Proposal for submission

Topic: Virtual Currency

Objectives:
1. Provide better understanding of virtual currency- information sharing

2. Find out how the virtual currency works on:
(a) games application (game developer and player)
(b) e-commerce

3. Discover the advantages of virtual currency

4. Discover the disadvantages (issues) of virtual currency- problem and challenges

5. Virtual economy

Planned Outline:
1.0 Introduction
2.0 Objectives
3.0 Methodology
4.0 Research
4.1 Virtual currency in online games
4.1.1 How does virtual currency work in online games?
4.1.2 How does virtual currency works for online developers?
4.1.3 Facebook credit

4.2 Advantages
4.2.1 Protection
4.2.2 Less paperwork
4.2.3 Rewards users with “own” currency
4.2.4 Increasing profits

4.3 Disadvantages
4.3.1 Security issues
4.3.2 Fraud
4.3.3 Technical challenges

4.4 Virtual economy

5.0 Conclusion


Literature Review


Virtual currency is a well-known terms for online users who use it to purchase virtual goods and services in the gaming, virtual worlds, online communities and social networking websites. In Asia and Europe, virtual goods have been generating profits for many years (BBC News, 2009). The first virtual currency has been launched by GameXa in 2007 with the support of World of Warcraft- the world’s largest MMOG (Multiplayer Online Game) (Allpaynews, 2010). The currency is known as “gold” which enable the users to buy virtual items such as weaponry and to increase their game character level in the World of Warcraft game. There are various virtual currencies used for online gaming such as SecondLife uses Linden dollar, Everquest used dollar as well as platinum, while Star Wars use Galaxies credit (Walsh, 2009). Virtual wealth which refers to the ability and power to obtain virtual goods in virtual world is measured by virtual money such as Linden Dollar, KinzCash and LB (Guo J, Chow A & Gong Z, 2009).

From the business perspective, virtual currency provides a new source of income for business person due to the popularity of social networks such as Facebook and Twitter. Users can purchase virtual currency by using different payment methods for instances, mobile SMS payments, PayPal, and credit cards (Trialpay, 2009). As virtual currency is being used widely in the virtual economy, it is necessary to look into the pros and cons of the virtual currency to the users. As discovered by Sen, V (2010) virtual currency provides huge benefits such as protection, less paperwork, and reward users. On the contrary, the disadvantages of virtual currency include security issues, fraud and technical challenges. BBC News has shown that in the United States, the virtual economy is set to make billions selling goods that do not exist (Daily Tech, 2009). In addition, one of the social gaming companies, Playfish has succeeded in the sale of virtual goods. Therefore, it is essential to discover how the game developers utilize virtual currency in this research.
Reference ListWe use these articles in order to explain and describe some situations for readers to understand better. In addition, some of these articles contain essential copyright laws issues that we need in our research.


References:

Journal

David, M 2005, ‘Virtual currency’, PC Magazine, vol, 24, no. 11, EBSCOhost, Computers & Applied Sciences Complete, AN 17204142, viewed 10 September 2010.

This article provides idea and examples of how does virtual currency work in online games such as Sony Online Entertainment’s EverQuestII Game. Players are allowed to replace their swords and other tools by using credit cards to improve the virtual character. It also contains on information on other things that the players can do by using the virtual currency.

Guo J, Chow A & Gong Z, 2009, ‘Virtual Wealth Realization in Virtual and Real Worlds’, 2009 IEEE International Conference on e-Business Engineering, viewed 27 October 2010, http://www.sftw.umac.mo/~jzguo/pages/pub/09_icebe09.pdf

This paper provides a further understanding about virtual wealth in virtual worlds and in relation to the real world. This paper consists of the formation, explanation, realization, classification and measurement of virtual wealth.

Richard, H 2010, ‘Real money from virtual worlds’, Scientific American, vol. 302, no. 1, EBSCOhost, Computers & Applied Sciences Complete, AN 45692997, viewed 10 September 2010.

This article illustrates how entrepreneurs earn real cash money from online games in developing countries, which involves the selling of virtual currency for actual currency. Examples used would be the World of Warcraft and EverQuestII where the users can sell their virtual resources through websites like PayPa to buy foreign exchange in the virtual world. We will use this as a guideline to explain in detail on how the virtual currency works.


Other references

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/

Daily Tech 2009, Virtual economy is booming, real economy still stinks, Digital Trends, viewed 11 October 2010, http://www.digitaltrends.com/gaming/virtual-economy-is-booming-real-economy-still-stinks/.

Facebook Credits Expanding the Social Network’s Ecommerce Efforts, ZippyCart Ecommerce Software Reviews Content Team 2010, viewed 24 September 2010, http://www.zippycart.com/ecommerce-news/1263-facebook-credits-expanding-social-network-ecommerce-efforts.html
Facebook Credits and the future of micro-transactions 2009, Entreprecurious, viewed 27 September 2010, http://entreprecurious.com/2009/09/19/facebook-credits-and-the-future-of-micro-transactions/

Facebook Credits could be our new universal currency 2010, The Duffy Agency, viewed 27 September 2010, http://blog.theduffyagency.com/methodical_madness/2010/07/facebook-credits-may-be-our-new-universal-currency.html

GameXa announce the launch of the first virtual currency trading platform 2007, Allpaynews.com, viewed 25 October 2010, http://www.allpaynews.com/node/3605

Hansen, JD & LLP, PC 2010, Virtual Currencies: Real Legal Issues for Retailers, RetailingToday.com, viewed 4 October 2010, http://www.retailingtoday.com/(S(ac2eydfbp0e0knyy0zaqrr45))/editorial.aspx?id=132107

Hefflinger, M 2010, Facebook teams with MOL to sell Facebook Credits in Asia, Digital Media Wire, viewed on 28 September 2010, http://www.dmwmedia.com/news/2010/07/08/facebook-teams-mol-sell-facebook-credits-asia

Korolov 2010, Does your grid needs its own currency?, Hypergrid Business, viewed 3 October 2010, http://www.hypergridbusiness.com/2010/08/does-your-grid-need-its-own-currency/

Mills, E 2008, Rising fraud threats in virtual worlds, cnet news, viewed 4 October 2010, http://news.cnet.com/8301-1009_3-10027609-83.html

OffGamers 2010, viewed 24 September 2010, http://www.offgamers.com/

Sales of virtual goods boom in US 2009, BBC News, viewed 23 October 2010, http://news.bbc.co.uk/2/hi/technology/8320184.stm

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/

Trialpay 2009, Virtual currency monetization platforms: five ways to increase revenue with direct payment options, Trial pay blog, viewed 10 October 2010, http://blog.trialpay.com/2009/04/virtual-currency-monetization-platforms-five-ways-to-increase-revenue-with-direct-payment-options/.

Walsh, I 2009, Value of virtual currencies c US dollar virtual currency chart, Ivanwalsh.com, viewed 25 October 2010, http://www.ivanwalsh.com/technical-writing-tips-tools/value-of-virtual-currencies-v-us-dollar-virtual-currency-chart/2224/

Watters, A 2010, Facebook consolidates Its Virtual Currency with Facebook Credits, Read Write Web, viewed 25 September 2010, http://www.readwriteweb.com/archives/facebook_consolidates_its_virtual_currency_with_facebook_credits.php

Worthen, B 2010, Fraudsters Like Virtual Goods, THE WALL STREET JOURNAL, viewed 4 October 2010, http://online.wsj.com/article/SB10001424052748704723604575379333744203498.html