Facebook's Virtual Currency Ambitions

Facebook's expansion plans have moved into the realm once reserved for central banks and kings: creating its own currency.

Details on Facebook Credits emerged at last week's f8 Facebook developer conference, although the news was obscured by the network's plans to extend its reach and an ensuing privacy debate. Credits can be used to purchase virtual goods, such as items in games, and at least one company seems to have already benefited. Facebook's mobile payment processor of choice, Palo Alto-based Zong, today announced $15 million in new venture funding.

The marketplace for virtual goods is on a tear. Domestically, it is expected to reach $1.6 billion this year and possibly $3.6 billion in three years, according to an analyst cited by Bloomberg. The founder of the 28-year-old video gaming giant Electronic Arts is much more optimistic: He expects the market to hit $100 billion within the decade.

Whatever the numbers, Facebook is positioned to reap huge rewards from the expanding market. Credits will be the only currency allowed on Facebook and the company will take a massive 30 percent cut of all transactions. Its users currently engage in roughly 800 million game sessions a month, Facebook Credits manager Deb Liu said last week.

Zynga, the company behind popular Facebook games "FarmVille" and "Mafia Wars," is expected to make $460 million this year in revenues, ninety percent of which will come from the sale of virtual goods. Under the Credits plan, Facebook's cut would be roughly $125 million.

Facebook doesn't see Credits as a money-maker right away, Facebook founder and chief Mark Zuckerberg told VentureBeat. "You may not believe me when I say this," he said. "We are doing it for developers. But it's not a revenue opportunity anytime soon. Ads are a very good business."

Presented by

Niraj Chokshi is a former staff editor at TheAtlantic.com, where he wrote about technology. He is currently freelancing and can be reached through his personal website, NirajC.com. More

Niraj previously reported on the business of the nation's largest law firms for The Recorder, a San Francisco legal newspaper. He has also been published in The Hartford Courant, The Seattle Times and The Age, in Melbourne, Australia. He's also a longtime programmer and sometimes website designer.

Why Is Google Making Human Skin?

Hidden away on Google’s campus, doctors at a world-class life sciences lab are trying to change the way people think about their health.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register with Disqus.

Please note that The Atlantic's account system is separate from our commenting system. To log in or register with The Atlantic, use the Sign In button at the top of every page.

blog comments powered by Disqus

Videos

Why Is Google Making Human Skin?

Hidden away on Google’s campus, doctors are changing the way people think about health.

Video

How to Build a Tornado

A Canadian inventor believes his tornado machine could solve the world's energy crisis.

Video

A New York City Minute, Frozen in Time

This short film takes you on a whirling tour of the Big Apple

Video

What Happened to the Milky Way?

Light pollution has taken away our ability to see the stars. Can we save the night sky?

Video

The Pentagon's $1.5 Trillion Mistake

The F-35 fighter jet was supposed to do everything. Instead, it can barely do anything.

More in Technology

Just In