I've been asking everyone I know a simple question, "Have you spent any cash today?" The answer, about 75 percent of the time, is no. Credit cards and digital wallets are replacing cash faster than calorie consumption after a workout.
At a recent Digital Kids Conference, I asked the question again, this time to a panel of experts and an audience of kids' digital toy lovers. This time I phrased it differently: "Are kids, who often play games for virtual currency, more likely to understand the ins and outs of real world virtual currency? Will they expect the real world to be more virtual?"
My panel consisted of a child user experience researcher and two kids' game developers who both use in-game rewards to help motivate kids to learn. First, we looked at the current crop of games and how their reward systems worked. From Club Penguin to Minecraft, young kids are keenly aware of how they earn rewards for play. Some games, say Candy Crush, lets you play for free unless you want to play faster, or Kids N Bids, which lets kids use earned points in the game to buy things off of a scaled down eBay auction, are more overtly tying real world money to play. Others, like Chore Master, blur the lines of on and offline by offering both real and virtual rewards (whatever parents want) for doing their real world chores.
Unanticipated Consequences
Panelist Vikas Gupta of Wonder Workshop pointed out that gaming behaviors can often have unanticipated consequences. Citing a study where parents were fined for not picking their kids up on time from a day care center in order to make them more prompt, he noted that parents actually were all too happy to pay the fine and then would feel justified showing up late. And then there's the freakonomics experience of using rewards for potty training that goes awry. Panelist Grant Hosford of The Foos explained his company's entrepreneurial coding culture where kids as young as five get to code their own games, post them online, and get paid with internal currency when other kids play their games.
Kids Know Real When They See It
According to Shuli Gilutz, kids don't transfer what they do online to the real world. She interviewed a dozen kids ages 6-12 and found that kids understand the difference between "game cash" and "real cash" and there's no transference in behavior. In other words, they may be allowance hoarders or savers in the real world but they report treating virtual currency differently.
Millennial Proof of Point
Self-reporting kids talking about differentiating between games and real life is one thing, but a glance at the current cash environment (or lack of it) is proof of how spending patterns are changing. The night of the Super Bowl, Venmo, a website that allows reimbursements and redistribution of money amongst friends, crashed, presumably as millennials settled their wagers high tech style. According to the Independent Community Bankers of America, 25 percent of millennials have less than $5 cash on them seven days a week. Cash alternatives including PayPal, Square Cash, Apple Pay and Google Wallet have become increasingly commonplace. And for now, novelty effect notwithstanding, the tap of a phone seems to hold sway for millennials compared to the swipe of a credit card.
There may not be a direct correlation between game play with virtual currency and a willingness to use virtual currency yet, but someone ought to be studying this in earnest. I'm convinced that the generation of 6-12 year olds will consider coins something only for collecting by the time they are twenty. Is their fluency in the underlying economic systems in their games part of the preparedness? My gut says, "You betcha."
Robin Raskin is founder of Living in Digital Times (LIDT), a team of technophiles who bring together top experts and the latest innovations that intersect lifestyle and technology. LIDT produces conferences and expos at CES and throughout the year focusing on how technology enhances every aspect of our lives through the eyes of today's digital consumer.