The latest theory comes from IT pioneer Ted Nelson, who offers a three-part hypothesis – based on the Bitcoin inventor’s intelligence, publishing methods and interests — to show that Satoshi can be none other than Japanese math professor Shinichi Mochizuki.

Nelson’s “deduction” (which Forbes and others have portrayed as more crackpot than convincing) comes weeks after programmer Sergio Lerner published a blog post that claims to show Satoshi has mined a fortune worth of Bitcoins, and that he has spent only a small fraction of it. A related report by The Verge endorses Lerner’s account and says the financial trail provides new clues to help establish Satoshi’s identity.

This “who made Bitcoin?” buzz is a fun parlor game, especially at a time when everyone from serious investors to Homeland Security are clamoring to get a piece of the new currency. But, while many of the guesses are as silly as saying Lewis Carroll is Jack the Ripper, the process also raises the question of whether Satoshi is entitled to be left in peace.

Last week, someone who has corresponded with Satoshi told me he believes the Bitcoin inventor is one person, not three as some suggest, and that he is not Japanese (this is consistent with the Forbes writer’s theory that the pseudonym is a tribute to 1980′s Tokyo cyber-punk culture). I asked him why Satoshi has decided to remain anonymous in the first source.

According to the source, who is a Bitcoin developer and did not want to be named for this story, Satoshi’s motives are not rooted in myth-making or anything sinister. Instead, they reflect a simple desire for privacy and are consistent with the ethos of open-source coders who work on a project out of altruism or interest and then pass it on to others when they want to move on.

If this is the case, then Satoshi is part of a tradition of private people who eschew the spotlight and prefer to let their work speak for themselves. It’s easy to think of others such as Groklaw‘s Pamela Jones (who does heroic work opposing software patents), cartoonist Bill Watterson and literary figures like Harper Lee and Emily Dickinson. Together, these quiet and relatively anonymous figures provide an inspiring counter-narrative to suggestions by Google and Facebook that anonymity is somehow sinister and that our entire selves should be open for media merchandising.

The point is that we may never know the identity of Satoshi Nakamoto — and that’s okay.

(Image by Shutterstock 69195535)

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On Thursday evening, GigaOM hosted a meetup in San Jose where six Bitcoin authorities, including investors and engineers, shared their views on how the currency is evolving and who is using it. Here are three of the larger ideas to emerge from the discussion (if you want to catch up on the basics of Bitcoin, see “Yes, you should care about Bitcoin and here’s why“):

Bitcoin can help ordinary people

Wences Casares, a venture capitalist and CEO of Lemon Wallet, grew up in Argentina, where he experienced first hand what happens when a government mismanages its currency: inflation, capital controls and the destruction of family savings. Today, the same thing is happening all over again as desperate Argentines try to convert their pesos into a store of value that the government can’t seize or destroy.

One option is Bitcoin. Casares explained how some people in his country are using “old Android phones” to acquire and exchange Bitcoins at a time when the government is clamping down on the trade in U.S. dollars. More remarkably, Casares noted, is that many of the people using Bitcoin don’t know much about technology — but they do know, through hard experience, about currencies and can recognize alternate sources of money.

Other speakers and audience members also described the potential of cyber-currencies like Bitcoin to ameliorate the broken or compromised banking infrastructure in places like Latin America and Asia.

In the larger picture, Bitcoin could be just one part of an impending revolution in the world’s money transfer networks. Specifically, new currencies and transfer platforms may provide a way for people, including those who rely on remittances, to escape the high transfer fees imposed by credit card and wire companies — and simply exchange money directly with one another around the world at almost no cost.

Bitcoin is complicated — and is going to stay that way for a while

Mike Hearn is a young engineer from Google who uses his 20 percent time to work on developing Bitcoin software. At the meetup, he chatted about infrastructure and security with Bennett Hoffman, a former Microsoft employee who is building a new Bitcoin exchange called Buttercoin.

The two engineers agreed that the system that creates Bitcoins is secure and stable, even if parts of the surrounding ecosystem (exchanges, wallets and so on) are not. Hearn said Bitcoin is not ready for “your grandma” just yet — and that is, in part, a choice by those who are building and fine-tuning the Bitcoin open source code bequeathed by the currency’s pseudonymous creator, Satoshi Nakaomot.

Hearn’s point is that he and others are focused now on improving the processing and ledger system that facilitates Bitcoin transactions; they are ensuring that it can scale in the same way that the Visa payment network is able to handle sales spikes. This focus on “the guts” of Bitcoin means that, for now, the software will remain complicated and will be a challenge to those who aspire to build consumer-facing interfaces on top of it.

This won’t, however, prevent Bitcoin from gaining traction in the real world. David Barrett, CEO of Expensify, explained earlier in the evening that his firm now allows companies to reimburse their employees’ expense reports in Bitcoin. According to Barrett, the Bitcoin option is not a gimmick but rather a cheap and practical solution for companies to pay employees across borders.

Bitcoin will be regulated — and that’s a good thing

Bitcoin watchers gasped this weekend when the Department of Homeland Security executed a seizure warrant against the owner of Mt. Gox, the Japanese exchange where many people trade the currency. The law enforcement action, which comes after U.S. securities regulators said they are looking at Bitcoin, posed a new liquidity threat to the currency and also reinforced its outlaw reputation.

Surprisingly, the Bitcoin backers at the event appeared to welcome the government’s growing involvement. According to Micky Malka of Ribbit Capital, which is investing in Bitcoin ventures, regulation is not just inevitable — but desirable.

“I’m already regulated by eight central banks,” said Malka, explaining that regulation is simply part of any mature financial system and that, in the case of Bitcoin, it is likely to introduce a new level of stability. Malka and others, including the Bitcoin Foundation, said they are less interested in libertarian fantasies than they are in establishing a rational and informed regulatory structure around the currency. Malka added that his biggest fear for Bitcoin is not the U.S. government but shenanigans by speculators.

The bottom line

The San Jose event felt at times like a cross between an investor seminar and a church revival, with the packed room sometimes applauding wildly at the blue skies of Bitcoin. But that doesn’t mean there’s not something very real going on here — a lot of very smart and credible people are putting a lot of time and money on the line in an effort to redefine the world’s financial infrastructure.

According to Wences Caseres, the moment feels like 1992, when the world was on the cusp of discovering the world wide web but hadn’t yet found the right user interface. He might be right.

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“We will continue to add more ways to earn and spend Coins on a wider range of content and activities,” Mike George, Amazon’s VP of apps and games, said in a statement. “Today is Day One for Coins.”

Users can buy 100 coins for $1, with discounts up to 10 percent for larger purchases. Developers get their standard 70 percent revenue share for purchases made with Amazon Coins.

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What went wrong? Apart from being a bubble (albeit a bubble of a kind we’ve never quite seen before), it looks like Bitcoin fell victim to a single point of failure. But wait, you say, it’s a decentralized currency – how can that happen?

That single point of failure is the most popular Bitcoin currency exchange, MtGox. There are other exchanges, but the bulk of Bitcoin trading happens there. MtGox claims to have been hit over the last couple weeks’ mania by the twin ills of denial-of-service attacks and sudden, excessive popularity, both of which amount to the same thing: MtGox’s systems falling over. The operation (which is based in Japan) has also shut down its own service at least once in an attempt to “cool down” the market.

And every time that has happened, a panic sell-off has been the result. That’s not surprising: MtGox’s status as the best-known exchange has led it to become the main data source for most of the Bitcoin rate visualizations out there, so when Mt.Gox goes down it affects visibility for a lot of people. And when people can’t see what’s going on, they panic, find another exchange and sell, sell, sell. Same goes for the biggest exchange unilaterally deciding to cool down the market – hardly a sign of viability.

(Some people have theorized about more sinister motives, too.)

As I write, MtGox is conducting an AMA session on Reddit, in which it is explaining what it’s doing to stem the problems:

“Upgrading computer systems means ordering more servers (two weeks timeframe), setting up (one day), load testing (two weeks) and deployment (one day). It’s a process that can take up to one month in total… We are now enforcing new rules for people placing large amounts of trades in order to reduce risks of lag.”

Hardly ideal. But what – apart from boring old state-issued currency – is the alternative?

Introducing Ripple

The ideal alternative for Bitcoin as an ecosystem is to try to even the load between different exchanges, or at least settle on one that doesn’t fall over when people get keen on the currency. However, there is also an emerging rival of sorts called Ripple (not to be confused with the charitable donation tool of the same name).

Although its use is also pseudonymous, Ripple isn’t quite the grassroots effort that Bitcoin is: on Thursday its sponsor, OpenCoin, picked up a round of funding from Andreessen Horowitz, FF Angel IV, Lightspeed Venture Partners, Vast Ventures and Bitcoin Opportunity Fund, “an investment vehicle for Bitcoins and Bitcoin-related companies.” OpenCoin’s development chief is Jed McCaleb, the guy who founded MtGox in 2010.

However, while it doesn’t have the same Stick-It-To-The-Man vibe as Bitcoin does, Ripple does have a few advantages over its better-known rival. Chief among those is the fact that it doesn’t need currency exchanges: in fact, it is its own distributed currency exchange.

Ripple can be used to convert dollars into rupees, or for that matter Bitcoins, and send them across the world for the nominal fee of one “ripple” – this fee is only charged to stop people from swamping the system with millions of transactions. OpenCoin says a ripple is worth around a thousandth of a cent, and the company will put 100 billion of them into circulation — three quarters of which it will give away and a quarter of which it will keep for itself, in the hope that the value goes up. No more ripples will ever be created.

So, ripples are both in-service tokens for the mechanism of sending and exchanging real money, and a virtual currency in their own right. Of course, Ripple users will need to get their hard cash into the system somehow, so the system employs what it calls “gateways.” Anyone will be able to act as a gateway, even individuals and convenience stores – although online services will probably be the most convenient.

A faster self-regulating network

Ripple is a bit like Bitcoin, in that the network verifies transactions – this is essential if you’re removing the “trusted third party” role that banks usually fill, because someone needs to ensure that people aren’t double-spending their virtual money. However, there’s a big difference in how this happens.

With Bitcoin, nodes on the network called “miners” compete with each other to verify each block of transactions every 10 minutes. To verify a block, the miner has to complete a complex computational puzzle faster than its rivals do. In return for the electricity spent in doing so, the miner gets a certain number of freshly minted Bitcoins – this is how the system keeps working, and how new Bitcoins get brought into the system.

With Ripple, the nodes on the network also maintain a shared ledger – the equivalent of Bitcoin’s blockchain – but they don’t compete with each other to do so. Instead, the system uses a complex consensus mechanism to make sure transactions get verified and added to the ledger.

As this process has nothing to do with mining the virtual currency, there is no need to control the timing of the verification, meaning transactions can happen within seconds rather than in 10 minutes or more it takes with Bitcoin. This is clearly a big advantage, and there are others, such as the ability to create a chain of IOUs, either through people they personally know and trust, or by using ripples.

But…

Thus Ripple solves some of Bitcoin’s problems: transactions can take place more quickly, there’s no need for shaky third-party exchanges, and the whole shebang doesn’t need to waste a bunch of electricity on solving computational problems. However, I suspect Ripple will have its own problems.

The first is to do with money-laundering. This is also a big potential problem for Bitcoin – although good luck to anyone who tried that this week – but I’m a bit confused about how well-controlled these “gateways” will be. Ripple’s own explainer states that “your neighbor or corner grocery could be a gateway,” but OpenCoin told me that “we believe these gateways should be properly licensed and regulated in the same way as other financial institutions,” Does. Not. Compute.

The second problem is OpenCoin’s role in Ripple. The company maintains that it’s “just here to pay to develop and promote the network,” and doesn’t control Ripple, but at the same time it’s a for-profit company (hence this week’s investment) that has a vested interest in seeing the value of ripples increase. At the very least, there may be an inherent problem of perception here, particularly for those subscribing to Bitcoin’s core ethos.

Ripple will also need to find enough “validating nodes” to ensure an above-board network consensus process. Unlike Bitcoin’s miners, these nodes don’t get anything for their efforts other than seeing the system stay up and running. Granted, they also don’t need to expend as much electricity in doing their job, but their participation is still not a sure thing.

Finally – and perhaps most importantly – Ripple is really hard to understand, compared with traditional “fiat” currency. A lot of pieces need to be in place for it to work, and a lot of education needs to take place too. I would even go so far as to say that Ripple is more complex (even on a conceptual level) than Bitcoin, and that’s saying something.

Still, Ripple is interesting, and perhaps having an official sponsor will make it more viable than Bitcoin. Whatever happens, it’s another step towards the post-experimental use of digital currencies.

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In a class action lawsuit filed in San Jose, Glynnis Bohannon is seeking millions for minors and their parents and guardians under California’s consumer protection laws.

The issue appears to turn on Facebook’s requirement that users not “provide any false personal information.” It may also turn on the company’s rules for using its currency such as:

If you are under the age of 18, you may make payments only with the involvement of a parent or guardian. You should review these Payments Terms with a parent or guardian to make sure that you both understand them.

In a related court filing, Manager of Payment Operation Bill Richardson writes that “users who are purportedly aged 13-17 purchased well in excess of $5,000,000 in Facebook Credits in calendar year 2011.” Facebook requires users to be at least 13 to sign on to the social network.

Facebook Credits are widely used in many games and apps and allow users to do things like purchase virtual sheep or play poker on sites like Zynga. The currency is a big money maker for Facebook which takes a 30 percent cut of all transactions.

The issue of minors who rack up online currency bills has become an issue for other companies like Apple which is facing a lawsuit over so-called bait apps. These are games that can be downloaded for free but then induce minors to make in-app purchases. Our editor, Kevin Tofel, experienced the problem first hand after his step-daughter treated the family to $375 worth of virtual fish.

In the past, commentators have been divided over whether selling virtual goods to minors is unethical or whether it is simply a parenting question for which the companies should not be responsible.

Under US law, contacts with minors are typically “voidable”, meaning that the minor has the right to back out of the agreement (there are of course exceptions).

Update: “We believe this complaint is without merit and we will fight it vigorously,” accordingly to Facebook spokesman Andrew Noyes.

Facebook describes the lawsuit in this request to move the case to federal court from state court where it was filed in March:

Facebook Credits Removal

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GetJar’s virtual currency builds off the existing GetJar Gold program, which allows users to download specific premium apps for free. Now, GetJar is trying to further engage users and reward their loyalty by giving them gold coins they can use to buy Android apps and pay for in-app content. It’s a model that’s growing in favor and has already been employed in recent months in some form by Tapjoy and Fiksu.

Here’s how GetJar Gold currency works:

• A user who downloads a non-sponsored Android app can earn perhaps 5 coins and for a sponsored app, they can get about 30 coins. For now, they’ll only get rewarded for downloading content. The money goes into a wallet and can be used to buy premium apps, which could sell for 20 to 50 coins. Or they can use their money to buy in-app content in games that have incorporated the GetJar Gold SDK. The coins can also be used in apps on other app stores such as Android Market and Amazon Appstore if the developer enables that in their apps.
• Developers will be able to accept gold coins for additional content and they’ll be able to encourage downloads of other sponsored apps with a GetJar reward page inside their app, which features promoted apps from GetJar. They’ll be able to exchange the gold coins for cash at a rate of 1 coin for a penny with GetJar taking a 10 percent cut.

GetJar CEO Ilja Laurs told me the goal is to cut out the use of real money, which can be a hang-up for a lot of transactions. When users are prompted to buy in-app items, they often don’t get through the entire Google Checkout process. That represents a loss of revenue for developers. By injecting its own currency for consumers, it encourages them to download and it makes it easy especially in areas where its hard to set up a payment account. It can also create simple transactions that don’t require a password since the cash is virtual. And by making the currency liquid for developers, it gives them a more viable way to monetize their freemium apps. Developers will still be able to use existing checkout methods.

“The problem is you send 100 users through a checkout process and only one use will complete the whole process. But because virtual currency isn’t subjected to the same limitations and requirements, our conversions are massively better,” said Laurs. “We predict our conversions will be ten times higher than checkout or any credit card or even carrier conversion.”

Laurs said the other objective is to just engender more loyalty with users, to show them that their time spent with GetJar is valuable. He said user loyalty is even more important than simple spending. ”Loyalty is worth money and we’re willing to give a portion of that to users,” said Laurs. “We want to make people want to download with us.”

The program is funded by taking a chunk of the marketing dollars sponsors pay to GetJar to promote their apps. GetJar keeps a portion of that money and also takes a cut when developers cash out. But the remainder flows ultimately to developers.

It’s an interesting idea that is meant to keep GetJar as a main destination for app downloaders. The company said it’s the largest independent app store with more than 2 billion downloads to date and 350,000 mobile applications for Android. But it’s facing more competition from rival apps stores and other emerging app discovery services that are looking to become a go-to resource for finding apps.

GetJar Gold is in fact kind of similar to recent efforts from Tapjoy and Fisku. Tapjoy Games, a new consumer portal rewards people with virtual currency for downloading apps, watching a video ad or signing up for a subscription service. Fiksu’s FreeMyApps gives users credit for downloading and interacting with free apps, which they can use to buy other premium apps through FreeMyApps.

The trend toward paying users in virtual currency to download apps is ultimately about driving and keeping traffic, which is critical to all of these models. That’s not as much a concern for Android Market but increasingly, app stores are showing they need to entice users to keep them coming. Amazon has employed its free app of the day, which has caused some grumbling by developers, but it’s working toward that same goal of deepening engagement and loyalty. GetJar Gold also gives developers one more reason to list their apps on GetJar, which is also another brewing battle for app stores.

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CrowdMob — which is backed by Andreessen Horowitz, Crosslink Capital and Western Investments Capital, and was co-founded by former LOLapps creative director Damon Grow along with Alex Han and Matt Moore – is offering merchants and retailers a way to distribute their local deals through third-party apps, incentivizing mobile users to buy a deal in exchange for virtual currency or goods. Users who play certain mobile games on Android and iOS devices will see a nearby deal offered in a mobile ad, which they can purchase immediately without leaving the app.

This plays off of incentivized offers like those from Tapjoy, which provides mobile gamers with virtual currency in exchange for downloading an app, viewing an ad or signing up for subscription service. But instead of those largely digital actions, CrowdMob ties the incentive to real-world deals from merchants and retailers looking to drive traffic to their stores. Deal providers have been advertising through mobile apps, but CrowdMob believes it has created a unique network that plays off incentives, leverages social and viral channels and establishes a seamless payment and redemption system that encourages transactions, builds loyalty and helps with additional personalization of offers. It’s also another way for mobile developers and publishers to monetize their apps and acquire more users.

Tying virtual incentives to real-world deals

How will it work? Let’s break it down: CrowdMob works with a retailer to offer a deal inside an ad — banner, interstitial or offer wall — that’s running in a mobile game. When a user buys the deal in exchange for currency, they are given a number of options to pay for the deal, including credit card, PayPal or Amazon. The first time a user buys a deal, they create a CrowdMob account and if they sign in with Facebook, CrowdMob can take their preferences, use them to personalize future offers and also encourage people to share their deals via the social network. When users pay, they can then redeem the deal via their mobile phone when they visit a merchant. That merchant can confirm the purchase with a barcode scan, SMS notification, confirmation code, visual inspection or through an HTML5 app for merchants. Users can pull up their deal from their email account, from CrowdMob’s website or from any app that they’ve logged into CrowdMob from.

Merchants who sign up can use a self-serve tool to decide what kind of deal they want to run. They don’t pay up front, but typically make 50 percent of the revenue on a self-serve deal with 35 percent going to the app developer and 15 percent going to CrowdMob. They can tie CrowdMob into their existing loyalty programs, or they can create a digital loyalty card for their business within CrowdMob’s network. Business owners can then provide additional incentives or rewards like extra credit on their card when a user get a friend to buy a deal. Because the redemption loop is closed by CrowdMob, merchants can also see analytics on deals purchased, conversion rates, how often deals are shared, how many are repeat customers, and what the lifetime value is of users. They can also home in on their most loyal users or the ones who share the most.

Tapping the mobile gaming market

CEO and Co-Founder Grow tells me he learned from his gaming background how to efficiently acquire users, something Facebook developers, and more recently, mobile developers, have been able to do with incentivized offers. By pairing user acquisition in the booming mobile game market with social virality and creating a very seamless way to pay and redeem local offers, CrowdMob is able to fuse two markets into one, said Grow.

“It’s the first time that the world of incentivized virtual economies is matched with real-world goods,” Grow said.

Grow said CrowdMob has been testing the system in San Francisco and is opening the platform to merchants nationwide. It has also been pursuing a national deal with a gift card provider in time for the holidays. He said CrowdMob will offer merchant its self-serve tool, but it’s also building a direct sales staff. It’s open to working with deal providers, who would like to leverage CrowdMob to distribute their deals.

Reducing the friction

This is an interesting idea in the local deals market, which is being approached by all manner of companies looking to help merchants and retailers acquire users. I think CrowdMob has a solid take in that it’s focusing on mobile games and using a popular mechanism of offering virtual goods to entice users to take an action. This has been a very cost-effective way to acquire users. I particularly like the way CrowdMob has tried to make the buying and redemption process pretty simple. If users can buy a deal without really leaving the gaming experience, it’s easier to pull the trigger on a purchase. And by allowing merchants to redeem a deal through a variety of methods without having to take a paper coupon, they can facilitate easy redemptions and also get back information instantly on how deals are selling and being redeemed and who’s doing what.

Also, this also seems like a good deal for developers. They have a new way to monetize their apps and they can enjoy higher usage of their apps if users come back for deals or to redeem their offers. And as users share their deals, it encourages more awareness about their apps. Developers are also able to set a floor on CPMs, so if CrowdMob doesn’t deliver a specific amount, it shuts itself off so a developer can run a different ad.

Questions ahead

There are still questions about the long-term success of CrowdMob, which was founded last year and has raised about $2 million to date in seed funding. It’s relying on mostly self-serve tools and so its customers will need to be ready to step up to that. It’s a cost-effective approach but it may not work with many merchants who expect to deal with a live salesperson. Also, there’s so much noise and competition in the local deals space that it’s hard to get the attention of retailers and merchants. And the initial sign-up process could hold people back. The bigger value comes later after the first sign-up but getting past that initial purchase might not be easy.

Still, I think this is a pretty creative attempt to provide a tool that can benefit merchants, developers and consumers. I think sustainable models need to be a win for everyone and this might have the features to do that.

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In the test, users of those games will have only one choice of payment option, Facebook Credits, instead of the usual GameHouse options of paying by credit card or PayPal. Players will be able to integrate their game experience of these games on both GameHouse and Facebook and pay for goods from one funding source. Facebook and GameHouse, a unit of RealNetworks, are looking to see how players react to the option, which will determine how each proceeds with Facebook Credits.

This could be a big springboard for Facebook to become a major payments player if it aggressively takes its Facebook Credits to other properties on the web. It’s already made Facebook Credits mandatory for gaming apps on Facebook as of July 1 and an option for other Facebook apps. It recently extended credits to mobile app developers who want to build HTML5 apps on its mobile platform. It was also allowing people to pay using Facebook Credits for things like Facebook Deals. If it can leverage its relationships with Facebook Connect publishers, it can offer a fast and easy payment alternative to credit cards, PayPal or other phone billing options.

Facebook would likely have to lower its cut of transactions, which is currently 30 percent for Facebook developers, if it wants to move beyond virtual goods. But if it got it down to a percentage that was competitive, say around 5 percent or so, it could build off the many Facebook users that already have Facebook Credits. Websites like GameHouse, as well as independent game developers, may stand to benefit if they can drive more transactions with the help of Facebook Credits.

As I wrote before, this could be a stepping stone to Facebook Credits becoming a larger payment service. Right now, it’s not really participating in that battle, but if it can tap its existing relationships with more than 800 million users it might be able to put together a formidable mobile payment competitor. As Erick Tseng, head of mobile products for Facebook, told the crowd at GigaOM’s Mobilize conference last month, the social networking giant is increasingly becoming a mobile company. It stands to reason that Facebook would love to see how far it can take Facebook Credits and make it into a tool that can start with online mobile transactions for virtual goods but could transition into something bigger, first with purchases of physical goods online and then, who knows, perhaps into offline transactions.

That’s a long ways off, but it’s not unheard of. PayPal is making the transition from an online payment company to one that is now poised to target point of sale transactions. Facebook obviously would need to do a whole lot of work to follow in those footsteps. And it has a lot of hurdles in becoming a major payment player: Ogilvy & Mather conducted a survey and found that Facebook was the least trusted option for mobile payments trailing Visa, MasterCard, American Express and PayPal by a wide distance.

But I wouldn’t be surprised if Facebook is eyeing this market. Mobile payments is booming now and expected to become a $670 billion market by 2015. But it starts with small tests like the one with GameHouse. GameHouse president Matthew Hulett said the test will help drive more users to GameHouse as it tries to expand its business to both social and mobile. He said he’s looking forward to bringing Facebook Credits to its 75 mobile apps as well.

“People already have cash balances on Facebook and the amount of friction this reduces is so much greater for us, we haven’t seen any negative impact on us using Facebook Credits after the mandated date of July 1 and I’m very confident consumers like to pay this way,” he said.

Hulett said he believes though its early Facebook Credits could be a big driver of revenue for Facebook, similar to how PayPal has become the main engine of growth for eBay. That will still be ways off, but if Facebook plays its cards right and learns important lessons along the way, it might not be a stretch.

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