The way that we spend money changes over time. Since decimalisation in 1971 (when we started using pounds and pence), we’ve seen the introduction of debit cards in 1987, contactless payments in 2007, and the arrival of digital wallets in 2015. Now, the UK government and the Bank of England are exploring the idea of introducing a new type of money: the digital pound. Although there are no plans for this to be introduced right now, the Bank of England and HM Treasury believe that it’s likely to be needed in the future. It wouldn’t replace cash but would help make payments more efficient and give people new ways to use their money.
This might sound like a big change for most of us, but GoHenry data* shows that kids are one step ahead. They’re already using digital currencies when gaming: Robux, Minecoins and V-Bucks are used to buy virtual items, and the money is debited straight from their GoHenry accounts. In fact, research suggests that kids increasingly prefer to receive virtual currencies rather than cash.
How do virtual currencies work?
Virtual currencies are a type of digital currency used in some of the most popular online gaming platforms. Some of these games, such as Roblox and Minecraft, are free to play, but players can use virtual currencies to unlock in-game advantages or buy add-ons such as new outfits or accessories to personalise their avatars.
In 2022 alone, GoHenry kids spent £ 2.1 million on the gaming platform Roblox, which works out at an average annual spend of £44.00 per gamer.* This is a significant spend when you consider that the largest group of Roblox users (29%) is 9-12-year-olds, and 25% of players are under the age of nine. The game uses a freemium/premium model, which means it’s free to download and play, but players have to pay for extras using the in-game currency called Robux. This can be used to buy special outfits or animations, unique abilities, weapons and other objects.
There are several different ways to get Robux: players can buy them, get them as part of their premium membership, trade for them, or receive a donation. They can also earn them by charging other users to play games that they’ve created or by charging for items in their games. This means that as well as spending ‘real’ money on Robux, players can also earn ‘real’ money. However, to do this, players must be at least 13 years old, have a premium membership, and have at least 100,000 Robux in their account.
Although Roblox is by far the most popular online game among GoHenry kids, their annual spend dropped by 3% compared to 2021. However, in 2022, Roblox reported that its number of daily active users reached 56 million, which is a year-on-year increase of 23%.
GoHenry kids spent a total of £931,000 in Fortnite in 2022, which is an average of £37.00 per gamer.* It’s popular because it’s free to play on a range of devices, and new updates and challenges mean that it’s constantly evolving. In the game, players fight to survive in a post-apocalyptic world by battling zombie-like characters who are controlled either by the game itself or by other gamers.
Fortnite has a PEGI rating of 12+, but there isn’t a strict age verification process, which means that younger players can and do access the game. Just like Roblox, players can get an enhanced experience via in-app purchases. They can buy V-Bucks, which are Fortnite’s virtual currency, and use them to buy a battle pass, which gives them bonus rewards such as ‘skins’ and extra challenges. V-Bucks can either be bought with real money or earned through play.
Unlike Roblox, over 60% of Fortnite players are aged 16-24, and GoHenry kids spent less of their pocket money on V-Bucks in 2022: their average spend has decreased by 23% since 2021.
In 2022, GoHenry kids spent a total of £3,160 on Minecraft, which is around £23.00 per player.* This blocky building game has been praised for encouraging creative thinking, geometry and even engineering skills. There are three modes of play: Adventure, Creative and Survival, and each has four levels of difficulty.
Although Minecraft started out as a free download, now players can only access the Classic desktop version of the game for free. To get the full, up-to-date experience, new users can get a free trial, after which they’ll need to buy the game. The good news is that it’s a one-time purchase, but costs vary depending on the console. After that, players can make in-game purchases for accessories such as skins (clothing), textures (to improve the appearance of objects) and access to other players’ worlds. These are paid for with Minecoins – the game’s virtual currency – and can be bought via a Minecraft account.
Minecraft is particularly popular with younger children: 68% of boys, and 32% of girls aged 6-8 play Minecraft. Their age, along with the fact that the Classic version of the game can be played for free, may explain their lower spend. However, GoHenry data shows that the amount of money spent on Minecoins has increased by 31% since 2021.
Are there any risks associated with virtual currencies?
Spending money on imaginary ‘coins’ might seem like a waste of money to parents, but in lots of ways, it’s no different to the pay-to-play arcade games that many of us remember from our childhood. Not only that, virtual currencies are an important part of the gaming experience, and in-app purchases can enrich their experience. However, players can still play – and have fun – without spending any extra money.
To play it safe, remind kids that it’s important to only buy in-game currencies within the game itself. There are some websites which sell discounted virtual currencies, but these are often operated by scammers.
It’s also wise to buy virtual currencies only when your child needs them. You’re unlikely to be able to get a refund unless they were bought by mistake, so it’s best not to buy too much just in case they lose interest.
If you’re worried about your child getting carried away and spending all their pocket money on virtual currencies, it’s easy to set limits and restrictions within your GoHenry app. This means you don’t have to worry about them racking up huge bills on your card, and it also serves to remind them that virtual currencies do cost ‘real’ money.
“Gaming is now an established part of childhood, and it offers an important social outlet for many kids and teens. The key is to ensure children are playing responsibly and this includes being aware of in-game spending, which is not always easy when no physical money is changing hands. Putting simple measures in place such as spend limits is one way to manage this, and provides a good opportunity to teach children how to spend money safely and responsibly in our increasingly cashless society.”
Louise Hill, CEO and co-founder, GoHenry
The future of digital currencies
Gamers have been using virtual currencies like Pokécoins, FIFA Points, V-Bucks and Robux for the last decade, so most young people are already far more familiar with the concept of digital currencies than their parents.
Charlene Hurlock, co-founder of clothes-swapping platform SWOPERZ, says: “Children have embraced the digital age and, thanks to gamification, growing numbers of them are at ease with virtual currencies. Our UK-based site allows children aged six to 16 to swap their clothes. Every time they upload an item, they get digital tokens to pay for something else on the platform. The secure, user-verified environment allows children to swap items and learn about the importance of budgeting in total safety.”
Early in 2023, initial plans for a central digital bank currency (CDBC) or digital pound were rejected by the House of Lords, largely due to risks relating to privacy and financial stability.
Despite that, the Bank of England continues to look into the possibility of introducing a digital pound – dubbed ‘Britcoin’ – and, following a public consultation, it is planning to develop the technology and policy requirements that would be needed. Even if plans to launch a digital pound ultimately get the green light, the Bank of England is clear that it wouldn’t be introduced until near the end of the decade, at the earliest. Given that GoHenry data* shows that only 10% of 10-16 year-olds currently spend in cash, we can be confident that Generation Z and Generation Alpha will be early adopters.
* GoHenry internal data is based on 587,590 UK GoHenry members aged 6-18, transacting between 1 March 2022 and 28 Feb 2023