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Wednesday, April 01, 2009

New Territories - new currencies

I discussed in a previous post presenting Xavier Comtesse work on the matter how New Territories are emerging as a result of the disconnection between the business layer and geographical limits as defined by nations or other governmental entities.

Related to this trend, it is interesting to see now more and more projects around the concept of virtual currencies.

We have the real world, and then we have the virtual world. And there is a lot of value which is being created in this virtual world which is not accounted for. And this is creating a problem, because free work or unaccounted value does not pay the rent.

One way to account for this value created online is reputation, which you accumulate as you provide good service on eBay. This value can result in more sales for yourself.

Another way to account for value creation are the point you accumulate when you contribute to a project on FairSoftware.
These points allow you to get distribution of revenues once the sofware you have built start generating cash.

And if you go further deep into the virtual, you have virtual currencies in games, where you can buy or earn points. If these games are MMOs then these points allows exchanges. Some virtual goods are purchased and sold for real money.

Back to the real world, there are also local exchanges in a few places, where the local currency enables bartering of goods and services between the people within a community.

All these things have in common that the virtual currency used represents a contract between members of a given community, whether it is a local community or an online community. These virtual currencies define an ecosystem.

So looking back at territories and the various layers within which each of us function, it would make a lot of sense to start accounting for all value created online through virtual currencies that could enable trades and bartering within people. So if I belong to several social networks, and live and work at the intersection of several ecosystems, I would accumulate real dollars from my activity, or points that I could use to get goods and services from and by other members of these ecosystems.

Today virtual currency platforms like Twofish or OfferPal are targeting the gaming industry, because this is where the work done can be monetized. And then there is one very interesting experiment with Twitter and twollars, allowing users to give each other points for valuable contributions.
The technology is available to manage these virtual currencies, and it will be interesting to watch how far we can take this concept on the business side.

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