Wednesday, November 16, 2005

Finally, we are there: Microsoft points to be issued as a means of payment !!!

VNUnet reports in this article that as a part of the further delivery and expansion in the gaming segment, Microsoft will launch its own e-money system, known as Microsoft Points. Cards will be sold for �13 containing 1,600 points which can be used online to pay for games ranging from 150 to 800 points.

At last I would say. This is an example of an issuer of digital value which is so big, that it does make sense to only spend the value at the issuer. As such Microsoft does not have to deal with financial legislation. The Microsoft Points are simply a prepayment of goods.

The concept of company points (or similarly: MacDonald points, Virgin points; Easypoints in the case of the Easy-imperium) is a further step towards an economy in which it becomes quite explicit what it is that consumers trusts. It has been expected for a long time, and now it is here.

Why could we expect it? Well, in short because there is no theoretical reason why a consumer would not trust a large brand as much as a central bank (that issues currency on behalf of government). In practice however most companies do not have a consumer base that equals a complete population in a country; so the use of company points will then alway be limited.

This changed with the Internet and the increased irrelevance of national borders. As a result, e-gold for example, now has a goldreserve bigger than a whole lot of small central banks. And similarly, the user base of Paypal equals the size of large EU-countries. So the real worldspanning brands and companies do have sufficient critical mass for their company-currency to become useful to the consumer.

Q.E.D. (by Microsoft).