Platform-Based Currencies

In recent years, many large Internet companies have introduced their own digital currencies. Most of these companies run large platforms that span media, entertainment, and e-commerce. The market has seen Amazon Coins, Facebook Credits, Q-coins, Microsoft Points, and Reddit gold, to only name a few. This is on top of the many video games and gaming platforms that have their own currencies—for example, World of Warcraft gold, Second Life’s Linden dollars, or Eve Online’s Interstellar Kredits. All of these currencies have been introduced by large online platforms that, in one way or another, help interactions between their large groups of diverse members: buyers and sellers, game players, or simply people who want to exchange pictures and messages with one another. These interactions often involve some form of trade that may be helped by a special, custom-built, currency that online platforms provide for the convenience of their members. It is important to see that in all these cases, the currency is entirely controlled by the platform, which can set all of its features and properties. In this chapter, we review a few such “centrally controlled” currencies to understand the key drivers of their design and the rules governing their use.