Second Life Experiences A Run On The Banks

from the virtual-depression dept

Thu, Aug 9th 2007 4:47pm — Joseph Weisenthal

One of the aspects of Second Life that has gotten a lot of hype is the fact that it's not just a virtual world, but a virtual economy as well, complete with trade, currency fluctuations and banking. That being said, people that have actually tried to engage in sophisticated financial activity (e.g. forms of arbitrage) have found in-game institutions to be unsatisfactory for their purposes. These problems seem to be spreading, as in-game banks that offered depositors sky-high interest rates on their Linden Dollars are experiencing what could be described as a 'run on the bank'. It can't be a surprise to the depositors that these institutions are having trouble remaining solvent, seeing as offered interest rates were in some cases near 100%. Those are the kinds of interest rates tend to be indicative of Ponzi schemes and other fly-by-night operations rather than stable banks. If anything, this raises more of a psychological question more than an economic one: why would people trust their money to a bank offering these kinds of rates when they almost certainly wouldn't do so in the real world? Then again, these issues aren't really unique to Second Life. France's biggest bank, BNP Paribas, has just announced that it will freeze the assets of three major funds, as it struggles with issues related to the US mortgage market.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: finance, virtual worlds
Companies: second life

7 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Bob, 9 Aug 2007 @ 5:47pm

This is just a long list of symptoms....
When Linden Lab, fearing the Justice Department of the US, decided to BAN Gambling, the "run" on the bank presented itself as just another symptom of the bigger problem with Second Life. That problem is simply that Linden Lab, the owner/creator of Second Life, has been making one bad decision after another. As Second Life has continued to grow in popularity and usage, albeit slowly, Linden Lab has continued to "Enhance" it's product, but fails to do the same with the infrastructure on which it's carried and the core program. Second Life has gone from a world of relatively non-annoying bugs, to a system that nearly imploded two weekends ago; it took Linden Lab over 48 hours to correct that issue, and then only temporarily. Second Life is now congested with World stopping bugs that destroy "user created content" in which the World itself is supposedly built upon. The bandwidth that carries Second Life to the masses has been stretched to a breaking point with all these "enhancements" and recently was congested even more by adding VOICE into the World. While the VOICE is supposedly between only two people, if you enable Voice on your client, then you can listen in their conversations. This means the voice packets of ALL conversations are being broadcast to everyone and only "enabled" if it's in "range". This has caused even more lag and latency issues since Voice itself has gone Live. The World of Second Life itself continues to groan under the strain, and I feel, as many of the oldest members of the Second Life Community do, that Second Life will eventually become so bloated with "Enhancements", bugs, and an un-retouched GRID, that one day it will just cease to operate.
[ link to this | view in chronology ]
- Nasty Old Geezer, 10 Aug 2007 @ 5:18am
  
  Re: This is just a long list of symptoms....
  I have never usedjoinedvisited Second Life -- but it sounds boring as watching paint dry. Why spend the time on pretending to do what I do for real?
  
  THere was an SF story I read many years aog -- have forgottten the name, author, etc. -- but it involved a group of humans held in suspended animation. THey were induced to dream about economic what-if scenarios, and the operators of the project used the dreams as economic projections, under a Delphi principle. They were manipulating the real economy with the results.
  
  Wonder if Linden Labs is doing any pattern analysis, data mapping, trend analysis, etc. on the activities in Second Life.
  [ link to this | view in chronology ]
inc, 9 Aug 2007 @ 7:10pm

it's still falls back to my previous point... it's not fun.
[ link to this | view in chronology ]
christian, 10 Aug 2007 @ 9:35am

who cares? SL is such an uninteresting waste of time. why anyone finds graphics and a UI that seem inspired by 1993 gaming standards remotely entertaining is beyond me.
[ link to this | view in chronology ]
Anonymous Coward, 10 Aug 2007 @ 10:54am

Second Life, for those that don't have a first life.
[ link to this | view in chronology ]
leah, 22 Aug 2007 @ 6:50am

Virtual World becoming more like Crappy Real World
What ever happened to peaceful online game play?
Today's Mumbo Gumbo comic confirms my fears that the world of online gaming is becoming too stressful:
http://www.itgumbo.com/mumbogumbo/2007/08/virtual_world_becoming_more_li.php#more
[ link to this | view in chronology ]
plastic molding, 16 May 2009 @ 3:10am

yyyyyy
How's China printing industry developed this years, who can tell us? China based plastic injection molding services with low costs and supeior quality Steel and aluminum scaffolding for construction is a very useful tool.
[ link to this | view in chronology ]