kidmercury

I've been a Facebook hater for some time now -- see our Facebook archive. I've been skeptical of the long-term viability of their business model, as well as the fairness of their technology strategy to their users.

I still don't like their technology strategy. And I think the company has shown itself to be fundamentally dishonest on numerous occasions -- like when they did a rather poor job of explaining why their CFO, Gideon Yu, was leaving the firm.

But at least in terms of business model, I have to give Facebook props. They are finally pushing out Facebook Credits more. That is the key, in my opinion, to the big Facebook pie. Force all transactions in the Facebook economy to go through Facebook Credits, their virtual currency. Facebook gets a piece of everything. I believe Facebook is extraordinarily well positioned to execute this.

This naturaly leads to allowing Facebook Credits to be used in transactions outside of Facebook. Will you use Facebook Credits instead of US dollars? And, as Facebook profits from the spread of their virtual currency, do they view other currencies as competitors?

Regular readers may be saying to themselves, "Hey Kid Mercury, do you think Facebook can execute The Business Plan That Saves the World?" Indeed, I think they are positioned to do so. But, almost for sure, they lack the courage, and the knowledge of what they are really getting themselves into. Remember, China has already shown concern regarding virtual currencies. Those who control monetary policy control the world.

At this point we may be able to see the two options we as a society are faced with: a world in which nation-states are replaced by online communities with a strong gaming component, backed by their own virtual currency; or a one world government, layered upon nation-states, which use carbon credits as the basis for a world currency. The former is the renaissance, the latter is the catastrophe.

Ultimately, though, Facebook is far too centralized, and thus easy for the powers that be to wage war upon. A decentralized system is needed -- one in which there are many independent virtual currencies, and a decentralized system of sorts to enable currency conversion. It has been my contention for some time that such a system requires a fundamentally new organizational structure. The Japanese concept of keiretsu, as well as the Western concept of a cartel, come to mind.

The games on Facebook should be prepared to lose some of their profit margins, as Facebook Credits will eat into that. More importantly, a vigilant society may be able to see this as part of the path that leads to the opportunity of how the Internet lets us democratize monetary policy, and in doing so, create a renaissance stemming from a new found global economic freedom the likes of which the world has not seen before.