- Implementing a thin bitcoin client with the virtual world client. Pros: I don't have to worry about managing virtual currency at all. Cons: insecure for non tech-aware users, extremely long bootstrap proccess, may saturate the network with many small transactions?.
- Implementing built-in eWallets. Pros: instant transactions, while the actual transactions are processed in blocks of 10-60 minutes and it's easier for the network; security for the end user. I can set a daily cap to avoid problems (returning automatically any money above the cap, with a fee). Cons: the security is in my end, so I need to implement it and I'm responsable for it; also it somewhat defeats the long-term purpose of having a P2P virtual world.
You might already know this, but with eWallets, you don't need to make an actual network transaction each time a user makes an in-game transfer. You can just give each user credit that they have with you, and that credit can be transferred. This would allow for instant transfers.
If the user wants to withdraw bitcoins out of the game, then they provide you with a bitcoin address that you send to, and you deduct the amount withdrawn from their credit, or likewise, if they want to deposit, you provide them with a dynamically generated address and add the amount deposited to their credit.
Also, I've thought of implementing alternative crypto-currencies (litecoin)
Bitcoin is probably the best option as it has a much larger base of users and thus a greater potential of becoming widely accepted on the internet. It's also the most secure from a >51% attack.