If you’re at all keeping up with the world of cryptocurrency (gotta love that word), then you’ve probably watched its up-and-downs, including skyrocketing values, friends in bad places (Silk Road), and worldwide rulings across the board. Most of this is related to bitcoin, the favorite virtual currency, but there are a number of virtual or crypto-currencies popping up here and there. And one big partner with the concept? Social media.
But first, let’s do a little bitcoin breakdown.
What is a bitcoin?
A bitcoin is basically a digital coin, or form of cryptocurrency, that is sent through the internet. It is the first decentralized currency, and isn’t controlled by anyone. No banks are involved. Nobody runs the network. It’s sort of a free-for-all. This, of course, makes some people nervous, but we’ll get to that later.
Bitcoin was created by a software developer, Satoshi Nakamoto, in 2009 (according to www.bitcoin.org). It was, however, first described in 1998 on the cypherpunks mailing list (a communication hub for activists “discussing cryptography and its effect on society”) by Wei Dai. Nakamoto, the one credited with really bringing this concept into reality, kept things pretty wrapped up and left the whole project in 2010. Since then, developers took over and bitcoin has boomed.
Bitcoin is controlled by no one, yet sort of by everyone that uses it. Bitcoin isn’t backed by gold; it’s backed by mathematical formulas (read more at CoinDesk), and the value is based simply on good ol’ supply and demand.
What’s the point?
Bitcoin and other virtual currencies boast some advantages to traditional currency. According to Bitcoin.org, the cryptocurrency’s decentralized aspect brings advantages like “payment freedom, very low fees, fewer risks for merchants, security and control, and transparent and neutral.”
But, of course, there are arguments from the other side. The lack of regulation raises concerns, especially given the fairly recent Silk Road incident. In case you hadn’t heard, bitcoin was being used to buy and sell “certain items” (ahem, illegal drugs) from the anonymous online marketplace, leading to a major crackdown (no pun intended).
However, most incidents with virtual currency aren’t so bad. After all, its use in gaming is pretty innocent. Some of these include “closed virtual currencies,” like those found in Final Fantasy, World of Warcraft, or even the bananas from Donkey Kong Country. When virtual currencies are closed, it means they have no ability to exist outside of their own system and stay separate from the economy.
Gaming virtual currency really started to take hold when apps came onto the scene. This virtual currency wasn’t closed, typically, and allowed for in-app purchases using a bank account or credit card linked to an app store account. This is where we heard the horror stories of inquisitive infants compulsively tapping and buying $5,000 of Smurfberries and Coins, draining their parents’ bank accounts. Yikes. Okay, so that’s bad. But with a few locks and settings in store, the issue can diminish.
These apps lead straight to social media. Social media gaming burst onto the scene with popular games like Farmville, Candy Crush Saga, and Texas HoldEm Poker. Games like these are played on Facebook, between groups of friends, and rely on in-app purchases either through a credit card or by a virtual currency like Facebook credits (now dead, read about it here). And it’s pretty addictive. Just take a look at your feed.
And as companies continue to accept (and even sell) virtual currencies, like eBay, Overstock.com, Tesla, WordPress, and more, it’s likely to bleed out into even more social media interactions. We’re starting to tweet payments, so it’s not unimaginable to think we’ll start tweeting bitcoin payments soon enough. After all, “Social Media has helped Bitcoins become a global phenomenon of Digital currency around the world,” says Digital Marketing pro Jasmine Sandler in an article on her blog.
With roots like that, it’s impossible for the two to not continue to be intertwined. Look for more developments between social media and virtual currency in the future.
Photo Credit: Flickr user BTC Keychain
