Emergent by Design recently did a post on the future of Facebook Credits, and how they are an emerging ‘currency’ or how they might emerge as a currency. (Thanks Aaron Wall for the tweet to bring it to your followers attention).
I do believe that there is a certain truth in the ability of major web marketplace players to establish themselves as an alternative to many things we otherwise rely on physical presence for. We can avoid shopping, driving, talking, reading a book, going to a library, a concert, and more, all because of the amazing power and breadth of options available online today. One quick search in Google or Bing (and Yahoo, Bing’s fat cousin), and we can find almost any piece of information or resource that we are looking for today.
However, I think the analysis offered of the future of Facebook in the Emergent by Design blog post was rather simplified and far too easily greased the wheels of advance for Facebook. I know that there is a book in the works, so no doubt this was an attempt to drum up interest and start a conversation. (Which is working, based on this post alone).
Currency in its earliest forms had to have value, and really didn’t need backing by any major states. Gold coins, jewelry, and trade goods all had intrinsic values associated with them, nearly universally across the globe and in almost every cultural history. If Rome was overthrown, the spices, the gold, the jewelry, the weaponry and armor, the livestock, and the land all still held value. In this simplistic view of currency, perhaps Facebook itself does have value as a currency. It is a good, (information and communication), that is easily exchanged and would hold value regardless of nation, region, or government form. The only reason that Facebook, or Google for that matter, hold any value is in their ability to operate as a provider of goods or services.
The prime reason that Facebook and Google especially will never offer a meaningful alternative to currency is that they inherently have no way of securing or backing their funds. Google’s beating in China by the government is a perfect example of how easily their ‘value’ can be upended. If Google had offered its own currency, Google +1Creds (since Facebook has Credits, Google would poorly copy), it would be senseless for 90% of the world’s population to invest or exchange their dollars/yen/yuan/pounds for. If that particular government, limits access or participation in Google or Facebook, then that investment suddenly becomes worthless, and the means for withdrawal become nearly impossible. In democratic ‘developed countries’, we might argue that the government would never be ballsy enough to limit or restrict internet connectivity. But they already have, and with the latest US Congress, they seem even more interested in doing so.
As long as their are physical controls on how people can access the internet, established and overseen by the governments of the world, there will never be a currency based on the full faith and backing of Facebook or Google. Will their be Credits or +1 Creds, that are backed by a real currency, that is backed by a real government? Absolutely. Will they grow in popularity and use? Absolutely. Will any strong, central government, like those of developed economies like Japan, the US, the UK, China, and the EU (if the tourism industry countries don’t bankrupt it first), allow those online currencies to supersede their own? Absolutely not. Through taxes, regulations, and other restrictions, your world wide web will be very carefully controlled and guided, regardless of how democratic your country.