The Second Life Economy
Tuesday, August 14th, 2007 at 1:56 PM by: Zee LindenThe question often comes up, just who is the Alan Greenspan of Second Life? Who pulls the levers and otherwise steers the fate of the Second Life economy? Incorporating a dynamic mixture of Linden Dollars (L$), land sales, commercial transactions and intellectual property, the economy is in fact managed by a number of people at Linden Lab. Despite being one of the central features of the virtual world, I still think there is a general haziness around conceptually what these tools represent. Today I’ll try to answer some of the more common questions:
Just what is the Linden Dollar (L$)?Linden Lab implemented the L$ to facilitate the exchange of digital property. In July there were approximately 12.5 million transactions, averaging less than a few dollars each. Simply put, the L$ represents a limited license right to use certain features of the Second Life service – to participate in the virtual economy. It is a virtual medium of exchange that has real-world value associated with its ability to be traded with others, for real-world currency. While Linden Lab does not guarantee a demand for the L$ or that residents will be able to trade at a consistent rate, a healthy Linden Dollar economy is critical to the health of our service and as such Linden Lab has a strong business interest in maintaining the stability of the L$.
Given real world economies have seen currency collapses and hyperinflation, what’s to stop that happening in a virtual one? The Second Life virtual economy is much more akin to a completely paper- currency (cash) based economy where the total value of all currency can be ascertained simply by adding up the sum of L$ in all active accounts. Linden Lab increases the supply of L$ in-world in two ways: (1) as a part of the premium subscription stipends that it…
distributes each week, and (2) by selling L$ directly on the exchange. Linden Lab reduces the supply of Linden dollars in-world by accepting L$ for certain in-world system events such as uploading an image or posting a classified advertisement. These are known as sinks. The various Sinks and Sources and their amounts can be seen here. Given the expanding population and popularity of Second Life, expanding the money supply has to date been the most frequently used tool in our toolkit. As population growth stabilizes, the use and development of Linden Dollar sinks will become more prominent.
Would these sinks be sufficient to adequately re-adjust the money supply? Currently there is approximately L$2.6 billion in world held by 1.7 million accounts. The average held in each account is L$1,687 and the median is L$161. In an average month, more than 75% of the in-world money supply moves through the LindeX. Each month our sinks represent about 3% of the money supply, stipends represent 7% of the supply, and our L$ sales on the LindeX represent from 0 to 5% of the supply.Although we currently do not accept L$ in lieu of land sale and maintenance fee payments, we could. Acceptance by Linden Lab of just one month of land sale and maintenance fees in L$ denominated payments could cut the in-world money supply by more than 50%. In general, its our goal to maintain large enough sinks such that the only day to day and minute to minute mechanism that we need to manage the exchange rate within a narrow band is to sell L$ on the exchange. Since August of 2006 this has kept the exchange rate quite stable as you can see here.
Why haven’t you put in place any regulations for “virtual” banking institutions in-world? Are there plans to regulate? It is important here to distinguish between real-world banks and the “virtual banking” services that some people are trying to develop in Second Life. From a simple perspective, banks exist in the real world so you have a place more convenient than your mattress in which to store your cash. Banks in the real world attract capital by offering to pay an interest rate. They then turn around and try to lend that capital to worthy borrowers earning money on the spread between the interest they pay and the interest they earn. Because Linden Lab holds everyone’s L$ as a database entry in each account, virtual banks don’t offer a superior “storage” alternative.
Probably the most important point is that real-world banks are regulated by real-world laws. Linden Lab does not intend to recreate or subvert real-world laws in any way.We are not aware of any institutions in Second Life that are insured by the Federal Deposit Insurance Corporation or similar governmental agencies in other countries. We caution our residents to be wary of anyone offering extremely high interest rates at no risk, either in the real world or in Second Life — if it sounds too good to be true, it probably is.
August 14th, 2007 at 2:04 PM
“if it sounds too good to be true, it probably is.”
very well said
August 14th, 2007 at 2:05 PM
so what Linden is saying that L$ is a currency Equall to RL currency but electronically and as Such is a Commodity?
So if somebody Commits Fraud say and rips off alot of good people that is equiverlent to RL Fraud?
August 14th, 2007 at 2:06 PM
Linden Lab does not intend to recreate or subvert real-world laws in any way.
No, they only steal ur money from ur account without telling u why.
they dont proof from what they doing it, so LL are thiefs
they should play alone in their garage until land is that cheap, they cannot pay their servers.
when childs play company…..
August 14th, 2007 at 2:09 PM
Thanks for lettings us know
August 14th, 2007 at 2:19 PM
Tisk-Tisk!….
If you are prohibiting the use of Games of Chance due to Real Life required gaming license etc, why not prohibit the use of InWorld Banking?..After all these banks are not FDIC insured and i’m sure they have the capability to up and leave game with Numerous Residents accts/linden funds?
Seems that we residents are investing into the game at a very COSTLY price and being left to the wolves now to fend for ourselves. After all it is the RESIDENTS that keep the game up and running outside of the technical expertises of LL employees.
If your gonna be fair in this, you should do so by aquiring the necessary license to keep inworld gaming flowing. OR comply with the IRS rules needed as well to keep this. There are many of us that wouldnt mind the cost of these thing being implemented and passed down to ourselves if it means keeping Games of Chance allowable in game. There are enough residents to where this wouldnt or “Shouldnt” affect each of us greatly on our monthly tier fees.
Jack…I luv ya dude but seriously?…..I see some of the changes that are now coming into play a grave and dismall future for SL. Huggggs!
August 14th, 2007 at 2:20 PM
@notagambler
Mind stating what kind of theft they did? I keep very tight record of all my SL transactions and every cent (real and virtual) is accounted for.
August 14th, 2007 at 2:22 PM
[...] el blog oficial de Second Life explican algunas aristas de la economía del metaverso, uno de los temás más rupturistas y polémicos en torno al [...]
August 14th, 2007 at 2:25 PM
@DaQueenB
And then there is the vast majority of us who *would* mind the license costs being passed down to us.
August 14th, 2007 at 2:27 PM
Just ban the banks inworld, make it against the TOS. You can do it. Personally I think it’s crazy to invest in a bank here but as many people have been taken in and lost a hell of a lot of income (which ironically would have greatly aided the economy) then simply outlaw banking.
August 14th, 2007 at 2:34 PM
“Probably the most important point is that real-world banks are regulated by real-world laws. Linden Lab does not intend to recreate or subvert real-world laws in any way.”
This is key, but it misses. These *are* “real world banks” and Linden Lab is right, they *are* governed by “real world laws.” So when those laws are apparently being broken (e.g. “if it sounds too good to be true, it probably is”) why wouldn’t Linden Lab step in and preserve remaining assets for depositors, etc. rather than let it perpetuate? Linden Lab does with land scams, theft of Lindens via password abuse, etc. This is just a little more complex. It’s just as wrong, and just as — apparently — illegal. (For those unfamiliar, this is discussed at length, re: Ginko Financial’s collapse, here:
http://virtuallyblind.com/category/virtually-blind-series/ginko-financial/
August 14th, 2007 at 2:35 PM
Is it coincidental that this post, referencing “in world banks” comes right after the Ginko collapse? I think not.
Broccoli
August 14th, 2007 at 2:36 PM
Basically this is a very creative way of conforming to legal counsel’s requirements that you disassociate yourselves from any virtual financial institutions within the SL grid. I appreciate the economic outline but I do think that outside forces have compromised the LL vision of freedom of creativity and innovation. As soon as you limit creativity in any way, and that applies to gambling, you seek to legislate morality. This stumps growth. LL is basically caught between a rock and a hard place as countries and government agencies continue to increase the pressure to conform to their standards. I rather think that the dream in the long run will die, the experiment will fail, and us ‘lab rats’ will be transported to an alternative facility.
August 14th, 2007 at 2:46 PM
I am happy that all the casinos are gone, hopefully the next thing to go is camping. And also it’s nice that land prices are coming back down, I think this si all good stuff even though a lot of people think it is negative because second life has gotten to the point for where people are replacing it with their first lives, It’s time that it turned back in to a game
I would also like to see all the banks go as well!
August 14th, 2007 at 2:46 PM
There is a question then, “What is a virtual bank?”
Traditional banks will usually accept deposits and then lend that money to borrowers they screen, with some kind of security. i.e. if a borrower defaults on a car loan, the car can be repossessed.
Now, virtual “banks” in SL accept “deposits” for which they promise to pay interest on those deposits. However, do they lend this money to borrowers, and can they get some kind of security on that loan? (I can’t see how this would be possible at this time.)
OR, have they been taking “deposits”, and investing this money in different businesses, companies, schemes etc in order to promise a fantastically high rate of return?
IMHO, if an avatar takes people’s money for investment, they should not be calling themselves banks, but rather something else such as an investment houses etc.
Careful scrutiny of people using the word “bank” might go some way to helping sorting the honest from the stupid and dishonest.
August 14th, 2007 at 2:46 PM
I’d prefer a market without a currency….why should SL have a currency anyway? It’s just like all those asian games that suddenly popped up outa nowhere, they’re “free forever” but you can use cash to buy items that’ll boost your gameplay, same with SL, you can use cash to buy items that’ll boost your fun.
I think it’d be an intersting test on a test server or something, to start an SL, that has no currency that everyone drools or fights over.
August 14th, 2007 at 2:46 PM
I am disappointed that the linden is a “real dollar” when it comes to taxes and not being allowed to gamble with it, but when I lose inventory due to a server failure (which has happened) then it’s “play money” and LL isn’t accountable for that loss.
You can’t have it both ways, LL.
And yes, good point that folks who are ripping other people off in-world… if the linden is a “real dollar”, this means they need to be PROSECUTED, not just suspended for a day or the victim told ’sorry, but you should know better’.
August 14th, 2007 at 2:49 PM
Well-said/well-asked, Broccoli … I thought exactly the same thing when I read this … hmmm. … are we too cynical?
Naaah!
August 14th, 2007 at 2:50 PM
Thank you for posting this. I like it when Linden Lab talks more openly on issues that concern us, and hope they continue to do so.
=)
August 14th, 2007 at 2:53 PM
Euhm. Just one thing: Alan Greenspan ‘retired’ and was replaced with Ben Bernanke.
August 14th, 2007 at 2:56 PM
I must say even after watching it all that banks are useful for me as i can hold my cash the interest i could care about though i do hold l elsewhere so i still have backup incase of a thing like this though i have bought into stocks among variuos companies and yes the bank did grant me a loan for payment on my tier which i returned in 4 days though i had been given much much more time before any real charge so i think the banks are working fine in fact the sl banks have absorbed the shock of the ginko deal and have easily replaced any issues with solutions
August 14th, 2007 at 3:01 PM
After the Ginko fiasco is this not horse and barn door stuff, the warning about too good to be true being just that? Surely anybody who put money into a virtual institution also sends cheques to the the Nigerian spam scam and was one of the “suckers” old PT Barnum used to talk about.
L$ cost rl$ but who does LL or anyone of the people who take rl$ out of sl think they are kidding that the sl economy is like the rl one?
If they do IM me and I have a bridge in New York (rl) you might be interested in. I will sell it at a loss since I bought it many years ago and it’s well used.
Cheers and thanks for the post..I look forward to the comments on this one..should be a doozey as nothing is closer to people’s hearts than their $ sl or rl.
August 14th, 2007 at 3:04 PM
I don’t know about anybody else,but the reason I started useing a “Bank” in S/L was because I got tired of logging on every Wed. to find all my cash gone.Good luck getting a Linden to get it back to you.
August 14th, 2007 at 3:06 PM
Second life also sounded to good to be true.
And what’s up with the no rl laws excuse? You just banned casino’s based on US laws?
August 14th, 2007 at 3:09 PM
Wow - you guys are killing my site. It’ll be back up shortly — they’re moving me to a bigger pipe as I type this. Check back in a bit. Sorry about that.
August 14th, 2007 at 3:13 PM
I find it interesting that LL feels it is necessary to prop up the exchange rate by “sinking” excess L$ funds. Sure, the stipend artificially inflates the available funds, but excess funds would normally just be exchanged US$. All I can see this does is cause land owners to pay more US$ for land and gives LL another income source on top of sales and tier.
But I am puzzled as to how LL does regulate sinks. They are fixed charges in the main. And if someone wants to pay L$100k for a weekly classified, LL neither encourages nor prevents them.
August 14th, 2007 at 3:15 PM
Well thats the problem here, you see. What’s ‘real’ and whats ‘the game’?
Whats real is the fact that the Linden is money, pure and simple. And in RL there are consumers wanting to borrow those funds, not so much so in SL. The only way for a ‘bank’ to make money in SL is to speculate in land, or cash out and deposit funds in a RL bank.
I myself, as a newb, dealt with ‘Citizen’s Bank’ to purchase property. They were fair, friendly and charged a great deal of interest - all told up front and great communication right through, even allowed me to pay in RL Dollars and avoid exchange fees ^^
But the collapse of Ginko and other reports from the grid indicate that LL BETTER pay attention to this. The one thing that stands out here in SL is the economy in RL dollars. Thats a sensitive thing too, and as the collapse of the USD recently shows, it CAN happen to you!
=D
August 14th, 2007 at 3:15 PM
i do hope LL is not going to increase the cost for sending high quality textures through the jpeg destruction system. it is bad enough that lL continues to erode the resolution of already damages textures by limiting what can be resolved and what resolutions can be used instead of finding out what causes the client crashes and fixing the software. Secondlife is supposed to be an immersive graphical environment and the efforts to destroy the quality of this graphical environment are perhaps the very worst thing LL can be doing.
i do agree that free accounts should incur a cost for exceeding certain inventory limits and perhaps exceeding certain transaction counts. perhaps there should be a flat limit on how much money can be transferred off sl by free accounts? perhaps free accounts should not be allowed to cash out more than $20 a month period. this includes selling lindens on external systems such as slexchange.com. After all, if the free accounts are making that much money then they can afford to drop the cash into their sl account in dollars and become a paid subscriber. this would require a new status of course since they would not have payment info on file. no payment info on file but paying their fair share status?
anyway… i’m not a fan of being charged more for services that degrade the quality of the experience. fix those now.
August 14th, 2007 at 3:16 PM
I run an in-world bank, and it’s saddening to me to hear people wanting to ban inworld banks.
Guess what that would mean?
In RL Banks quite much dictate the economic health, like it or not, look deep enough and you see it.
Also, Banks makes people without the cash upfront possible to make their dreams come true etc etc.
Well, atlest, in the end of the day, i know that atleast i am trying to run as stabile, transparent and honest operation as possible.
And at the moment, running an in-world bank is also Legal.
Asked 2 lawyers already
August 14th, 2007 at 3:16 PM
@13 - Spot on. Real enough two way cashable for gambling, should be real enough for banking too. Or do you think the 700k real USD swallowed in Ginko was all stipends deposited?
Not to mention cross invsting, cross ownership, and swapping of board roles between Ginko and the WSE… Since in the end, like for gambling, it is real money being lost here, I think the RL financial authorities will be taking a keen interest in this. Or is Linden Lab happy for SL to be known as a haven for dodgy wheeler dealing that would be illegal in RL? Come to Second Life, the only place where you can lose your shirt twice: once to dodgy banks, and the other through inv loss.
Or is that a LL bright idea to stimulate the economy? Only seems to be expensive no copy items that get eaten by the asset servers, never freebies. Is there a load of code in there? If llObjectValue > x, llSetRandomInvLossChance…
And the real question is what economy? Most of it was land deals. Now land prices are plummetting like a stone. Concurrency goes up in small jumps, but doesn’t compete or keep up with the 800 plus new sims added every month. That just spreads people and customers out, increases the number of malls and clubs, so all are increasingly more than half empty.
It might be nice if the Key Metrics had a total of Lindens for “Business Owners” to compare with land, and come to that, why are those numbers in USD at different bands, when everything else is in L$. Are you trying to hide something?
And printing money normally leads to sorrow in RL, virtual worlds are no different.
August 14th, 2007 at 3:17 PM
There is a sucker born every minute and this way to the egress! LOL. PT Barnum was right as the gullible bumpkins who gambled in SL or handed their money over to the “Bank” have discovered. Please, send me your Lindens instead…I will even give you a receipt!
And all this whining about costs and tiers and LL taking your money! You are paying next to nothing for hours of fun so suck it up and go somewhere else if you dont like it here. No one has a gun to your head to force you to stay.
August 14th, 2007 at 3:20 PM
Wow - THANKS ZEE!
Your post is very instructive and an interesting read. It all makes killer sense and now I understand why you won’t take tier payments in Lindens LOL
Thank you for an educational and interesting look into the inner workings of thinks.
As for virtual banks… I have to say, I never really understood it for exactly the reasons you mention… storage of my funnymoney isn’t an issue. Only reason to use a virtual bank is to earn that interest they’re promising.
Heh…
I’ll keep my cash in my pocket, all. But thanks anayway. ;P
August 14th, 2007 at 3:20 PM
You know what I think?
Linden Labs has the ability to make lindens and take lindens it’ll be a simple task now that all the records are ont he WSE to just simply give us back our linden dollars from the ginko’s collaspe and make us all happy, while still holding them responsible for paying using their site-based credit system. That’ll save their sims from being sold, their economy from going into a depression and their clients from leaving them. This issue would be solved, and we all could feel at ease.
But then again. Thats a million dollar dept Ginko’s has, out of the how many millions SL generates?
August 14th, 2007 at 3:22 PM
Oh, and did I mention that’ll also make Ginko’s legally responsible for paying IRL?
August 14th, 2007 at 3:27 PM
i relied on ginko to suplie interest as i do not have weekly strip spend like some people. i also relie on camping. taking these away and pooresr classes of society will be cut out fun.
i think LL should get all nessary legal licences for banking and gambling. there enough major corperations to shoulder it with corperation tax. second life is equivilent to a virtual state. so if did want out licencing thne have declare selves and servers a new newtral country, albeiet a “virtual one”. part land inamerica is deamed sovern land of other countries in their embasies. why cant linden lab declair itself to be embersay of this virtual land?
it only have get it self recognised by united nations. we could all declaire ourselves as citizens of sl, as our accounts could act passports?
just idea. but no more talk please killing banking off n world. besides u can sell bonds which all deposits ginko converted all cash. it was our panic that killed ginko! the assests are still earning intrest. sme what at a slower rate. it just it not bank any more but an investment house. and forced into that position to protect the assets. until emotions cooled.if bothred to read ginkos post on web page. and yes i had lot invested in ginko, so both victuim and surprised it was not insured at very least, that should been a requirmemt. maybe ll could require that of any futre would be investment house or would be bank? at least something to think about.
August 14th, 2007 at 3:27 PM
If I remember correctly Zee you weren.t here last August so I will correct you statement. “Since August of 2006 this has kept the exchange rate quite stable as you can see here.”
Last 8/1/2006 the average exchange rate was 305.32/1 and by 9/1/2006 it was 282.62/1. That is a drop of 8% in 1 month, I hardly call that stable. By 10/1/2006 it was 272.53/1 for another 1 month drop of 3.7%. Since then though with the 8/13/2007 rate of 269.32/1 the exchange rate has only dropped 1.1% in 10 months. So you can say, “Since October of 2006 this has kept the exchange rate quite stable as you can see here”.
August 14th, 2007 at 3:31 PM
With virtual people, virtual land, virtual objects, virtual money, virtual banks, virtual sex, I think maybe some of us are getting our first and second lives crossed. As control in a virtual world is virtually impossible, I suggest people figure out what they are prepared to pay for the virtual entertainment value of sl and put only that in.
Sorry that bridge sold really quickly, which wasn’t surprising at all, at all.
AND…right on Ann Otoole….the texture things is super important..in a virtual kinda way.
August 14th, 2007 at 3:33 PM
@ Ann:
A PIOF, non-subscription payer can cashout? My word, I need to pay more attention then!
I rather thought i had a 0L$ cashout limit… another reason to not go premie then!
August 14th, 2007 at 3:36 PM
@11 - I concur on the casinos and the camping, too. But low land prices devalue the land held by small and medium land owners, too - right now, if I wanted to up and leave SL, I would take a hit ov 40% on all land I own.
That is not ok, I think, neither creating too much money nor creating too much land is a good move in the long run, I think.
SL is NO GAME, it never was. No points, no levels, no quests, it is a simulation, not a game.
The moment it is turned into a “game”, it will have seen the last of me!
I don’t know who ever came up with the notion that SL is a game - it never was!
I thought land priced at around L$10 quite ok, as a matter of fact, having seen L$20 and even L$25!
Why should land be cheaper than the cost of creating it? If the price achieved at the initial sale of the land can no longer cover the cost of purchasing and deploying the server it runs on, then new regions would have to be financed from tier payments. Then there would be less of that money for improvements!
I would rather see land at 10 L$ per sq m and more investment in the infrastructure, like datacenter interconnects and asset servers.
August 14th, 2007 at 3:39 PM
I’ve read all of these posts so far, and I’m surprised that I haven’t seen anyone else mention it before myself.
Forget the banking crash and economic wobbliness of late, remember that SL has been getting some great press (especially European), for about 6 months - 1 year now. It can, and will turn against you, and ruin SL for everyone if you let it.
The press love to hype things up, both good and bad, and if they do then you’d better watch out because the 1.7 million citizens of SL who still log in regularly will start dropping, and the L$ they will spend here will fall too.
LL is a real company, with real employees, who demand real wages. Since the company has expanded massively due to the good publicity, just imagine what bad publicity may do ….
It’s time to start looking at the horizon, not a few steps in front …
August 14th, 2007 at 4:02 PM
‘Linden Lab does not intend to recreate or subvert real-world laws in any way’ I know LL is referring to finance and banking in the that statement. But what is all this about recreating real world laws on gambling and subverting the laws on slavery
August 14th, 2007 at 4:09 PM
1) If LL had not GOMed the GOM there would be no value on the L$ by LL; they could of then left gambling ect alone.
2) If LL is going to start regulating the L$ as if it were legal tender; again I give you “gambling” then they should do so across the board. Regulate the in world banks.
3) I cash in my L$ threw LL system called the Lindex; there for you do accept my L$ as tier fees in the end.
I do not understand this need to make things so murky. I like many other collect our L$ turn them in and pay our RL tier. LL not only condones it they give us the way and the means.
Who is trying to cover their backside here. If there is no monetary value to the L$ then there is no need for the IRS. I do not for one minute think that LL is looking out for me or anyone else. They are careful in their wording to cover themselves.
The IRS, GOM’s LL. Now that’s not a headline I would like to see; but let;s not pretend the wording is anything but very careful in it’s presentation.
m’kay.
August 14th, 2007 at 4:11 PM
#29
Control of a virtual world is possible, the lindens trace every dollar you spend with them automatically, and every object you recieve, right down to the second. They own every sim, and can take any object away from you just by knowing the time you got it.
The social aspects are also controllable, every string of chat passes through a host server, keywords can be blocked, alarms can be raised when a violation occurs and people can be booted for saying things. Software can do anything you program it to, very effectively too.
I’m sorry, but your wrong, SL can be controlled, but the people who can control it are not willing to do so.
August 14th, 2007 at 4:15 PM
When RL money comes into play, it no longer remains a game, simply put.
I for one applaud getting rid of lag ridden, bot infested casinos, and hope that camping is soon eliminated too. Oh! While you’re at it? Ban brothels/escorting too, if you don’t mind please
August 14th, 2007 at 4:16 PM
Probably the most important point is that real-world banks are regulated by real-world laws. Linden Lab does not intend to recreate or subvert real-world laws “where are the casino’s”?
August 14th, 2007 at 4:19 PM
I’m curious about how Linden dollars can be considered merely “a limited license right to use certain features of the Second Life service”, if they can be freely exchanged on an open market for US$. How are Linden dollars anything other than a de facto fiat currency?
Similarly, the gambling ban, as LL states in their own policy, is intended to keep LL within the law as it pertains to the US ban on online gambling. If the Linden dollar were not an actual currency, if it were only a “limited license,” and not something of value, how would wagering with Linden dollars be in violation of the prohibition of online gambling? Doesn’t LL’s ban on gambling constitute an implicit acknowledgment that the Linden dollar is a currency rather than a license?
It rather seems like LL is trying to have it both ways, asserting that the Linden dollar is not a currency, but that it also has intrinsic value. I’m not trying to make my point in order to be cheeky; if there is a way for the Linden dollar to both be a thing of monetary value while at the same time being a “limited license” rather than a fiat currency, I think it would be helpful to have some clarification to that end.
August 14th, 2007 at 4:20 PM
If you maintain that Linden dollars are not in any way real money then how can you turn around and say gambling with fake money is real gambling? Monopoly has a casino game and it uses fake money in gambling and it is for ages 12 and up.Sometimes I think that Linden is “cleaning up” SL’s “moral” issues to pave the way for election campaigns in here. If that happens to be the case you better make political assassination of avatars against the TOS too, cause if one of those hillbillies tries to set foot on my land I am coming out shooting
August 14th, 2007 at 4:22 PM
it’s hitler dead?
August 14th, 2007 at 4:28 PM
Maybe a mattress is a better place to put my money than within SecondLife. Toss that at LewisPR and see if it sticks.
August 14th, 2007 at 4:37 PM
I’ve been thinking about this problem, and I think I might have an interesting solution.
The casinos were major sinks in SL, but more, they were places that people were willing to expend their money to allow those places to BE sinks. People enjoyed going there and spending money and such; now that gambling is illegal, the land owners have no reason to maintin ownership, and the people who were once spending their money are now hording it.
LL needs to work with the few remaining sim owners to replace the casinos with something both equally profitable and equally fun for all involved. The people who own the sims are going to want to earn something for their efforts and land use, and LL seems to need the sinks that casinos were, as well as the investments in their stack exchange.
There are a bunch of rough ideas, such as amusement parks and simple games of chance that don’t violate the rules against gambling, yet still award some kind of prizes worth trying for, to draw people back to those sims. Income could come from, say, some kinds of charge to enter fee for the sim or per ride/whatever… not all that different from the amount someone had to pay to play slots or other gambling games.
It’s just an idea, but hopefully, it can be used in some way.
August 14th, 2007 at 4:44 PM
“Linden Lab does not intend to recreate or subvert real-world laws in any way.”
Hmm.. that seems to me to be very contradictory to your ban on gambling. That certainly is an intention to recreate real-world laws.
August 14th, 2007 at 4:49 PM
“It is a virtual medium of exchange that has real-world value associated with its ability to be traded with others, for real-world currency. While Linden Lab does not guarantee a demand for the L$ or that residents will be able to trade at a consistent rate, a healthy Linden Dollar economy is critical to the health of our service and as such Linden Lab has a strong business interest in maintaining the stability of the L$.”
I love how they using words now, really the world is not healthy needs help fast! If your saying that lies in people placing the money market on sl. Your looking for problems! What well happen when you find people corning the market and making more then you thought? Banned them? or worse ? I don`t trust LL these days because they say SL is a working Eco, but what they don`t tell you is they change the rules anytime they please. No thank you ZEE!
August 14th, 2007 at 4:52 PM
Virtual banks in-world don’t really have a chance. The fact that todays banks make money off of borrowers is the ticket. Virtual Banks have no way to hold borrowers accountable. In addition, people who deposit money into virtual banks have no way to hold virtual banks accountable. The accountablity in SL between residents and companies is nil. Don’t trust in a virtual bank unless you can afford it. It’s really a wager to see if they will flop.
August 14th, 2007 at 4:53 PM
#35…you are right of course…but not controllable by you and I..unless we buy a controlling interest in LL of course. Would you buy this company? The point I think I may be trying to make is that the only difference between sending LL a cheque and the Nigerian Spam scam a cheque is that LL gives us something back and has a real address (at least “they” tell me they do). And if you gave LL a BIG cheque you gambled and seem to be losing..but let’s not get into gambling..HA F-ing Ha !
#37…sheesh your comments got me worried…The very last thing I want is group spam about rl politicals. Can you get me a really good weapon for our assassination squad.
As a non-USian I think maybe your “silent,moral,right-wing christian mob” has infiltrated LL because I see their agenda poking it’s ugly nose in. Hope I offended somebody with that.
August 14th, 2007 at 4:54 PM
Are SL Banks Safe…Because They are Not Chartered By Government,SL Or Lindens,They Are Only As Safe As The Confidence Of Their Depositors.
Will They Be Here Next Week?……..Very Likely!
Will They Be Here Next Month?…….A Good Bet!
Next Year?……………………………..Will SL Be Here?
As a Place To Hold Excess L$ In The Short Term,They Are As Safe As Needed Right Now.To Get A Little Interest,Etc.
As a Long term Investment,Your Risk….Pull It Out and Invest It In Rl..Bring It Back As Needed…Safer
Currency Traders Use Them For Overnight Interest(Like Real Banks Do). But Personally 100’s Of thousands,Be Willing To Loose It All .
I Mean,A “Bank” Making Loans In Romania,To Avoid US Laws,You Decide.
Gambling,Do You Hear A Large Sucking Sound.Other Than Campers…Where Dose The Money Go?
August 14th, 2007 at 4:55 PM
I think the issue of translating Linden dollars back into real currency is something that shoudl be discontinued. It would permit the re instatement of ‘gambling’ since one way currency exchange from real currency to Linden currency would no longer count as gambling. Allowing the Linden to real currency exchange not only will effect gambling restrictions but it will only be a matter of time when the US Tax department will be asking for their fair share of currency exchanges especially if you make a profit. Gambling was only the start. Any Linden exchanges will start being victims of a 33% tax…because the IRS LOVES taking out the maxmum when they don’t know what the actual tax shoudl be….buh bye profitable businesses in Second Life.
August 14th, 2007 at 4:55 PM
ohne
August 14th, 2007 at 4:59 PM
So with this post LL confirms that we play with really money and that they will refund all our lost items? You cant say here is real money, buy stuff with it and then you make us loose it just so we would spend more money to buy a replacement? If lindens are real money LL’s first concern is to see that they have back ups for our inventories.
August 14th, 2007 at 4:59 PM
Is the money supply of Linden Dollars increasing per active resident? Is there a good way to evaluate if the SL economy is under inflationary pressures?
August 14th, 2007 at 5:03 PM
I would add that unlike the real world, Second Life’s economy can be significantly altered through the actions of the Lindens. I experienced this with the collapse of Ginko, and would say I feel that in part my loss of money was tied directly in with the Linden’s policy decisions, and feel extremely wronged as a result. I won’t deny responsibility I realized there was risk, but the “powers that be” apparently would rather write a it’s not my fault column instead of carefully examing how their policies will effect the economy.
August 14th, 2007 at 5:05 PM
“Once I built a railroad, and made it run, made it run against time. Once I built a railroad, and now it’s gone, ……bother can you spare me a dime…” Since I have lost all my Lindens on bad investments, bad advice, etc., etc…… I will now live as a bum in Wasteland! ( not such a bad place, not such a cheap place either, but I love the people!) Hope to see some of you there! Thank you Linden Labs, you have really helped by inflating the economy and dropping land prices by flooding the market! You have helped me achieve a dream! so to speak!
LOL!
August 14th, 2007 at 5:06 PM
My only problem with the LindeX is that my own account and many others that I know don’t even allow us to sell on the LindeX anymore, even though I’ve had an account for over a year. Yet despite my numerous attempts to fill out a request ticket to get my trading limit back at the right account level they (big surprise) never get answered. Ironically, several of us were able to sell and buy on the LindeX just fine until the whole gambling ban had everybody taking their money out of SL…
That’s one reason that I do like rival currency exchanges like SLX–they are at least reliable. I have a hard time believing that LL has any real clue that they know how to run an economy because their own support when problems arise in game is nonexistent. Perhaps it comes as no surprise, then, that LL still wholly supports Ginko and the WSE; two more organizations to steal and funnel money while taking economic blame off of the Lindens’ shoulders in the process.
I remember the days when the Lindens would arbitrarily delete items that they saw in world to be culturally offensive, though they didn’t like to “get involved.” I can’t think of anything more culturally offensive than letting a thief like Nicholas or Luke off the hook, citing “if it’s too good to be true, then it is” as warning. Heck, LL (sometimes) ban the avatars that pass around the objects that, if you accept it, take all your in game lindens. The only difference here is that Ginko, WSE, and other banks and exchanges don’t steal their money via prims, but via persuasion and the smoke screen mentality that if what they were doing was wrong, LL wouldn’t let them continue.
August 14th, 2007 at 5:06 PM
It’s always a good idea to never draw attention to yourself by telling folks how much money you have guys. Just throwing this out there, but ISL or IRL, do not be so willing to give away this kind of information, to anyone. And always ask questions. Knowing is half the battle.
August 14th, 2007 at 5:11 PM
@all: I have looked at most of these comments, and noticed that people think that LL has said that a L$ has no monetary value. This is true, but note that L$ are like coupons. They have no real value, but can be exchanged for goods and services, (one being cash) So, they ARE worth something, but LL doesn’t have the obligation to ever pay you back. It never did. So don’t complain. It’s like a bank. Though the bank says it will pay you back, it can’t always do so. LL has said, in their TOS, that they will never be obligated to pay anyone back, for any reason. Sue them if you want, but they will slam that in your face.
@31: I agree with you about the land. Selling land for less makes for a decolining economy. Also, I never thought of SL as a game. How is it? Sure, you can CREATE a game using it, but in general, yes, I agree with you there too.
As for banking…I’m not against it, but I really don’t see a need for it. I probably won’t use one, so, it’s not for me xP
August 14th, 2007 at 5:17 PM
interesting…..the L$ is real money….but once it’s taken, either by fraud or by server issues, it’s suddenly not LL’s problem. Please be fair.
You cannot just apply real life laws to parts of SL and blindly look the other way. If banks are risky, those ATM’s of theirs technically count as “gambling”. Residents put their money in in the belief they will be getting it back. These people can up and run with people’s money and I bet LL would ultimately scold us, with no refunds given.
If gambling is banned, the banks will have to be regulated or tossed. Otherwise, invest in the gaming licenses to keep things as they were. Linden Labs cannot have it both ways.
August 14th, 2007 at 5:20 PM
As population growth stabilizes, the use and development of Linden Dollar sinks will become more prominent.
Lindenspeak for be prepared for higher costs in world for services, fees and such while we try and recover the money lost to accounts being cancelled and tier lost due to our own stupidity?
August 14th, 2007 at 5:25 PM
well for the love of god.
in december LL took TWO MILLION from my account even tho i only had 302,000 in my account due to someone dropping 1.6 million into my sploder the time it took for the drop down blue info box telling me that the money was dropped into my sploder i was kicked off the server and my account suspended.
it took them untill mid january to answer my emails.
after i got back on my account was in the red to the tune of MINUS 1,892,000 i fired off emails to just about everyone of the accounts department asking what the hell is going on.i was basicly told that i was a victim of fraud and since i “took” the money i was to be punished.
my account WAS MINUS 1,873,000
its took me from january untill today to get to MINUS 1,513,220
i have tried phoning LL i have sent off about 4 dozen emails but the last phone call i was told to “f*** off we dont want you in our game”
August 14th, 2007 at 5:34 PM
[...] The Second Life Economy - A pretty good exposition of the Second Life economy, written by Zee Linden. [...]
August 14th, 2007 at 5:36 PM
chmarr I believe you. That is how LL treats it’s customers. They could care less.
August 14th, 2007 at 5:47 PM
“SL can be controlled”…. lol
August 14th, 2007 at 5:47 PM
The Second Life economy is a VIRTUAL economy. This is really quite a fundamental point to understand. The money system (in its own right) is meant to be virtual (even if it can be traded with USD).
“Banks” and “stock exchanges” related to SL are ALSO virtual (and in some cases openly declared as FICTIONAL).
This means that when you “deposit” Linden dollars into a SL “bank” you are engaging in a kind of roleplay, where you are choosing the role of “customer” and playing with someone who set up the group who is playing the role of “banker” (ooops, nearly mis-typed that). It would be OOC (Out Of Context) in this roleplay for the “banker” to tell you that you have little or no chance of getting back your deposit or the “fantasy” levels of interest offered. So, when you lose your Linden dollars by intending to withdraw them at the wrong time (which is kinda like gambling, except there is no random number generation), it is all part of the simulated role play.
You wouldn’t go to a Wild West sim and not expect to get shot at if you argue with the tough the guy at the bar would you?
I genuinely feel sorry for all the people that have lost money in Ginko and all the people that are highly likely to lose Linden dollars in the other 30 similarly structured (errrmm…financed?) “banks”, but at some point you do have to take a deep breath, go AFK and realise that SL is not the real world, then come back to SL and go and explore some of the absolutely amazing content that there is out there, meet people and have some fun.
August 14th, 2007 at 5:47 PM
For those saying LL should obtain a gambling licence, I doubt this would be possible. Getting a gambling licence requires allowing inspectors to examine everything related to the gambling operation and certify it - first, I doubt that the SL core is simple enough that it could be certified to the level needed, and second, this would require EVERY ingame script to be certified as well. So this isn’t really possible at all.
August 14th, 2007 at 5:57 PM
Ok ppl, look its as simple as this, they talk the talk, they say what they think what we wanna hear but again lets put it into what it is with 13,000 sims give or take a few hundred… at a 40% decrease in land value it 19.5 million in us we the ppl ( players have lost from the increased in land, but atlas lets look at it from there side, 300 new sims amonth times 195 tier(if a full sim) 58,500 a month x12 months 702,000 us dolars for them x 12 months damn near 8.5 million in tier more u think they give a rats ass about the 19.5 million us dollars the players lost in the last 30 days? heck maybe they should double the tier and make us all wear dunce hats when in world
August 14th, 2007 at 6:01 PM
I think #49 has seconded what I said earlier but made it clearer than I did. So moved, and surely carried nearly unanimously although I would expect that #48 may abstain and I couldn’t blame them. That is an ugly story.
/Jazzman Jibilla thinks in his best Bogey voice, ” One of the million ugly stories out here in Blog city schweetheart. Somebody get me rewrite.”
August 14th, 2007 at 6:04 PM
Michael Linden also returned all my games and i only had grid games aswell (no casino games) all he left was a blog link, thats what i get after 8 months of tier,time and tons of money. Its clear they have no idea what games are what or they choose who it is can and cannot have them. Either way its not right. iv tryed despreatly for 3 days to contact, michael,philip or robin linden on the matter. only one response after 3 days from robin and was the total run around again. Its not the rules changing that bothers all of us about it, its the way it was brought about and our SL lifes flipped up side down over night without any form of reinbursment or fair warning.
For being so called “premium members” the loss of inventory,land sales,currency decline,games banned (owner of a games business) my job loss, my income loss and 8 months of RL time. NOT what i had in mind.
~ Puts sack and stick over shoulder and whistles off down the raod ~
***ACCOUNT CLOSED***
August 14th, 2007 at 6:08 PM
SL is a luxury, not a neccessity, unless your primary source of income for living, is generated from SL.
“While Linden Lab does not guarantee a demand for the L$ or that residents will be able to trade at a consistent rate, a healthy Linden Dollar economy is critical to the health of our service and as such Linden Lab has a strong business interest in maintaining the stability of the L$.”
Linden Lab cannot gaurantee a demand for the L$, “cannot” is the correct definition, not “does not”, Linden Lab cannot force such demand because “demand” depends on the available customers.
Linden Labs could give Land and L$ free… it CANNOT gaurantee demand.
It is certainly “critical to the health” of Linden Lab, as SL is its primary source of income for living, but that is my assumption, since i dont know for sure.
If you, the customer choose to make the L$ your primary source of income for living, then it is a neccessity for you… for anyone who does not… it is a luxury.
Do you have all your eggs in one basket? more fool you.
i can lose all my luxuries and still survive, still live.. i attach no critical demand for the availability of SL to enable my life. SL is a luxury, just like the PC it runs on… i can turn it off.
August 14th, 2007 at 6:08 PM
Gee… The SL economy is starting to go down and fail… Who’d have guessed this would happen??? Oh yeah, WE DID! Bring gaming back!
August 14th, 2007 at 6:16 PM
Who’s going to swarm all those millions of catholic churches that play bingo evey Wednesday night and tell them bingo is illegal. No one cause it’s legal.
August 14th, 2007 at 6:17 PM
46, “We need to get a GAME UNION made & have LL state to us in writing that Slingo Zyngo Tringo Shrooms Quincee & the other games that play like this are LEGAL. It isn’t up to them to decide if a game is a casino game or not their are LAWS for that.”
As you know Kermitt brought alot of money in to sl and then he products a Game Boy version that gave second life even more PR about playing games on sl. LL owes kermitt for what he did to gaming. That is why tringo style game are not outlawed. Its just another WHO you know and what you done that earned you a place or honor and ranking.
August 14th, 2007 at 6:23 PM
Blaim it on Bush
August 14th, 2007 at 6:30 PM
I find the average L$ per account very low. But maybe that’s because from the 1.7 million accounts, only 25% is actually in use? I’d like to see an average on -active- accounts. Just for the fun of it
August 14th, 2007 at 6:30 PM
I will help swarm a church with you SL Player…because they should be illegal !
August 14th, 2007 at 6:31 PM
*rolls her eyes* yes my son’s new puppy peed on the floor..why don’t we blame Bush for that too?
August 14th, 2007 at 6:32 PM
@49: Because you say it is so doesn’t make it so. Because Linden Lab says it is so does not make it so. To say that real world copyright is here and is exchanged for anything less than real is silly. It is counterintuitive. The money within the SecondLife economy is as real as the copyright which it is used to purchase. Tossing a wet blanket over that reality is just asking for trouble.
Virtual. Is the time you spend inworld ‘virtual’? When you log out, is it the same time as when you logged in? Are you changed for the experience?
And if the stock exchanges are fictional - well, heck, they should be able to cover the GPB losses Ginko Financial customers are taking - it is fictional currency, right? Just write some more!
@48 - would love to hear more about that.
@POST: The lack of policy related to fraud (not banks) and the protection of the interests of the community, financial or otherwise, serves to undermine the trust in the Linden dollar. This in turn means that the value of the Linden dollar will decrease, which would mean that instead of worrying about putting Linden dollars into the economy… you’d have to worry about putting US dollars into the economy. When the collective trust in the Linden dollar decreases enough, how much of a run can Linden Lab sustain?
August 14th, 2007 at 6:43 PM
Ok, I missed something.
Linden doesn’t have GS iw banks because it’s extra data to keep track of.
Signing in already rewards a high rate of return, more so if you’re a paying customer.
Bush fought the wrong war in the wrong way, but he did a dang good job at it.
Blame Bush, not the boys on the ground.
>>back to our regularly scheduled program.
August 14th, 2007 at 6:54 PM
unlike the real world, The safest place for your money is neatly tucked under your scripted mattress. Really, I only semi trust my real world bank. they make screwy mistakes with my direct deposit from work, deduct twice for the same check, forget to apply checkcard charges, and always hit me with an automatic fee when i have less than $10 in the bank. I only keep them honest by being vigilant. LL has always been square with my account and provides downloadable excel spreadsheets that i can proof against. I never have a problem with LL, and never trusted anyone who claims that i can make money without workng for it. on this vacation from reality, dont take a vacation from your common sense.
do yourself a favor and download the transaction reports regularly. Any disputes with other residents or even with LL will be suported by your spreadsheets.