Gameinlane Virtual Currency Exchange

For all of the followers of my blog you know I have been interested in the rapid evolution of virtual currency. This weeks announcement that the Chinese government will begin the full regulation of virtual monetary exchange underscores the importance of virtual currency for the world economy. They have instituted this move because virtual currency trade is disrupting the trade and value of traditional currencies. This further confirms my prediction that the intersection of virtual currency and traditional currency is on the horizon. In fact, it is already here. I am of the opinion that this is the single most important development we may see in our life times. It will create all kinds of opportunities and challenges. It will rock Wall Street and redefine Main Street. The line between virtual goods and physical goods went from blurred to non existent.

So how do you get on board and not buried in the onslaught of virtual goods merchants and virtual currency issuers. You leverage virtual currency to get big fast!!!

We have marveled at Blizzards early success and Zynga's recent success in this space. Their big problem is that they act as insulated silos not encouraging the open exchange of their currency. Guess what! This is a big mistake and a great opportunity for other virtual currency issuers to create larger and more sophisticated trading environments. How about inter trade of virtual currency between issuers? Yes, this is the next step and a way to grow a much larger community of virtual currency users and virtual currency.

At the risk of self promotion I have started a business, www.gaminlane.com to do just that. I have begun to engage game companies and virtual currency issuers to join the virtual currency marketplace.

If you are issuing currency now leverage it by allowing it to be exchanged with other currency issuers. Start establishing a real value for your currency by allowing people to use it outside of your environment!!

Let's create the next big wave in virtual currency. For more information on how to sign-up please contact me at kflood@gaminlane.com.

Is my prediction of a Universal Virtual Currency on the Horizon??

Virtual Currency Meets Main Street

Several months ago I wrote a blog item about the emergence of a virtual currency. I received a fair amount of criticism about this prediction. I think the term "your are crazy" was used a few times. Recently, some of my early critics have reached out to me and admitted that I might actually be right. I do not know if you have been following the accelerated rate of virtual currency trading and virtual item sales but it has been intense in the last several months. Please read the information on the following links Communities Print Their Own Currency, Poker Goes Virtual, ChangYou, Investment In Virtual Worlds, SpareChange, MyCoke, Viximo, Habbo. This is only a small sample of the buzz about virtual currency and virtual items.
My current radical thinking is that the convergence of main street and wall street businesses with the virtual world and gaming environments is going to tip this phenomena over the edge and bring about a formal business exchange process involving virtual currency and traditional currency. This is the next step in the march towards a single virtual currency that acts as a trading currency bridging the gap between disparate businesses and traditional currency.

So Why Is This Happening And Why Are Traditional Businesses Going To Jump In?

Traditional Businesses Have Been Issuing And Using Virtual Currency For A Long Time - We seem to forget that airlines, hotels and credit cards companies have been issuing virtual currency for years trading in virtual currency well before the virtual world even existed. We do not think about frequent flyer points as virtual currency but they are. In fact, they are rewards for a job well done in the flying game. The most proficient road warriors receive points for their dedication and hard work.

Main Street Virtual Currency Trading History - Airlines, hotels and credit card companies have a history of trading virtual currencies within exclusive clubs and partnerships. If you own the virtual currency of a company in the partnership you can trade it for another company's currency.

Virtual Currency Monetary Valuation - The trade of virtual currency within traditional company networks has established a real monetary value for virtual currency. Points exchanged for real items such as airline seats, hotel rooms, camera's and cloths establishes a traditional monetary value for the virtual currency. These valuations float and change as the businesses change and the relative value of the items change. Essentially, these companies have created an organic and informal trading and valuation platform for virtual items and virtual currencies.

The Gamer Generation - I know many gamers and it is striking to me how the demographics for this community are changing. We are accustomed to thinking of gamers as people between the ages of 12 and 18. Not so anymore. Video games, MMOG and MMOGRP games have been around for a long time breeding an entire population of adults that have played these games, understand virtual items and virtual currency.

Virtual Items Become Real Items - The more you play games with virtual items as an essential part of the game the more you consider these items to be no different then a real sword, pair of shoes or poker chips. A person that engages in these games on a regular basis does not think that there is any fundamental difference between a physical item and a virtual one. They both have value and are used for a specific purpose. This may sound subtle but it is very important. People that play games involving virtual items and virtual currency inherently understand the value of virtual currency.

Traditional Companies Go Virtual - I was at a social gaming meet up in San Francisco recently and had the good fortune to sit next to a person building virtual worlds for traditional companies like Coke, Disney, NBC, etc. These companies have bought into the importance of providing virtual experiences for their consumers thus bridging the gap between their brick and mortar operations and the virtual world.

The Dollar Is A Virtual Currency - The dollar and many other popular real trading currencies have no physical backing. The US went off the gold standard years ago. The dollar's value is based on its trading power relative to other currencies. Scary as it sounds without this trading value it would have no value at all. Is the dollar a virtual currency?

Online Payment Option Limitations - In many parts of the world it is a difficult to buy things online with traditional currency and traditional payment vehicles such as credit cards. The phenomenal growth of virtual worlds, virtual items and virtual currency in China is directly related to the lack of good ways to buy and trade things online in a traditional manner. This has spawned the need for a different way of transacting online that inevitably drives the adoption of online specific trading and currency models.

The World Economy Facilitates The Use Of Virtual Currency - You may not have dollars, yen or rubles but you most likely have virtual currency in some form. If you do not it appears that some outfits are allowing you to create and trade some. This is all about the failure of the traditional economy to put traditional currency into peoples pockets and the large stores of point and virtual currency amassed by gamers and consumers. Why doesn't someone take advantage of this and let people use these points to drive customers to their properties. provide discounts on items, etc? What a great way to stimulate the world economy!!!



How Will This Evolve?

1. )Bridge The Gap Between Traditional and New Age Virtual Currency Issuers -I think what will happen first is companies like Delta Airlines or Disney agree to exchange virtual points with game companies like World Of Warcraft or Zynga. This seems to be relatively easy and beneficial to both worlds.

If I am not mistaken frequent flier points are considered to be an accounts payable and therefore a liability on the balance sheet. This should motivate an airline to encourage their patrons to use as many of their points as possible. If they can't take a trip then play a game online or buy a virtual item.

2.) Networks of Virtual Currency Trading Partners Emerge - What a great way to increase traffic to your gaming property. Many games sites are hungry for players and more content to provide stickiness. Why not form a coalition of game and other virtual currency sites to increase your traffic and provide new and fresh content for your consumers. The way in is to trade one currency for another increasing the overall value of all of the currencies. In many ways it becomes a game in and of itself.

3.) Networks Grow In Volume And Complexity - At some point the complexity of trading virtual and traditional currencies is going to require an intermediary step between the trading partners. Just the handshaking alone will require a common API and some standard rules so everyone is not wasting their time doing their own and creating barriers of entry in the process. It could be that one of the currency issuing companies emerges as this broker.

4.) A New Virtual Currency Trading Currency Is Born - The sophistication and volume of trading will result in the creation of an intermediary virtual currency that all currencies are converted into and out of. This would make valuation easier and more understandable.

5.) The Intermediary Trading Virtual Currency Becomes A Standalone Currency - In the final step the intermediary currency now becomes a currency with its own value and companies start using this currency as their purchase and sale currency avoiding the need to create their own.
In conclusion, the notion of a universal virtual currency could be perceived as Utopian and perhaps unachievable because of all the complexities, laws and business forces that exist in the world today. However, one should consider the business need to merge the virtual world with the physical world. In fact, the virtual world may become a larger part of GNP then most people can image. We currently do not have a good way to universally trade and value this currency. Some form of common trading currency is going to be required to make this happen.

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The Emergence Of A Universal Virtual Currency

Call me crazy but is this already well on its way to being realized!!! Perhaps I am a bit off the chart. However, my experience in the online game area makes me believe that this is certainly within the realm of possibility.

So what is virtual currency? It is a currency that is used exclusively to buy and sell products and services over the internet. In the gaming world "points" are frequently used to obtain access to game play and to win prices. In some cases the points are obtained by purchasing them with traditional currency. Essentially, a traditional currency is exchanged for the virtual currency. This exchange establishes a value and exchange rate for the virtual currency.

Virtual currency is also being used to purchase virtual goods in the video game and MMOG world. There are sites that cater specifically to this kind of transaction. A price of say $20 is placed on a single virtual item. A deposit is made in a traditional currency into an account. This account is used to purchase virtual items. These virtual items can then be sold and exhanged for virtual or traditional currencies.

There are trading sites where the virtual currency value of a real or virtual good can fluctuate based on its trade value and market price.

There are sites that allow you to exchange your virtual points for real items such as a Starbucks, Costco, Crate and Barrel coupon.

Today the value of virtual currency is set by the trading within each site. Each site has its own exchange rate. Essentially, each site is acting as its own country with its own virtual currency. I do not know of sites allowing people to exchange virtual currencies between sites. However, I suspect that this is not far off. It is certianly something my game site is going to do.

All of this activity begs the question: Is it possible to create a currency that acts as a virtual common denominator currency? How would the currency be managed and who would manage it? How would it relate to traditional currencies? Are we already organically on our way to this state?