Cashless Society: ‘Facebook Nation’ unveils its new currency
21st Century Wire
January 31, 2011
The 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