Guess what? Times are changing and money isn’t what it used to be. Our faith in money isn’t what it used to be and virtual currencies are skewing our financial views even further in addition to gaining credibility…
Money. The stuff that makes the world go round. Every day we earn it, spend it, exchange it and lose it. But you won’t find any Linden dollars, Eve ISK or Facebook credits down the back of the couch.
Virtual currencies like these are used for transactions in online worlds and social networking sites. While real-world currencies are on the slide, many virtual ones are going from strength to strength. In the second quarter of the year the equivalent of $144m (£91m) was traded on the LindeX, the official currency exchange of Second Life, where residents buy and sell Linden dollars for their US counterpart – a 20% increase on the previous quarter, while the US economy shrank by 1%. Trading activity increased by 6% in the last quarter of 2008…
“New ideas about money are beginning to evolve,” says Dave Birch, a director of Consult Hyperion, a management consultancy that specialises in electronic transactions. “You’d have a tough job convincing me that the pound is any more ‘real’ than World of Warcraft gold. Where is your starting point? The UK hasn’t had a gold standard for the past three generations.”
Old money, new money
It’s not the first time that virtual currencies have been mooted as the future of online payments. Several were launched in the late 1990s; but the likes of Beenz and Flooz were doomed to failure, suffering fraud and lack of consumer interest.
Lisa Rutherford, president of Twofish, which manages virtual economies for social, gaming and entertainment services, says the online landscape has changed. “If you’ve going to do a large-scale universal currency, you need to have a certain level of scale, and it needs to be serving a certain purpose. That’s really what the fundamental shift has been.”
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