already accounts for 70% of the virtual goods transactions on the site.

According to Facebook, the social networking corporation are not insisting that their new online currency will be the only payment method available to users, and in exchange for their cooperation game developers will offered incentives if they use Facebook dollars exclusively. Compensation for compliance will apparently include early access to product features and premium promotion on their site, including promotion on the games dashboard and of course, premium ‘smart’ ad targeting.

What appears on the surface to be a simple online marketing tool to help consolidate a niche market share on the world’s largest social network, has in fact much more far and reaching consequences for hundreds of millions of users.  What Facebook have effectively achieved here is nothing short of a huge “game changer” in terms of envisioning a world without cash.

Foreshadowing of things to come

In 2011, it is a social reality that most people you know are, in one way or another, citizens of the Facebook Nation. The corporation’s success in capturing a near global monopoly of membership to their online platform has now given it the ability to dictate an economic mandate to both producers and consumers, in effect, controlling both the upper and lower loops of their virtual economy. This is an incredible position of power, but one which should come as no surprise to any economic student of monopolies. A severe lack of choice in the world of online communities has unwittingly(or not) positioned Facebook in the rolls of banker, retailer and governor.  It is certainly a trend worth noting at this stage, and one which may one day have real consequences for its members and their various cyber passions.

By issuing its own form of “virtual currency credits”, it is essentially creating its own money supply that may one day be the defacto currency for all transactions for goods and services that fall within the borders of the social network. This puts Facebook into a position of exception economic leverage. With any new form of ‘national’ currency- in this case, it’s the Facebook National currency, also comes the possibility of fluctuation in currency exchange rates. With this centralisation of power also comes the ability and means to control and even inflate the value of its currency in terms of supply and demand. This can also reflect itself in the value of all goods and services whereby the paying online community would have no choice but to comply to any new user monetary policy decrees or changes in value imposed on producers and users. One only has to look at their recent announcement to realise that this is indeed already the case.

A Brave New World: the cashless society

As the virtual community and virtual economy begin to replace the real ones, trends forecasters and futurists can begin to imagine a world where morning newspapers are replaced by online news, local markets are replaced by online supermarkets, community fundraising events are replaced by web fundraisers, fun fairs are replaced with online games and greasy spoon cafés are replaced by internet cafés. In case you haven’t been paying attention, in so many ways- that day has already arrived. Welcome to the virtual world. As we spend more and more of our time interfacing with this new world, we will invariably be performing many more monetary transaction there too.

Aside from the obvious differences in a cashless society- a world where  no notes and coins are ever physically held by the owner, there are also a number of other not so nice realities which citizens will be forced to accept. Chief among these are legitimate concerns that a cashless society would make “retailer resistance” aka choosing independent shops, buying direct or supporting local markets over mega supermarkets and national retail chain stores… nearly impossible. In addition to retailer resistance, cash ensures some level of anonymity on the part of its owner. Not so in cashless world, as electronic currency and transactions are and will always be recorded, track, analysed and in some cases- suspended.

With the introduction of a cashless society, citizens are also likely to lose their identities associated with national currencies like American Dollars, or British Sterling. But as they lose one identity, they will most certainly gain another. In this way, Facebook has taken the lead in supplying a monetary identity to its client citizens in the form of its ‘virtual currency credits’.

Perhaps one day we may also see ‘Apple Credits’ or ‘Nokia Kroner’ as mobile device transactions creep further and further into our economic routine. Either way you slice it, it is an incredible amount of power and influence which an elite clique of corporations now have over large sections of the global population.

As we have seen with the online games developers and their customers, resisting the Facebook marketplace is no longer an option, as it has already defined policy within the boundaries of its massive virtual community- even mandating what form of money can be used within the Facebook Nation. The decree is simple and clear, “if you are not in, you are out.”

By Patrick Henningsen

21st Century Wire

© 2011 Copyright Patrick Henningsen - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

peter tschipper
04 Feb 11, 12:51
another fiat currency

I don't mean to devalue what facebook has done for social networking or for how it is helping in the in egypt today

but i don't think creating a new currency, backed by nothing more than a digital number on a server, is going to help the world. We have enough problems with the worthless paper that's out there right now.

How about if facebook did something really great and created a currency backed by gold?


Shelby Moore
04 Feb 11, 13:46
Facebook currency

The currency has to be created. If it does not represent an exchange between tangible money, then it means who ever created it, is like a central bank, stealing that value and causing inflation as it spends it into the the ecosystem.

So in essence what Facebook has done is admit that their business model is an economic failure:

http://www.jperla.com/blog/post/facebook-is-a-ponzi-scheme

Now they will take down all the game developers with them, because their system could not sustain economic viability with a free market of game developers charging how they wished.

One thing is a virtual currency is a way for people in the developing world to earn income on Facebook and avoid the issues of money transfer and transactional costs. But the problem is that if Facebook doesn't back this currency with gold or silver, this it will just be stealing value via inflation and ripping off the entire ecosystem, eventually bringing the whole thing down.

The genesis of Facebook's demise will be decentralized social network. It is coming. The Napster or Gnutella version of Facebook is coming. I should know. Hint.


Alan
07 Feb 11, 05:29
Gold

Shelby: we get the hint, and I'm sure you can come up with

dynamite software. The issue is getting 200 million people

to migrate to a new platform. It will require more than

the snapping of fingers.

Mr Henningson: the numerous typos in your article are most

distracting. Couldn't you spare some minute for proofreading?


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife