Facebook Credits to Challenge US Dollar

21 Jul 2010 by Graham Lyons - News, Uncategorized Facebook, global currency, social networking 1 Comment »

On the 31^st October 2008 a new currency was born. The Facebook Credit arrived in the world, not forged from the fires of Mount Doom but simply smelted in a fiery Facebook furnace and unceremoniously explained on their blog as an ‘adjust[ment to] its pricing system’. Now it’s coming out of its beta test stage and into a full scale program, it has big ambitions.

With Online Retail Sales shooting through the roof, it is clear that buying online will be the way of the future. When Facebook created its own currency they may or may not have foreseen the massive rise in members it would achieve to the point where people consider it to be the biggest challenge to Google’s world domination, and now having reached the $1billion revenue mark this year and having surpassed the 500 million member mark, there is no doubt that Facebook Credits might really become a valid world currency to challenge the US dollar, and with the full roll out of the credits application, Facebook is making it easier for people to spend online and is effectively turning the cash tap on.

With Facebook reaching further and further around the world, it comes up alongside many different nationalities and currencies (70% of its users are international), so being able to capture those users’ currencies was always going to be a problem. With the expansion of the Facebook Credits system, users from anywhere in the world can buy credits and use them online to buy apps and games, and in the future, goods and services. To make more money Facebook hopes to gradually make Credits the only way to pay for stuff on Facebook, this is because it gets a 30% cut of all purchases made in this way, while it gets nothing if people pay by another method.

Zynga, the software people behind Facebook games: Mafia Wars and FarmVille have already racked up $450million this year, mostly thanks to virtual purchases. Facebook Connect was announced on 9^th May 2008 and alongside the new improved Credits program there is almost no limit to the opportunities for people to make money with help from Facebook. To show how real the possibilities of this currency really are: when you select a payment method on Farmville, the Facebook Credit option appears in the same line up as Visa, Mastercard, AMEX and Paypal. Admittedly this is on Facebook itself, but it gives you an idea of what they are trying to do. Imagine seeing that at the checkout of your local shop? Plastic money is slowly taking over from paper currency so there is no reason why Credits couldn’t be the first global currency.

When you think about it, there could be no better way to roll out a new truly global currency than through a multi-national social network, bypassing the bank and the government red tape, avoiding diplomatic allegiances to currencies with kings and queens on them and focusing on fairness and breaking down international barriers.

The one thing to worry about, and I’m pretty sure this will always be on Facebook’s mind after the last couple of months, is privacy and security. A quick search for Facebook Credits brings up countless pages offering you ways to get ‘Free Credits!’, a sign of the demand and a foghorn blast in the face for online fraudsters who have the skills to take advantage. An article in the Wall Street Journal goes into more detail. This will no doubt be high on the list of things Facebook seeks to weed out as it goes for global social network gold.

What do you think? Would you switch to ‘Credits’ if it became a viable currency?