Facebook recently announced a partnership with Miramax films to allow Facebook members to rent Miramax movies through Facebook’s social networking platform, and to allow payment to be rendered in Facebook Credits — the company’s virtual currency. This event is a major milestone on the virtual currency trajectory, and thus is of great significance to all those interested in creating the new monetary and political systems of the post-dollar world order.
There are two key points to ponder here:
1. Because this partnership increases the exchange value of FB Credits — what you can get for when you exchange them — it increases their value as a store of wealth. This leads to the foundation for a financial economy involving loans and investing.
2. Facebook’s monetary policy is critical here. What if Facebook all of sudden reprices the exchange rate between FB Credits and US dollars? Can they seize your FB Credits directly? If so, can you go to a jurisdiction in the global nation-state system and take legal action against FB and accuse them of theft? Other companies in the field of virtual worlds have faced these issues before; the Chinese government has even banned certain virtual currencies for their de-stabilizing effects. Likewise, US Senator Charles Schumer has identified Bitcoin as a threat to the US economy.
This latter aspect — Facebook’s monetary policy — is where I suspect they will fail. Culturally, their money is very close to the Goldman Sachs money epicentre; Goldman is the incumbent in the world of monetary policy, and so I find it unlikely they will be able to play the disruptive card, or will even tolerate it. There is an element of political battling that is also needed to play the role of the currency manager, and I doubt Facebook has the DNA for such a battle.
In any event, we are getting closer to the intersection of the collapse of the current global monetary system and the rise of a new one built on virtual currencies and gold. This event is the keystone to the economic transition we are in the midst of; it is especially relevant for those participating in the re-monetization of gold or social media/Bubble 2.0 value plays. More importantly, I view it as the most important step in the trajectory of the world, politically and economically.