When someone says the word currency, most people automatically think money. Paper money. Dollar bills. But the internet is changing that thinking in some big ways.
Money is just a common and convenient medium of exchange. It’s easier to attach a common market value to everyday items we purchase with a universally accepted form of tender like money. It’s easier and more convenient than trying to trade chickens for horseshoes.
A currency zone is generally country specific. It’s an area where a certain currency is the dominant currency. Canadian dollars, US dollars, Euros … all different currencies, used in their prospective countries or regions. Or zones.
Digital Money
With the widespread use of bank cards and credit cards, the borders between currency zones have fallen away. All you need to travel to another country is your ATM card and a credit card. If you need paper money in a different currency you simply withdraw or charge that amount and it’s automatically converted for you.
Electronic funds and the computerized management of funds has made it easier to cross through different currency zones. And though the zones are still different and each currency carries its own value, the medium of exchange that people use everyday is not just paper money. It’s plastic.
Enter The Internet
The internet has changed the medium of exchange even further. It’s no longer plastic. It’s simply a number.
Your credit card number + your name + the expiry date on your card. That’s the common medium of exchange on the internet.
New Currencies On The Internet
Difficult problems require creative solutions. Here are a few inventive ways that people have come up with to create alternative forms of currency:
Online Gaming
The online gaming industry has been hit hard by the fact that legislation signed last October forbids the use of credit cards, checks, and EFTs to fund online betting accounts. Difficult problem. Creative solution required.
So, since then, people have been using gift cards, phone cards, and whatever they can get away with to stay in the game. These are just different stores of value being used as currency to get around the legislation.
Online Socializing
The online virtual world of Second Life has it’s own currency called the Linden Dollar. They’re directly convertable to and from US dollars at a rate of about 250 $Linden to 1$US. The large gap in the exchange rate allows players to use prices similar to those in the real world while conducting commerce in Second Life, without costing them the equivalent price in real world dollars. Nobody is going to pay a real world price for a virtual world house.
Links As Currency
I like to surf by SEO blackhat once in a while. I’m not into blackhat stuff, but I always find Quadszilla’s posts to be bold, off the cuff, and entertaining. Right now he’s putting together an SEO poker tournament.
You can’t buy your way into this tournament with cash. To get yourself a seat at the table, you have to have a website with a homepage pagerank of 4 or better. The grand prize is a link to your site for one year from all the participants in the tourney.
All these links contain a lot of potential value for driving traffic to a monetized website. How much value is dependant on a lot of different factors. And so, unlike phone cards or Linden dollars, the exchange rate into paper dollars is not easily pinned down.
Are These Things Really Currency?
They’re all stored units of value. And unlike bartering your web design services or something like that, they all have a certain capacity as a universal, or at least widespread, medium of exchange.
The crazy, crazy internet. You gotta love it.