(FORTUNE Magazine) – Joichi Ito, a venture capitalist in Tokyo, knows just about everybody in tech. That's good for business, but it also means others are constantly approaching him to broker connections around the world. Though the superkinetic Ito likes to help, he has trouble finding the time. "I need to throttle back my interactions with people," he says. "I need to get fewer requests from higher-quality sources." So this summer Ito joined a website called Linkedin, one of about 15 so-called social-networking companies or sites formed in the past year. These businesses, all part of the hottest online trend, act as intricate friendship flow charts, showing who is friends or partners with whom. The best-known site, called Friendster, launched in May and is already hosting almost two million users, most of whom--unlike the businesspeople using Linkedin--are looking for dates, love, or sex.

I know about Ito's network because a few weeks ago he invited me to join--adding my name to his 444 direct connections. (Not everyone is as dedicated; Ito is Linkedin's most wired guy). Now I have indirect personal access to 10,100 people on the site. What makes this different than just being able to rifle through his Outlook contacts is that any mail I send to a Linkedin connection of Ito's has to be approved by Ito. If someone I sign up wants to reach that same person, his e-mail has to go through both me and Ito. Today's social networks typically give you access to friends of friends out to four degrees of separation. Everybody you meet on such a site is thus connected to you by a traceable network of acquaintance. Not surprisingly, Ito hopes to use Linkedin to use his time more efficiently: "I can imagine eventually telling people, 'If you want to reach me, do it through Linkedin.' That way everyone would come with references."

In the free-ranging world of the Internet, the ties created by social-networking sites have people excited. Some are calling it a social revolution. Much of the talk has focused on how well sites like Friendster aid dating. But social networking can be used for lots of other things--for example, at a later stage in life, finding a babysitter. You might find someone to play tennis with, or someone who likes the same kind of music you do and can suggest new artists. And if the best jobs come through connections, what better way to find work than through a giant online social network? In San Francisco, where unemployment is rampant and social networking is nearly an obsession for just about everyone under 35, it seems everybody looking for a job is using sites like Friendster, Linkedin, Tribe.net, or Ryze, all of which allow you to join only if you invite friends to join with you, or if you are yourself an invitee.

The phenomenon may be seen as offering people tools analogous to the most powerful ones being used in business. Writes Yong Su Kim, who maintains a blog on software trends at YSK.com: "It's almost like the CRM and ERP of peoples' professional and personal lives. Social-networking software is designed to help people look for new relationships (acquire customers), maximize existing relationships (sell to the installed base), and optimize their social interactions (order management, manufacturing, supply chain, and distribution)."

So far Friendster and most of its competitors are free, and all the excitement is making this feel a bit like 1999. Dozens of companies are frantically trying to figure out how to make such connections into a profitable business without ruining their viral appeal. Venture capitalists are circling. Says one, Bill Gurley of Benchmark Capital: "Free e-mail like Hotmail had viral marketing but not increasing returns. I see both in this social-networking thing. As the network gets bigger and bigger, there's more value to incremental users." Translation: The more people there are on the network, the more likely you are to find a hot date or a good job.

But where's the money? Gurley is certain it's there. "If you can generate that many users or page views--and I know this sounds very 1997ish--there's value." Ads, for instance, can be keyed to people's interests or hobbies. These sites could also end up being sold to the biggest Net players, helping them lure users. Few doubt that AOL, MSN, Yahoo, and maybe even Google will want to incorporate social networking into their portal businesses. Meanwhile new companies like Contact Network, Socialtext, and Spoke Software are generating revenues by selling social-networking software to corporations. Typically such products work behind the corporate firewall to mine employees' contact lists and e-mail traffic patterns. They have various ways of ensuring that no employee's data are used without permission.

There may be a new kind of Internet emerging--one more about connecting people to people than people to websites. The blog phenomenon, where blogs link to blogs, is another aspect of this same trend. Mark Pincus, an investor in Friendster and founder of Tribe.net, calls this the early phases of the "peopleweb"--a user-controlled network of identities and relationships that transcends any one site or company. How that web will take shape remains murky, but in the explosive growth of social networking we are surely seeing the future, using the Net to connect people with bonds of trust and friendship--and maybe sex.

David Kirkpatrick is senior editor for Internet and technology. Fast Forward also appears weekly on fortune.com.