Tuesday, May 19, 2009

Virtual Currency

Here's an interesting bit on CNN regarding virtual currency.

With currency, it's all about confidence, especially since they're starting with fiat from the get go. Right now, it's hard to imagine, say, World of Warcraft gold gaining any sort of real world traction, but fifty years ago it would be similarly difficult to imagine being able to buy goods with a plastic card. If there is convertability between virtual and established currencies, and virtual currencies are better managed in terms of inflation, is it that hard to imagine people wanting to protect their assets?

It is worth mentioning that PayPal was started with at least the partial intention to allow users to protect themselves against the erosion of value of their own currency, if they so chose.

And I liked this line: "The solution has been for each social network or game that uses its own currency to appoint a money manager. Hi5, for instance, employs a staff economist for this purpose." I think I missed their ad in the JOE last year.

1 comment:

Justin M Ross said...

I also liked the comment about signaling, at the very end:

At first, it may seem ridiculous that someone would pay for virtual currency in order to buy a T-shirt icon to put on a social-network profile. But Seiler said more or his friends see the virtual T-shirts on his Facebook page than see any T-shirt he wears in real life.