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Forget money, let’s use sand

For years, I’ve played poker with matches and chips rather than coins and notes.

We accept that a match can be ten cents or a chip is a dollar or more.

We don’t need real money to know our exchange rates.

Now, this basic idea is being replicated in social networks.

Facebook, as many of us know, has made a bet on this with Facebook credits.

Twollars can do the same for Twitter.

And now, according to this Wall Street Journal report, everyone is trying to build virtual credits in social worlds:

To be honest, this idea is not new, as it is just an extension of complementary currencies as pioneered by Bernard Lietaer and Margrit Kennedy.

This has gained traction recently as communities try to encourage more local trade through currencies such as the Totnes and Lewes pound.

But the big deal is that social networks, with billions of users, can now take these concepts to new heights as money migrates to credits across social networks.

So the future looks like one where, as the WSJ video calls it, the world is built on sand.

Sand?

Sure, the world is full of rocks, pebbles and sand:

  • rocks are the core currencies of nation states – the dollar, euro and renminbi;
  • pebbles are corporate currencies, such as store credit cards; and
  • sand are the little grains of value exchange made person-to-person, peer-to-peer, P2P.

The future built on sand?

Sure.

Sand makes glass and the gazillions of grains make up the coasts of all nations.

So why not build a world on sand …

… oh yes, the house falls down on sand.  We need rocks for foundations as well.

*

Postnote: this is actually Innovations in Retail Payments, Part 2


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About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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2 comments

  1. Hi Chris,
    I consider this article spot on. It’s an interesting debate as it constitutes so much ambiguity in the need for foundation, while exactly that foundation is in dispute to be by-passed.
    I think the “social value” approach would become really a threat to classic banks if/when the foundation would no longer be the currencies themselves, but straigth away the same foundation of the currencies (i.e gold).

  2. Hi Chris,
    I consider this article spot on. It’s an interesting debate as it constitutes so much ambiguity in the need for foundation, while exactly that foundation is in dispute to be by-passed.
    I think the “social value” approach would become really a threat to classic banks if/when the foundation would no longer be the currencies themselves, but straigth away the same foundation of the currencies (i.e gold).

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