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Is Facebook Becoming a Central Bank?
wasimkadak sends this quote from an article at Forbes:
"Facebook's 27-year-old founder, Mark Zuckerberg, isn't usually mentioned in the same breath as Ben Bernanke, the 58-year-old head of the Federal Reserve. But Facebook's early adventures in the money-creating business are going well enough that the central-bank comparison gets tempting. ... Initially, the Credits-based economy was confined to the virtual world’s trifles. Credits could be spent to buy imaginary gold bars for aficionados of Mafia Wars, or bouquets of virtual flowers for birthday postings on friends’ Facebook accounts. This new form of digital money was cute but essentially useless for mainstream activities. Lately Credits have become more intriguing. Warner Brothers this summer offered movie-goers a chance to watch Harry Potter and The Dark Knight for 30 Credits apiece. Miramax and Paramount countered with film-viewing offers, too. In a provocative post this week on Inside Facebook, guest blogger Peter Vogel argues that Credits in the next few years will become more of a true currency. Facebook's 800 million worldwide users represent a lot of buying power. He figures Credits could evolve into commercial mainstays for digital movies and music."
From the article:
Peter Vogel is co-founder of Plink, a Facebook Credits-based loyalty program that rewards Facebook members for dining and making purchases at their favorite restaurants and stores.
"Facebook credits" are just another gift card scheme. You can't cash them out. You can't invest them. You can't convert them to another currency. You can't transfer them to another individual. And Facebook takes a 30% cut off the top.
The only virtual currency that comes close to behaving like a currency is Linden Dollars, the monetary unit of Second Life. Those, you can transfer and convert.
Bitcoin had potential, but it turned into a pyramid scheme.
Betteridge's Law of Headlines is an adage that states, "Any headline which ends in a question mark can be answered by the word 'no'".
There's no -1 for "I don't get it."
If you can buy goods or services with a currency, and exchange those goods or services for US dollars (via eBay, Craigslist etc), then the currency is a de facto method of paying US tax liabilities.
You're half right. Money hasn't been worth anything since before the gold standard was dropped. Even gold is fiat currency. Money, including precious metal coinage, is just tokens meant to simplify complex barter arrangements. It only has value based on people's faith in its value.
I clicked through to TFA. I know, what was I thinking...
So, a co-founder of a business based on Facebook Credits thinks they're super-important and could be equivalent to actual money. Right. Next ridiculous story, please.
I expect more stories inflating Facebook's perceived worth to be pushed to the mainstream media in the coming months as Facebook's IPO is imminent.
Ummm, no. The finance majors don't say that. Nor do the economists. There is chutpzah, there is subterfuge, and there are varying indicators, but it's not pretend.
When a letter of credit clears, there's a complex set of events that's spawned. Lots of people get paid. Sometimes they get paid in differing currencies, but they get paid. When the Russians had their post Soviet-breakup crunch, maybe they paid in potatoes, but they paid. Trading is something humans do well, and there is some predictability beyond "pretend".
---- Teach Peace. It's Cheaper Than War.
Or, more precisely, by their willingness to accept it as payment. Recursively. Acceptance all the way down.
Analogies don't equal equalities, they are merely somewhat analogous.
The real value of silver has undergone drastic changes in the past, sometimes because of enormous new finds, sometimes for other reasons.
It's probably better to use "a nice lunch" (as in a good but unpretentious restaurant meal of tasty, nutritious, healthful food, containing about 500 kcal) as your price reference. A meal at a restaurant is both a product and a service, and it contains a range of raw materials. Since the restaurant needs to pay real estate costs it also reflects the housing market.
Left it in my coat pocket? Heck no, I was a college kid back then. It was the end of the school year, and I was pretty much broke. That $10 was enough to buy food for two weeks!
Well.. maybe. Or Maybe not. But Definitely not sort of.