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Saving For a Space Ship

Bank Run & Collapse Crisis In Second Life Virtual World

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http://www.itweek.co.uk/vnunet/news/219654...its-second-life

Given recent uk bank run events, I thought this was interesting from last month. A few SL residents who have lost as much as $10,000 in the Ginko bank scheme.

Accounts converted into bonds to prevent banking meltdown

The Ginko Second Life bank has closed due to insolvency. The bank was unable to meet $180,000 in withdrawal requests.

Prior to its bankruptcy, the bank held over $700,000 in assets for its account holders.

Account holders will have their assets converted into bonds at a yield of three per cent. The bonds will be traded at the World Stock Exchange, allowing consumers to convert their assets into cash.

Ginko customers had staged a rush on their account balances following last month's gambling ban inside Second Life.

An individual could therefore easily create a pyramid scheme, offering steep interest rates where the early customers are paid from the deposits of later sign-ups to create a virtual buzz

Linden Lab stressed that it warns users about the lack of regulators. The company said that it is preparing a statement on the bank's collapse, but at the time of this story's posting, no such statement had been published.

Bank Failure in Second Life Leads to Calls for Regulation

http://www.wired.com/gaming/virtualworlds/...08/virtual_bank

Edited by Saving For a Space Ship

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http://www.itweek.co.uk/vnunet/news/219654...its-second-life

Given recent uk bank run events, I thought this was interesting from last month. A few SL residents who have lost as much as $10,000 in the Ginko bank scheme.

Bank Failure in Second Life Leads to Calls for Regulation

http://www.wired.com/gaming/virtualworlds/...08/virtual_bank

Is this an online bank or something different? I don't play second life so I have no idea about how it works.

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Is this an online bank or something different? I don't play second life so I have no idea about how it works.

Second Life is a virtual world where you can have a virtual identity, and live out a fantasy existence. It has its own currency and society, all of course comprising binary numbers turned into animated characters, a cartoon of a real world that you as a player can interact with. That's how I understand it though I've never used it.

Of course, it could be that this art imitating life is ironic - we could all be part of a giant computer ourselves! <_<

Who was it that said a long time ago, "All the world is a stage and all the men and women are merely players."

Spooooky!

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Spooooky!

Spooky that there is basically no difference between this fantasy-land bank and any 'real' internet bank. It's all electronic, yippeee.

Edited by Goldfinger

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Second Life is a virtual world where you can have a virtual identity, and live out a fantasy existence. It has its own currency and society, all of course comprising binary numbers turned into animated characters, a cartoon of a real world that you as a player can interact with. That's how I understand it though I've never used it.

Of course, it could be that this art imitating life is ironic - we could all be part of a giant computer ourselves! <_<

Who was it that said a long time ago, "All the world is a stage and all the men and women are merely players."

Spooooky!

You forgot the "entrances and exits" from/into the multi-dimensions!

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Yup, they're better known as branches of Northern Rock.

I can sum them up in One word - £ POUND-STRETCHERS! £

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Looks like another SL bank went down more recently ( statement from 3 days ago)

http://www.allenvestfinancial.com/home/story/system/516

Because of this it has put us in a situation where we no longer have enough assets to cover all deposits and investments into our company, both past and present.

http://www.economist.com/finance/displayst...tory_id=9661900

The Economist appear to sum it up quite well. IMO, this thing has been so hyped it has all the signs of a classic bubble. There needs to be an open source version with a more democratic control. The fact that they banned gambling, just like that, makes investment in such virtual industries so insecure.

Just as anyone is an reckless fool to base their business, solely on Ebay or Amazon, where it could be banned for some trivial matter or error, it would appear to be wise 'not to put all your MMORPGS in one basket' ;)

A credit crunch in cyberspace

Yet even before Ginko's collapse, public opinion had turned against Second Life. This was in part because of the media backlash typical with an over-hyped technology, but also because reality has intruded online. Many users experience this parallel world as a lonely one, despite the existence of 7.7m registered residents as of June. Only 10% of new users are still active after 30 days and at any given time only between 20,000 and 50,000 are logged on. Most corporations hardly attract any online visitors, which is why some firms have already closed their branches. Real money is being made by only a happy few.

Still, Second Life is unlikely to experience the same hard landing as the market for subprime mortgages. In fact, compared with other virtual worlds before it, Second Life's economy and its currency have been tightly managed. To ensure that the Linden dollar does not stray too widely from an exchange rate of L$270 to the American dollar, Linden Lab uses a set of monetary instruments, allowing it to inject or mop up liquidity. It also intervenes on a Second Life currency exchange, called LindeX, which even features automatic circuit breakers if trading gets too frantic.

The real economic policy tests, however, are yet to come. Will Linden Lab be willing to prop up its currency if growth slows down (which it apparently already has begun to do) or if many users start selling their Linden dollars? Will the firm, which so far has preferred a laissez-faire approach, introduce regulation, to avoid further bank runs, say? If Second Life has trouble answering such questions, it can take solace from the fact that they are proving pretty tricky in real life too

Edited by Saving For a Space Ship

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I can't find the article on it but one newspaper story recently on Second Life said about 5% of users spend (wait for it) 70 hours or more in Second Life each week.

After reading that I did look at joining to be anti-social and get banned but it was too long-winded a process for a small bit of fun.

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The really strange thing about Second Life is that they also seem to have a property and land value bubble. You can buy "land" and build houses on it but apparently space is limited in the various different worlds :lol:

People are making fortunes trading land and property that only exists virtually. It's the strangest thing going. I mean, if you think about it, it's not so different from the real world, but at least in the real world land and property is tangible. You can live in a house. Second Life is like the most pure form of economics and human behavious. Fascinating.

The really crazy thing is that it's probably the prime place for a severe, massive bubble (hence, porbably a great investment opportunity in the near future) because it's only attracting people with money to burn, and open to the entire world from the comfort of their own home and, um...it's a geat investment opportunity because it's a prime place for a bubble. It's all about feedbacks.

Edited by Fergie

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Spooky that there is basically no difference between this fantasy-land bank and any 'real' internet bank. It's all electronic, yippeee.

Actually there is an exchange rate between SL money and real money. If you make money inside SL you can convert it into pounds - there was a case of a woman making herself genuinely wealthy from her success on SL property development. You can see that the SL bank run is a real bank run.

I set up a character once, but could not work out what to do once I joined. I left him in a disco - hope he's doing fine.

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Actually there is an exchange rate between SL money and real money. If you make money inside SL you can convert it into pounds - there was a case of a woman making herself genuinely wealthy from her success on SL property development. You can see that the SL bank run is a real bank run.

Is that right? Sounds like a money launderer's dream.

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Is that right? Sounds like a money launderer's dream.

http://www.businessweek.com/magazine/conte...18/b3982009.htm

Since she began two years ago she has amassed land and Second Life currency -- which is convertible into real U.S. dollars -- worth more than $250,000.

You are right about the money laundering. With an online market place, some anonymity, it will probably attract money launderers.

http://www.telegraph.co.uk/news/main.jhtml...3/nternet13.xml

legal experts claim the lax regime could provide a haven for money launderers, fraudsters and even terrorists to hide and move funds.

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I used to play the odd online game similar to this in the past although no-where near as sophisticated - normally it's more about teaming up with a few other people and going into a cave to beat up rats / zombies / dragons / whatever, and they always had 'strict' rules on using real-life money to buy or sell in-game items. I say strict in quotes because I'm pretty sure it's tacitly encouraged as it does them no harm, quite the opposite in fact. But when real life money is an official form of currency such as in 2nd life it does worry me. Still, fools and their money and all that.

The hard-core denizen of these games has always disturbed me, spending 40 hours a week + in game is the only way you can 'get anywhere' in these kinds of things. I rarely play online games now, only with my friends if I ever do, as the average stranger you encounter in these things are a complete and utter scrote. Plus Second Life looks fekkin awful. (I looked on Google images for a pic to illustrate but most of the pics seemed to be 2nd Life 3d characters having sex with each other...)

At least it keeps these kind of people off the street. ;)

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The really strange thing about Second Life is that they also seem to have a property and land value bubble. You can buy "land" and build houses on it but apparently space is limited in the various different worlds :lol:

They even have the BBC ramping property values for them, what next a location, location, location special all about booming online property prices. They only ever go up, you know!

BBC NEWS Gamer buys $26,500 virtual land

http://news.bbc.co.uk/1/hi/technology/4104731.stm

BBC NEWS Virtual property market booming

http://news.bbc.co.uk/1/hi/technology/4421496.stm

Will the Bank of England be bailing out this online bank?

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