Could Social Media Currency Replace the Dollar, Euro or Yuan?
When Mark Zuckerberg first launched his Open Graph
API at the last Facebook F8 Conference in 2010, it was clear that a
paradigm shift was set in motion- one that would revolutionize
advertising - but more importantly one that would transform monetary
transactions across the Web. But could it possibly replace the
dollar, euro or yuan?
On July 1, Facebook will require all social game developers to process real-world payments using Facebook Credits. As a result, analysts believe this new currency could expand outside of Facebook's borders to become the Web's new PayPal.
In Facebook's Blog posted on January 24, this latest move by Facebook will touch at least 350 applications from 150 developers which represents more than 70 percent of the 'goods transactions' volume on the social network. And since Facebook taxes 30 percent of the profits on all FB Credits' payments, Team Zuckerberg is in line for a 2011 windfall from this new revenue stream.
Including Zynga the number one social gaming developer, this will also affect Playfish, Crowdstar, Digital Chocolate, PopCap, Arcadium and a number of other smaller players.
While Facebook will allow these game sites to also use their own virtual currencies in addition to Facebook Credits, Facebook will incent developers to switch entirely over to the social network's in-site exchange system. "These developers will receive early access to product features and premium promotion on Facebook, including featured placement on the Games Dashboard, premium targeting for ads, and access to new co-promotion opportunities," Facebook's Deborah Liu noted in her blog posting.
In Facebucks & Dumb F*cks, the graphic novel about Facebook, the label "Facebucks" is a satirical reference to Mark Zuckerberg's (aka Z-Man's) worldview. It's a metaphor for how one social network scaled beyond all others to reach the point where it could 'mint' its own money.
Tying Facebook Credits to social media gaming was the important first step in acclimating both developers and users into using this form of currency online, as the book points out.
However, this is a baby step toward Zuckerberg's grander vision. Becoming a world bank seems to be the ultimate goal. Over time, the company plans to turn Credits into a system of micropayments that will affect any application, be it a game or a brand's advertising campaign. This could easily expand to everyday transactions where consumers would only have to enter their credit information once and have it applicable for anything they purchase online.
According to a NY Times report back in September it was noted that some analysts and industry insiders believe that expanding Credits makes sense and "could eventually put Facebook in competition with PayPal." This supposition is supported by the fact that Facebook's team includes recruits from PayPal. In that same report, Liu was quoted as saying, “It is a lot like PayPal in the early days,” said Deb Liu, a former director of corporate strategy at PayPal who is now product marketing manager for Credits. “We are moving fast and changing the industry.”
A world bank headed up by Facebook is not a far-fetched notion. Scaling past 600 million users, the social network is third in population only to India and China. When Mark Zuckerberg starts extending loans to sovereign states that can no longer increase their deficits by printing money, that's when Facebook Credits will really kick into high gear. Controlling the debt of other countries is a place coveted by countries like China. Could a social network take its place and eventually replace the dollar, euro or yuan? In Zuckerberg, we trust! Your thoughts?