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
As the virtual community and virtual economy begin to replace the real ones, trends forecasters and futurists can begin to imagine a world where morning newspapers are replaced by online news, local markets are replaced by online supermarkets, community fundraising events are replaced by web fundraisers, fun fairs are replaced with online games and greasy spoon cafés are replaced by internet cafés. In case you haven’t been paying attention, in so many ways- that day has already arrived. Welcome to the virtual world. As we spend more and more of our time interfacing with this new world, we will invariably be performing many more monetary transaction there too.
Aside from the obvious differences in a cashless society- a world where no notes and coins are ever physically held by the owner, there are also a number of other not so nice realities which citizens will be forced to accept. Chief among these are legitimate concerns that a cashless society would make “retailer resistance” aka choosing independent shops, buying direct or supporting local markets over mega supermarkets and national retail chain stores… nearly impossible. In addition to retailer resistance, cash ensures some level of anonymity on the part of its owner. Not so in cashless world, as electronic currency and transactions are and will always be recorded, track, analysed and in some cases- suspended.
With the introduction of a cashless society, citizens are also likely to lose their identities associated with national currencies like American Dollars, or British Sterling. But as they lose one identity, they will most certainly gain another. In this way, Facebook has taken the lead in supplying a monetary identity to its client citizens in the form of its ‘virtual currency credits’.
Perhaps one day we may also see ‘Apple Credits’ or ‘Nokia Kroner’ as mobile device transactions creep further and further into our economic routine. Either way you slice it, it is an incredible amount of power and influence which an elite clique of corporations now have over large sections of the global population.
As we have seen with the online games developers and their customers, resisting the Facebook marketplace is no longer an option, as it has already defined policy within the boundaries of its massive virtual community- even mandating what form of money can be used within the Facebook Nation. The decree is simple and clear, “if you are not in, you are out.”
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