How Virtual Currencies Revolutionize Capital Markets

Originally Published July 23, 2009 

Here's the simple idea: 
 
1. This works best for online gaming communities. The good news is that every online community is going to increasingly be about games, as games are probably the best way to both learn and socialize.  
2. The gaming community attaches a storefront.  
3. The gaming community introduces a virtual/game currency, and through various "stimulus packages," puts the money in the community, and also allows it to be convertible with other currencies.  
4. From there, it's just a matter of spreading your currency, and getting other merchants to setup a shop in your game world or to accept your game currency in their shop elsewhere.  
5. In such a world, one major point is going to be the monetary policy behind the game currency. As virtual currencies grow, organizations that issue them will need to compete on the basis of monetary policy -- i.e. who can offer the best currency that will have the most purchasing power.  
6. Now, let's tie it all back to fundraising. The organizations that issue virtual currencies are essentially central banks. The Federal Reserve, the central bank that controls monetary policy in the US, and hence is the primary organization responsible for dictating what the dollar's purchasing power will be, is also privately owned.  
7. And so, I think the way the Fed operates is something that can be mimicked for organizations looking to create their own virtual currency and fund themselves in a grassroots fashion. Basically, the central bank will be responsible for dictating monetary policy, budgets, fiscal policy (i.e. what if any actions people can do to earn the game currency; tax rate for businesses). You can buy shares in the "virtual central bank," which is simply a part of the game world that is your business.  
8. The shares can be traded in the game world amongst gamers. Dividends are paid in the game currency.