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Virtual currency is used for payments in virtual environments and can be earned or purchased. It can increase user engagement and facilitate social networks in gaming and social media. However, legal and ethical issues arise when it can be bought or traded. Japan was one of the first nations to regulate virtual currency.
Virtual currency is the currency that people can use to make payments in virtual environments such as games and social networking sites. It is possible to earn it by completing tasks in the virtual environment or simply by participating for a set period of time, and users can also purchase it by converting real currency to virtual, usually at a very favorable exchange rate. The rise of virtual payments began in the early 2000s and quickly gave way to a host of legal and ethical issues.
Businesses can use virtual currency as a tool to make users more engaged with a site and to facilitate frequent visits to the site. As users invest more time and sometimes money, they are more inclined to stick with a site to reap the benefits of those investments. They can also recruit friends to join the game, especially when bonuses are offered for new virtual currency subscriptions. Users can also get extremely involved in virtual worlds with other users.
In a gaming context, virtual currency is often available to purchase in-game goods. Users can also earn money, find it, or take it from other players, although the rules may vary from game to game. Currency can provide a faster way to move through game levels by providing users with tools that they can use to overcome in-game challenges. It also allows players to stack goods for their characters and will increase their sense of connection to the character and the game. It can 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 changes to a profile. In social networking communities, research shows that participants can gauge a sense of worth and achievement through 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 compelled to engage in activities such as gift exchanges to increase their social capital.
Legally, such currency can create some puzzles. In a case where it can only be earned by participating in an activity and cannot be transferred, it may be treated as points within a game or social media environment. When it is possible to buy or trade it, problems like money laundering, trying to game the system by paying other players for money and goods, and so on can arise. Japan was one of the first nations to try to regulate virtual currency.
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