Ask HN: Virtual gifts vs real-world prizes?

I am currently working on a project that features a social network in which people can earn points for different actions around the site. Just like most forums or social networks, rank increases with the total points a user earns. I've been considering taking this system to the next level in order to give added incentive for participating in the site. There are a few options but the two that seem to stick out to me are:

1. Virtual gifts - User able to 'buy' digital gifts using points earned.

2. Real-world prizes - User able to claim real-world prizes using the points they have amassed, which are then shipped to the user. These prizes would obviously be much harder to obtain than virtual gifts.

I have seen many examples of sites using the first model, however the second seems to be a bit harder to find.

Has anyone else considered these options for their project before? Any insight would be useful.