As discovered by Sen, V (2010) virtual currency provide huge benefits in different aspects such as protection, less paperwork, and reward users. It could be explained further as below:
1. Protection
Ø As mentioned before, virtual currency can be obtained by using cash, credit card, physical store or mobile purchasing.
Ø Once you made the payment to buy the virtual currency, no information regarding the bank account is needed in the application.
Ø Unlike credit card, in buying virtual goods or services bank account information is not important and not involved; therefore there is less probability that your bank account will be hacked.
Ø Therefore, this virtual currency transaction will not affect users’ bank account privacy and security issue.
Ø It could be a benefit for the companies to provide protection and confident to their customers.
2. Less paperwork or form filling
Ø It is very efficient and effective way to perform transaction with virtual currency.
Ø The users need not to follow up the procedures in the normal business world for example using credit cards or bank in payment.
Ø Users only have to make sure they have sufficient virtual currency on hand if they are interested in purchasing the virtual goods or services.
Ø This ease up the transactions as less paperwork (information of customers, initial signature of the customers) are needed while purchasing.
3. Rewards users with “own” currency
Ø Many providers in China are running their own virtual currencies for example, Baidu, NetEase, and Tencent.
Ø This provides an incentive to the companies as they have the “right” to “print money” as well as rewards users with their “own” currencies.
Ø In my opinion, this could be an advantage in terms of customer retention where customers will be tied to use the company’s goods and services.
4. Increasing profits
Ø According to Corwin (2010), the virtual currency provides benefit the website owners as the revenue will come straight from the users instead of advertisements.
Ø This is where the service provider or game application owned the website and where the users can directly purchase the virtual goods from there.
Ø This may be due to the reason where the virtual goods are cheap to produce and therefore increase the profit margins.
Ø As mentioned before, virtual currency can be obtained by using cash, credit card, physical store or mobile purchasing.
Ø Once you made the payment to buy the virtual currency, no information regarding the bank account is needed in the application.
Ø Unlike credit card, in buying virtual goods or services bank account information is not important and not involved; therefore there is less probability that your bank account will be hacked.
Ø Therefore, this virtual currency transaction will not affect users’ bank account privacy and security issue.
Ø It could be a benefit for the companies to provide protection and confident to their customers.
2. Less paperwork or form filling
Ø It is very efficient and effective way to perform transaction with virtual currency.
Ø The users need not to follow up the procedures in the normal business world for example using credit cards or bank in payment.
Ø Users only have to make sure they have sufficient virtual currency on hand if they are interested in purchasing the virtual goods or services.
Ø This ease up the transactions as less paperwork (information of customers, initial signature of the customers) are needed while purchasing.
3. Rewards users with “own” currency
Ø Many providers in China are running their own virtual currencies for example, Baidu, NetEase, and Tencent.
Ø This provides an incentive to the companies as they have the “right” to “print money” as well as rewards users with their “own” currencies.
Ø In my opinion, this could be an advantage in terms of customer retention where customers will be tied to use the company’s goods and services.
4. Increasing profits
Ø According to Corwin (2010), the virtual currency provides benefit the website owners as the revenue will come straight from the users instead of advertisements.
Ø This is where the service provider or game application owned the website and where the users can directly purchase the virtual goods from there.
Ø This may be due to the reason where the virtual goods are cheap to produce and therefore increase the profit margins.
In my own perspective, virtual currency will be successful and beneficial if the company is able to adopt the technology and manage it properly. What do you think? Will the costs outweigh the benefits? After this, we’ll be discussing on the disadvantages of the virtual currency.
References:
Sen, V 2010, Virtual currency-money for nothing & clicks for fee?, Thinkplank, viewed 1 October 2010, http://thinkplank.wordpress.com/2010/05/24/virtual-currency-money-for-nothing-clicks-for-fee/
Corwin, P 2009, Virtual goods in social networks- Alternative business models, How to Start A Social Network, viewed 1 October 2010, http://howtostartasocialnetwork.com/2009/12/21/virtual-goods-in-social-networks-alternative-business-models/
Thanks for the information. I would like to ask a question. Yes, virtual currency protect people from their bank account. However, is there any different if the virtual currency account is being hacked? I mean like the loss of money will still be occurred if the virtual currency account is being hacked same as bank account.
ReplyDeleteI do agree that it will be less paperwork compare to the bank. Moreover it is more efficiency and effective way to perform transaction with virtual currency. Also, it is more environment friendly as it does not require to use large amount of paper. As things are done online, the personal information will be recorded easily to the database and this will reduce the human error on keying in the data. However, there are some people might giving the "virtual ID" which mean that the data might not be accurate. For instance, a guy name "John" and while creating account, he put his name as "Nick". Not only in term of name, other information might also be fake.
Yes. A virtual currency company may "print" its own virtual money and reward to its users. This will retain customer from hopping to the other service provider if the offer is good enough. However, will the virtual currency be effected?
I mean like since users will be rewarded with virtual money, will it effect the value of virtual currency to drop?
Good to know the best points on virtual currency. U have made an interesting blog. Cheers !!
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Bitcoins plays a major role in the international money transaction.
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