Facebook credit value could be tied to real products

Facebook launched a digital currency called Facebook credits to allow users to make purchases within games and other applications. In response to a related article, I suggested Facebook tie the credits to real products.

Facebook could tie credits to the value of real products, not Federal Reserve dollars/tokens, to give users protection from monetary confiscation (AKA inflation/devaluation). Facebook credits could be tied to a commodity index such as the Rogers International Commodity Index. “RJII”, an ETN (Exchange Traded Note) based on the Rogers Index, trades at $7.18, as of May 2010. One Facebook credit could be worth 0.14 shares of RJII. Here’s a sample calculation:

RJII Share Price = $7.18

$10 = 1.4 shares of RJII (10 x .14) = 10 Facebook Credits

If the price of RJII rises to $14 due to monetary confiscation, the credits would hold their value. Redeeming Facebook credits would be as follows:

RJII Share Price = $14.00

10 Facebook Credits = 1.4 shares of RJII (10 x .14 shares RJII) = $20 (1.4 shares x $14 RJII share price)

Facebook would need to convert the dollars used to purchase credits into RJII shares to avoid exposure to the dollar and to be able to always make the conversion.

Read the article about Facebook credits.

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