
Philip Rosedale of High Fidelity just made a major announcement that his new virtual world will use blockchain technology to coin its official currency, the HFC, and to manage IP rights to user-generated content:
This currency will be a public blockchain with a consensus group made up of multiple parties, and ultimately independent of High Fidelity’s control. It will achieve the key goal of a virtual world currency, which is to provide an easy way to enable transactions between virtual world users who physically live in different parts of the world with different local money systems. HFC will be convertible to local currencies or to other cryptocurrencies at popular exchanges, enabling creators of digital goods and experiences to immediately start making money. In addition to providing the basis for in-world transactions, the HFC blockchain will also be used to store information about the ownership of digital assets in virtual worlds. We plan to use this aspect of the blockchain to provide an open way to protect intellectual property by embedding certification affirming item ownership into the blockchain.
Unlike wildly fluctuating electric currencies like Bitcoin and Ethereum, however, HTC will be carefully managed by the company to keep its value and exchange rate relatively stable:
The dream of a global digital currency that can be used for everyday transactions has been hampered by the speculative excitement around their rapid increase in value. But Second Life’s Linden Dollar, supporting an economy with a million or so people generating more than $500M in yearly transactions, demonstrated that price stability is achievable in a digital currency through active management that increases the available money supply as economic activity (e.g. users and transactions) increases. So rather than creating (or selling) a fixed number of ‘tokens’, we are going to design a system and policies that will gradually increase the amount of HFC in circulation . Because the currency will be created on a public blockchain with a federation of signers, we can use an open process, voting, smart contracts and other mechanisms to regulate the monetary policy.
Philip tells me that consumer-level users won’t see all this complex and obscure blockchain technology in their High Fidelity experience:
“In the client you will just have a simple 'balance' and an 'inventory' of things you own," he explains. "If you are asked to pay for something, you may have to enter a password. You won't have to do any fancy cryptocurrency things. The differences with using a blockchain are behind the scenes, and not visible to a casual user.”
This is pretty big news. If High Fidelity can keep the currency value stable as well as Second Life's Linden Dollar (which has remained roughly L$ 250 to US$ 1 since inception) this may not only have a major impact on virtual worlds and social VR, but become a compelling alternative to Bitcoin and other virtual currencies. And while I just reported that indie project Decentraland is also using blockchain-based currency, Philip’s plan goes far beyond that -- and High Fidelity is a well-funded startup backed by some of Silicon Valley’s top VCs and leading lights.
Philip tells me he’s confident that they can keep the value of HTC stable, and isn’t worried about blockchain currency speculators glomming onto the currency: