Making facebook dollars

Overview: Virtual currencies rates seem to be going up for 2008. This article reviews the causes for success and failure of virtual money and suggests social methods for launching a successful (virtual and non-virtual) eco-system.

Virtual currencies or e-money are not a new idea: Floz.com had tried to create a virtual currency a decade ago without success. Today, virtual money is common and strongly tied to virtual communities and social networks:

• Second Life – another known 3D social network is using the own Linden dollar to enable users to buy and sell land and fashion accessories.
• World of Warcraft – Players are paying real money to gain virtual gold and experience

Less known in the west but even more popular by user base criteria, Chinese and Korean social networks:

• QQ – A largest Chinese social network had created the QQ coin which is equivalent to one real Yuan.
• CyWorld – The largest social network in Korea had also created virtual money.

Based on the success of e-money in other social networks we could check what has been done in social network applications of facebook and OpenSocial.
In facebook, the hobo-wars application uses virtual dollars to encourage people to distribute the game, but till now there wasn’t a strong player that will create such currency for facebook applications. It is unlikely that immersive environment like Second Life and WoW so other incentives should be used to support the new facebook currency:

• Create an eco-system that will support the new currency and provide services in exchange for this currency.
• Provide real world services that will encourage users to support the new currency

In order to provide those requirements, e-currency partners are required to provide real world services in exchange for virtual currency. This request is not too much to ask vendors and service providers invest large amount of money to attract new clients.
One of the most appealing areas in which the e-currency service might be useful is VoIP:

• VoIP vendors provide a service that is highly connect to the PC and our virtual world
• VoIP service providers invest large amounts of money to attract new clients
• VoIP service providers own billing and authentication systems required to support e-currency service. The tokens or pre-paid cards are only a primitive system of e-currency which is not supported by other service providers.
• Telcos and VoIP service providers have service creation and delivery platforms which enables fast creation and launch of e-currency services

To summarize, e-currency is a successful service when launched correctly in social networks environment. Support e-currency requires the creation of an eco-system that will use the currency and provide virtual and subsidized real-world services in exchange for the currency. VoIP service providers are an ideal player for creating such application since they have large communities, flexible billing systems and they already have primitive e-currency applications as calling cards.