Facebook considers virtual currency

Facebook has 400 million users

Facebook confirmed rumors it is "looking at" adding a virtual currency to its already extremely well-padded and popular social networking framework.

The idea will let users earn virtual currency credits in return for signing up for services like Netflix or filling out a survey. These deals have been made popular by companies like Offerpal, gWallet and Super Rewards, which offer deals for virtual currency in games on Facebook.

Facebook's gaming guru, Gareth Davis said in an interview at the GamesBeat conference in San Francisco: "Clearly, it's something that is a large undertaking. So it has to be done carefully."

If Gareth Davis and Facebook can make it work it will definitely be worth the effort.

According to the LA Times, web games such as Club Penguin and Maple Story, players pay real dollars to get virtual currencies they can use to buy online outfits, homes and pets. It highlights a trend whereby virtual goods and currency markets have been immensely popular elsewhere and within social gaming on Facebook, MySpace and other sites.  The industry is expected to grow into a US$2 billion industry within the next few years. Analysts estimate that consumers have spent more than $1.5 billion worldwide on virtual goods already.

The pros and cons of virtual currency on Facebook

The pros certainly outnumber the cons. Aside from being able to pull in a percentage and accumulate more revenue, a Facebook currency would afford its 175 million active users the opportunity to play without having to crunch their credit card details every time they wanted to spend money with a different application user. In theory, they could play with one click of the mouse.

A virtual currency would also allow purchases of 25 cents or other unusual web denominators, as the currency would be purchased in larger chunks, say $10 or $20, then spent in smaller increments over time. Minuscule purchases through a credit card would cost the developer more money than they could accumulate.

Negatively, any virtual currency is vulnerable to fraud. As a result, Facebook would need to spend big bucks on policing the system to prevent possible scams.

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