Facebook Credits: Virtual Currency Overview and Shutdown (2011-2013)
Explore the history and functionality of Facebook Credits, the virtual currency used for in-game purchases on Facebook from 2011 to 2013, and its evolution into modern digital currencies.
Daniel Rathburn, an editor at Investopedia, specializes in tax, accounting, regulatory, and cryptocurrency topics.
What Were Facebook Credits?
Facebook Credits were a proprietary virtual currency introduced by Facebook to facilitate the purchase of digital goods within online games and applications on its platform. Users could acquire these credits through various payment methods including credit cards, PayPal, mobile billing, and physical retail outlets. Launched in 2011, Facebook Credits provided a unified currency for transactions across multiple games and apps until their discontinuation in 2013.
Key Highlights
- Facebook phased out Credits starting in 2012, completing the shutdown in 2013.
- The currency was designed for purchasing virtual or in-game items exclusively on Facebook.
- Each credit was priced at $0.10 USD, with Facebook retaining a 30% commission on all sales made through Credits.
- The Credits system was introduced in beta in 2011 and fully retired by 2013.
- In 2019, Facebook announced Libra, a blockchain-based digital currency aiming to succeed Credits with a global reach.
Understanding the Facebook Credits System
Facebook Credits acted as an intermediary currency, simplifying transactions within Facebook's ecosystem by replacing local currencies with a standardized virtual unit. This currency enabled users to purchase intangible digital items such as virtual gifts, game assets, and other in-app purchases. The revenue model included a 30% fee on all transactions processed via Credits.
By early 2011, Facebook mandated that all game developers on its platform accept Credits exclusively for in-app transactions. The currency was backed by fiat currencies from over 50 countries, ensuring stability and usability worldwide. However, in 2012, Facebook announced the discontinuation of Credits, converting remaining balances back to users' local currencies.
From Facebook Credits to Libra: The Evolution of Digital Currency
In 2019, Facebook revisited the concept of a platform-specific digital currency with the announcement of Libra, a blockchain-powered stablecoin designed to facilitate global transactions. Unlike Facebook Credits, Libra aimed to maintain a stable value by being backed by a basket of fiat currencies and was supported by major financial entities such as PayPal, Visa, and MasterCard, although some partners later withdrew.
Libra faced significant regulatory scrutiny and skepticism from the cryptocurrency community regarding its security and technological robustness. Despite challenges, Libra represents Facebook's ongoing commitment to integrating digital currency solutions within its ecosystem.
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