With the continuing movement of social life into new types of places such as cyberspace the function and meaning of gift-exchange has emerged as being an important anthropological tool for the investigation of social relations online. In cyberspace several fascinating questions come into light, for example: what kinds of gifts are exchanged in cyberspace; how are these gifts exchanged there and what does the exchange of gifts in cyberspace signify? An analysis of the 'gift of time' is particularly pertinent when investigating friendship in virtual communities because gift exchange in cyberspace can be related to notions of reciprocity and trust. For example, my own ethnographic research in Cybertown, a virtual community on the Internet, suggests that one important concept for friendship in Cybertown is the exchange of the 'gift of time', and highlights its role in the creation of trust and reciprocity. In explaining this phenomenon, this paper examines the function and meaning of gift exchange in Cybertown in relation to contemporary theoretical notions of the gift, explains what kinds of obligations gifts engender and what role gift practices play in creating networks of friendship.