Just as Europe standardized its currencies, a de-massification and diversification of our monetary system takes place. This results in more currencies instead of less. Alvin and Heidi Toffler state this in their excellent book Revolutionary Wealth.

These currencies originate often from loyalty programs: e.g. Frequent Flier Points or Plus Points (from Delhaize). While these points where originally only redeemable at the companies who issued them, gradually they could be transferred to other people and used with more companies: Frequent Flier Points can be redeemed for rental cars, hotels, etc. The Plus Card  from Delhaize,  a card holding the Plus Points,  can be used at Sun Parks, Q8, Avis, etc.
I guess the original loyalty programs were limited to the issuing companies to increase the exit barrier. Luckily the companies found out that they could increase the value for the consumer by opening up their program to other partners.

Right now we see the same thing happening to social media sites. Netlog has their currency since a while, Facebook seems to be testing it. In need for a business model the social media networks enable their users to earn credits from advertisers or by inviting friends and trade this for applications, skins and other stuff.

Your typical loyalty program, I’d say. But getting money back out of the system would really increase its value. Since I hardly ever carry cash, I owe money to everyone I know and who trusts me. These people tend to be called friends. And all my friends are linked to me on Facebook. So why can’t I just send them the 2 € for the sandwich they just bought me on Facebook? My friends would get their money immediately, but after a while they wouldn’t accept it anymore if they couldn’t buy anything but applications and skins. At some point they would want to withdraw their money from their Facebook account.

This would not create loyalty by installing an exit barrier, but by creating value to the user. A while ago I talked about this with people from Netlog, but it seems that besides the technical and security issues, there are also a bunch of legal issues. They would have to register as a bank or they would have to pay VAT on all their transactions.
Since we’re about to reform our whole financial system, why not tackle this little problem along the way?

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