Virtual currency is currency people can use to make payments in virtual environments like gaming and social networking sites. It is possible to earn it by completing tasks in the virtual environment or simply participating for a set period of time, and users can also buy it, converting real currency into virtual, usually at a very favorable exchange rate. The rise of virtual payments began in the early 2000s and quickly gave way to a number of legal and ethical issues.
Companies may use virtual currency as a tool to make users more engaged with a site and to facilitate frequent site visits. As users invest more time, and sometimes money, they are more inclined to stick with a site to reap the rewards of those investments. They may also recruit friends to join the game, especially when bonuses for new signups are offered in virtual currency. Users can also become extremely involved in virtual worlds with other users.
In a gaming context, virtual currency is often available for buying in-game goods. Users can also earn currency, find it, or take it from other players, though the rules may vary from game to game. Currency can provide a more rapid way of moving through game levels by providing users with tools they can use to surmount in-game challenges. It also allows gamers to amass goods for their characters and will increase their feeling of connection to the character and the game. It may also be traded with other players. This facilitates cooperation between players and creates a social network.
Social networking sites apply virtual currency to activities like buying virtual gifts for friends, accessing special site features, or making edits to a profile. In social networking communities, research shows that participants may value sense of worth and accomplishment by metrics like how many friends they have, the number of gifts they receive, and comments on their sites. Virtual currency can add a new dimension of complexity as users may feel an obligation to participate in activities like gift exchanges to raise their social capital.
Legally, such currency can create some conundrums. In a case where it is only possible to earn it through participating in an activity and it cannot be transferred, it may be treated as points within a game or social networking environment. When it is possible to buy it or trade it, issues like money laundering, attempting to game the system by paying other players for money and goods, and so forth can arise. Japan was one of the first nations to attempt to regulate virtual currency.
