Virtual currency is creeping its way into every facet of online social media and networked gaming sites. For those who have not yet heard of online currency, it is a reference of value specific to a certain social networking site, virtual world or online gaming site. Online currency is used within these sites to purchase virtual products or services and can be accumulated by various means or simply purchased using real world currencies. Virtual worlds in particular have their own economic systems and virtual currencies. For example in Second Life, avatars can purchase land, homes, goods and even clothes to increase their status and game prospects. Some virtual currencies are based on time, which is measured against gaming activities in order to accumulate a certain amount of points and virtual currency.
Virtual Currency and Social Media
Virtual Currency is increasingly becoming an important revenue driver in social media. For example social media giant Facebook receives around 20% of its total revenue from online gaming company Zynga, who operate the highly successful Facebook games FarmVille, CityVille and more. Virtual goods, and hence the need for virtual currency markets, is increasing every day, particularly in Asia, Europe and America. In the past, only dedicated online gamers would spend money and virtual currency on virtual goods and services, although because of the popularity of social networking sites like Facebook and MySpace and the appeal of the games they support, this is all changing.
Virtual Currencies in the Real World
Today the virtual is creeping into the real world. The global virtual currency Ven, which is used by members of the invitation only social network service Hub Culture, combines the virtual and physical world. It allows members to buy and trade knowledge, products and services using virtual currency as well as participate in virtual currency exchange. It was the first ever virtual currency to be used in the financial markets and in trading both commodities and carbon credits.
Virtual Currencies and Tax
In latest news, rising demand for virtual currency games and participation in virtual worlds has caught the attention of governments and tax authorities who are interested in the conversions of virtual currencies to national currencies like the US Dollar. Players use online auction websites, virtual currency platforms and social media companies to sell virtual currencies that have accumulated. At the moment tax regulations are lagging behind developments in online gaming and virtual currency games and at the moment social media companies that exchange virtual currencies in international transactions are unsure if and how virtual currency will be taxed.
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