Getting users to trust a virtual currency
I am about to build a service where a virtual currency is a vital part. The kind of virtual money, I am talking about here something, which is conceptually equivalent to money in a game like second life, which can be used to buy virtual islands or whatever. The kind of money the users will invest could be several thousand dollars.
My question, is how can I get the users to trust this currency. Specifically, I am asking how I can get my users to trust that they can convert digital currency to dollars in the future. I do have cash reserves to ensure that all of the digital money could be converted to dollars, but how can I prove this to the users? I guess that I could negotiate with an escrow service or something like that, but then I expect to spend 5-10% in fees to them. Are there any other options?
I am already planning on doing everything on the branding side, because I understand the importance of branding with regards to trust.
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What do you mean by a virtual currency? Do you want to create another thing like Bitcoin? Or do you just want users to convert their money into something like points (which you for example get on your tesco clubcard) and then pay in some online shops with the points, and if someone wants their money back, they just convert it back? Basicly, 90% of "real" money is in fact "virtual" money and does only exist on computers. You of course can create "real" virtual money, but I don't think it'll be easy to get people's trust so quickly. – Lukeshek 13 years ago
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@lukeshek Excellent questions. I will edit my question. – David 13 years ago
1 Answer
First of all, you'll always get people who trust you. You have to make sure they always get their money back if they request it. This way you won't get people complaining all over the Internet about your service.
The brand is also very important. Focus on your website and make sure it looks decent. There are many companies I would never trust just because their websites look rubish.
And in terms of how to prove that you have the money - I would register a limited company and declare the money you have. However, this might differ depending on what country you live in. I live in Poland and here each limited company must declare its share capital, pay the money in its bank account, and state this amount on official documents issued by the company and in terms and conditions on the company website. On the other hand, I've registered a limited company in England and there you're not obliged to do so, but you still have to make your annual accounts available online.
Find out how this works in your country, and check whether you can declare the money you have in this way.
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+1 for good points, but would you trust me with thousands of dollars (or even just a hundred), if register a limited company, have a decent website, and declare my share capital, and promise to pay you promptly if you need the money back? I am thinking that I need something more in the beginning to get people started with trusting me. – David 13 years ago
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Depending on how much you wanted from me. I wouldn't mind converting $50, but to invest more, I would have to use your service for a while and make sure it's safe. And I think that's the only way you can make customers trust you. – Lukeshek 13 years ago
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There is another thing I thought of. Maybe you could try to find a trustworthy partner company and cooperate? – Lukeshek 13 years ago
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I really like your idea of getting a partner company involved. I have no idea who it would be, but that would surely make a huge difference, especially if they have a decent brand. – David 13 years ago
