Update, 2017

Since the blog below was written, the Smileycoin has changed considerably.

In 2015, the Smileycoin is registered on more exchanges (notably cryptopia.co.nz), it can be used to buy coffee on the University of Iceland campus and there are multiple web pages describing its uses. In particular, users in Iceland can go to smly.is to buy discount coupons for a domestic airline, tickets to the cinema, Amazon coupons etc. Several other companies are expected to join the project in the near future.

The reward scheme in the tutor-web has also changed and 2.7 billion SMLY have been awarded to students up to December 2016. Several students had earned over 20 million SMLY during the fall semester of 2016.

The price of the SMLY did not change much during the first two years, Nov. 2014-Nov. 2016, staying around 1 Satoshi or 10^-8 BTC throughout. Once students started selling their earnings in December 2016 the SMLY price fell to about 0.25 Satoshi. The price is very volatile and it takes little to move it up or down by a factor of 4 (as of February 2017).

The price of a Smileycoin

So how much is a SMLY actually worth? Not much, actually.

To get an exact figure as of today, you can check into a cryptocurrency exchange such as c-cex.com where the sales price is currently listed at 0.00000001 BTC. This means that it takes 100 million SMLY to buy one Bitcoin or, put another way, 1 million SMLY will buy 3 dollars (US).

Standard economics will tell you that this makes perfect sense: Why would anyone want to keep, or buy, SMLY if there is no use for it, nothing to buy with it? 

This has been seen with other electronic currencies: If there is no real use for it then people do the obvious thing, namely sell it as fast as possible.

Current and immediate use of the SMLY

The current use of the SMLY is primarily as a rewarding mechanism inside the tutor-web system, both when the tutor-web is used from the web-based server and as the education-in-a-box system on the road. In both cases this works like a cryptocoin faucet or water bowl which hands out coins in exchange for some work, in this case studying. In economic terms, this creates a supply of SMLY, but no demand.

In fall, 2015 the tutor-web will be extended so as to allow students to request tutors (anonymously). The students can then pay for the tutors' services using SMLY. The first tests of this system will be in a classroom where a large class will be split into two groups, one being the "tutors" and the other the "students". To make life simple, the "tutors" will charge their "students" one SMLY during class. In the following session the roles will be switched. In a controlled classroom experiment this is easy to organise since credit will be given for participation. This tutor-web extension will include setting up a page of available tutors, including their "grade" (from their students) and their rate (in SMLY). The hope is that this will lead to some continuing to offer to tutor their peers, each charging their own rates for tutoring.

This will provide some uses for the SMLY, but is unlikely to have much of an effect on economic demand, as the tutors will have nowhere to go with their SMLY. At present the economic demand is driven solely by speculation (and belief in the tutor-web+Smileycoin concept).

Should the SMLY be more than a smiley?

An obvious first question is whether we should simply leave the Smileycoin as it is, i.e. as the equivalent of a hand-drawn smiley face in a child's drawing book. To answer this, just consider the obvious uses in terms of rewarding for performance and paying for tutors, there is a considerable difference between a worthless SMLY and one which has some economic value. If a SMLY can buy goods and services then this is much more likely to entice students to take the extra measures needed to obtain a high grade rather than a minimal passing grade. One should not forget that a SMLY with real economic value can buy Bitcoin which again can be used to buy Dell computers or Amazon gift cards to name a few. Electronic currencies are not just computer artefacts but actual units of value, the SMLY is simply very very low at the moment.

Consider now the low-income regions of the world: A student who earns SMLY worth one US dollar has enough to support a family for a day in many regions of the world. This can simply mean the difference between being able to study or not.

In Europe it would make a considerable difference if the SMLY payments to tutors had real value. At the moment a tutor in Iceland would need to request about 10 million SMLY for an hour of work in order to reach the sorts of payments which a tutor expect. Even then, such an amount may not be sellable on a market.

Can SMLY be given a nonzero value?

This begs the obvious question, which has been mentioned before in this forum: How can we make the SMLY more interesting?

One option would be to ask philanthropists to pitch in and simply buy Smileycoins off the market. Although this is certainly one way forward, it is not  step towards a sustainable SMLY economy.

A slightly better approach is to try to get companies which sell goods or services to accept SMLY as payment in some form.

Campus coffee shops could accept SMLY either for coffee, for a discount on coffee or to purchase discount cards. Many coffee shops give discount cards of some form, eg punch-cards where the 10th cup is free. 
Some bike shops already give discounts and might be willing to give student discounts for SMLY.

Some phone companies spend heavily on promoting their services and some of them even specialise in students. 

A game producer might be willing to offer a month of play time for a certain number of SMLY.

Airlines traditionally gives travel points to their travellers and commonly allow a traveller to buy travel points to fill up into an order. A domestic airline might be willing to offer travel points as a part of a promotional campaign.

The problem with all these suggestions is that this acceptance of SMLY for purchase is always a part of a promotion where the recipient basically takes the SMLY as a zero value and has no use for it and this is not a long-term economy.

The long-term view for a sustainable SMLY economy must be to arrange for a closed system, where a student can earn SMLY, pay someone for a service and any recipient can always spend the SMLY on something of interest. Thus one needs to "close the loop".

There are many ways to close such loops. The shortest loop is for a student to pay the SMLY back into the tutor-web project. To get this started, the SMLY wallet is currently being modified to permit connections to a simple computer game. Thus a student will be able to earn SMLY by studying and then spend those SMLY playing a computer game. This provides a simple closed loop but is mainly intended to provide an example for other programmers who may come up with their own ideas.

Are YOU interested in supporting the project -- or simply having some fun with coins?

The easiest way to support the project is to either donate directly or buy some SMLY. You can find donation information right on the tutor-web home page but buying SMLY is a bit different as you get to keep the SMLY. To do that, proceed as follows.

First, if you have some experience with cryptocurrencies and own Bitcoin (BTC), just head over to the c-cex exchange, register if needed, transfer some Bitcoin and buy SMLY.

If you have no experience at all with cryptocurrencies, you can have some fun trying out the following, which seems to be the simplest method to try out these fancy coins: First go to virwox.com, where you can buy Bitcoin. Actually, you deposit USD or EUR from PayPal or credit card, then buy some SSL (game tokens) and then exchange SSL for BTC. Then head over to the exchange, c-cex, where you will want to register, go to Balances to get a BTC address in c-cex and head back to virwox where you can now withdraw BTC to that address.

 This last paragraph should also show you that it is actually quite difficult to get into the "world of crypto", from traditional money. That is in fact one of the beauties of the SMLY that it allows students to easily test cryptocurrencies without a lot of effort - and with no investment at all.