Social Network Currencies

The Future of Facebook project released part one of a six-part video series, sponsored by Cosent, exploring future scenarios for the development of Facebook and its impact on society.

This first video in the Future of Facebook series, focuses on the economics of social networks, and the use of virtual currencies. In a way it's a sequel to an earlier video project on The Future of Money.

Watching those videos, absorbing the ideas expressed by the interviewees, drives home the point that we're moving into unchartered territory when it comes to the ways we define, experience and manage value in the 21st century.

Any news feed with it's parade of stock and bond market crises, exposes the fragility of the banking and monetary systems we use to coordinate economic activity and glue our societies together. The videos featured here are part of a broader trend of re-examining fundamental assumptions regarding value, wealth, trust and money.

Our economies are rapidly transitioning from linear industrial-age structures to new networked patterns of societal organization. In fact, in advanced economies the industrial economy was superseded by the knowledge economy already half a century ago; we're just racing to catch up mentally.

Social Capital

As I argued elsewhere, the new economy is centered on non-material values like knowledge, information, trust and sustainability. The crucial point is, that such non-material values grow when shared. It's not a zero-sum world anymore. If I eat your bread, you can't have any. But if I adopt your idea, we have both found an ally. The result of this transition is a massive renaissance of the commons, the pool of shared resources available to all. Sharing intellectual resources has become the new engine of value creation.

Our established currencies, and the zero-sum paradigm encoded into their operations, are becoming increasingly unreliable as tools to support collaboration and to transmit and store value. Social capital is becoming more important than physical assets. Virtual currencies, of which Facebook credits are an example, provide new conduits for value sharing and enable experiments in sustainable community economics.

All currencies, whether virtual or real, fundamentally express trust. The Dollar and Euro are called fiat money (translation: trust money) for a reason: those bills are worthless pieces of paper unless everybody trusts that they can be exchanged for real goods and services. Credit is closely related to trust and virtual currencies need credit providers just like real currencies need banks. Which begs the question: since excessive and unregulated credit expansion, especially in unregulated shadow banking systems, caused the economic near-meltdown of 2008, how should we prevent such crises from occurring in new virtual currency systems?

What are your thoughts on virtual currencies and the future of Facebook? Your feedback is appreciated!

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