Catch up on stories from the past week (and beyond) at the Slashdot story archive

 



Forgot your password?
typodupeerror
Check out the new SourceForge HTML5 internet speed test! No Flash necessary and runs on all devices. ×

Bank Run in Second Life 336

Jamie found an interesting bit about a bank run in Second Life. The recent ban on gambling combined with a $12k theft from the 2L stock market has caused people to try to get their money back. The article mentions that this could supposedly affect 8.5M players even tho most estimates of actual hard core players in the system are in the 5 to low 6 figure range.
This discussion has been archived. No new comments can be posted.

Bank Run in Second Life

Comments Filter:
  • by pegr ( 46683 ) on Wednesday August 08, 2007 @09:53AM (#20156689) Homepage Journal
    I'd be alright if I could get a decent exchange rate for all these Simolions...
    • by utopianfiat ( 774016 ) on Wednesday August 08, 2007 @10:22AM (#20157073) Journal

      I'd be alright if I could get a decent exchange rate for all these US Dollars...


      FIXED.
  • 2L? (Score:5, Funny)

    by mwvdlee ( 775178 ) on Wednesday August 08, 2007 @09:55AM (#20156735) Homepage
    What is this "2L" thing? It's not Second Life, because the whole friggin' world abbreviates that to "SL" and nobody is pedantic enough to come up with a totally new abbreviation when a perfectly good one already exists. So what does it mean?
    • Re: (Score:2, Insightful)

      by UbuntuDupe ( 970646 ) *
      Yeah, kinda like how no one would ever say "price point" in cases where "price" would convey the same information. ("Sony's failing because they make the PS3's price point too high.") And when challenged on why they felt the need to say "price point", they would never go on a long, condescending diatribe about the economic theory of "price points", dodging the matter of why it was necessary to say it in *that instance*. And they would never feel smug and superior for doing so.
      • Re: (Score:2, Informative)

        by Otter ( 3800 )
        Yeah, kinda like how no one would ever say "price point" in cases where "price" would convey the same information. ("Sony's failing because they make the PS3's price point too high.")

        That's not what "price point" means. Sony is failing because their price is set above attractive price points.

        Anyway, nowadays everyone says "Sony's failing because they make the PS3 SKU's price point too high." Where are you writing from -- two weeks ago?

    • Re:2L? (Score:5, Funny)

      by karnal ( 22275 ) on Wednesday August 08, 2007 @10:09AM (#20156917)
      I'm guessing it's somewhere between "L" and "XL".
    • by BMonger ( 68213 )
      Not only should they not have used 2L as an abbreviation for Second Life but 2L in regards to Second Life usually means 2 Linden Dollars... that made it a tad confusing for me for a bit.
    • I read "two litre stock market". I read on for a bit before thinking, "that's not right...."

    • Uhm.. it's what second year law students are called.. (1L, 2L, 3L - then you graduate).

      But I doubt that's what he was going for.

      -GiH
  • Vast exaggeration (Score:5, Interesting)

    by DaleGlass ( 1068434 ) on Wednesday August 08, 2007 @09:56AM (#20156737) Homepage
    Ginko is a resident run bank, which has nothing really special about it. You can it on their own a href="https://ginkofinancial.com/">website: They only claim to have 18,875 accounts, quite a few of which probably were created as a test. Nowhere near the 8.5 million claimed.

    Ginko's problem was their insane interest rates, which IIRC varied somewhere between 100% and 30% per year. I think it was 70% for a quite long time. People accused it of being a Ponzi scheme, which given that enormous interest sounds likely. That's why I never put a cent in it :-)
    • by mwvdlee ( 775178 ) on Wednesday August 08, 2007 @10:01AM (#20156817) Homepage
      Ginko also isn't a "bank" in the usual term of the word; it's not regulated or insured in any way and isn't impacted by any of the legal requirements of real world financial institutions. Quite frankly; you're an idiot if you trust them with your money.
      • Yeah, but you could think of it as a high risk investment. If the do indeed have a 70% interest rate, then you could put $1000 in the bank, and take it out a year later and have $1700. Sure you wouldn't want to put all your money in there, but it wouldn't be a terrible idea to put a little bit of money in there. Instead of spending $10 a week on the lottery, you could just drop $500 in there each year, and you'd probably get better returns.
        • by SatanicPuppy ( 611928 ) * <Satanicpuppy@gma ... m minus caffeine> on Wednesday August 08, 2007 @11:42AM (#20158355) Journal
          Might as well put it in the lottery. If they're returning 100% interest, then someone is getting screwed somewhere.

          Banks make money through investing in other people's projects, and by loaning money for interest. Like everything else, it's a diminishing return, so you can't loan money at an equal rate to the interest rate you're giving your depositors, so either they're loaning your money to people at an interest rate that is higher than 100%, with no possible way to collect on a bad debt.

          Chances are they were using that money to finance one of the now-illegal casino's, which would make sense, as that's about the only way to make money in SL that would actually require an input of cash. Now that they've tanked there is basically no longer any point in a bank that actually pays interest. There is nowhere for the money to come from.
      • by Dragonslicer ( 991472 ) on Wednesday August 08, 2007 @11:10AM (#20157851)

        Ginko also isn't a "bank" in the usual term of the word; it's not regulated or insured in any way and isn't impacted by any of the legal requirements of real world financial institutions. Quite frankly; you're an idiot if you trust them with your money.
        So they're the Second Life version of PayPal?
      • Keep in mind that regulations and insurance are relatively new concepts in real-life banking. (Yet people take them for granted.) Even so, regulation didn't prevent the S&L crisis.
    • by morgan_greywolf ( 835522 ) on Wednesday August 08, 2007 @10:08AM (#20156905) Homepage Journal
      No, no. What they're saying is that banks like this (not just Ginko, there are others like it) will have an effect on the economy of the game. Think about it. If there were real banks doing this what effect would it have on the economy? Think 1930s America, because that's almost exactly what happened.

      The most interesting part of the article to me, though was this tidbit:

      Because the Linden dollar has no commodity backing, he says, the Second Life economy is in danger of crashing when provoked by any sufficient shock.


      Now, s/Linden dollar/U.S. dollar/ and s/Second Life/U.S./ and the sentence would still be correct. Go ahead, try it. Read it again. Because the U.S. dollar has no commodity backing...

      • Yes, but you can't pay taxes with Linden dollars. That's the whole reason US money is worth something, because the government guarantees they will accept it in payment of taxes.
        • Re: (Score:3, Informative)

          by Colin Smith ( 2679 )

          That's the whole reason US money is worth something, because the government guarantees they will accept it in payment of taxes.

          Um. Nope. The US dollar is worth something because it has a limited supply.

          Money works in the same way as any other commodity. It's like coffee or oil. High demand and low supply increases the value of the currency compared to other commodities, everything appears to become cheaper (deflation). High supply of the currency or reduced demand for it reduces the value of the money with respect to other commodities and everything appears to get more expensive (inflation). You have inflation at the moment becaus

          • Re:Vast exaggeration (Score:5, Informative)

            by UbuntuDupe ( 970646 ) * on Wednesday August 08, 2007 @10:30AM (#20157191) Journal
            Um. Nope. The US dollar is worth something because it has a limited supply.

            My snot has limited supply too, but it's not worth anything.

            The GP was right for the question he was answering: why do the unbacked, limited-supply US dollars have value? Among other things, because you can pay taxes with them. I would add further, that so many debts are denominated in US dollars. This cascades into a sort of network effect: X people accept dollars, because they can pay debts with them, so MOST people accept dollars because they will be buying from someone, somehow connected to those X people.

            And no, debt in and of it self is not morally objectionable. There's nothing wrong with businesses taking out loans for productive purposes for example. The reason a lot of economists like currency based this way is that you don't have to hold productive commodites (like gold, which can be used for hi-tech equipment) out of production, just so it can be used as money.

            Your point about government inflating the currency is well-taken, but you're exaggerating its impact. As long as people know the approximate range by which it will expand the money supply, they will demand an interest rate on their lending that eliminates this effect. It's only the *ununsually excessive* expansions that can have distortionary effects, and people's expectations are pretty well adapted based on history.
            • Re: (Score:3, Interesting)

              The GP was right for the question he was answering: why do the unbacked, limited-supply US dollars have value? Among other things, because you can pay taxes with them. I would add further, that so many debts are denominated in US dollars. This cascades into a sort of network effect: X people accept dollars, because they can pay debts with them, so MOST people accept dollars because they will be buying from someone, somehow connected to those X people.

              All of which boils down to the starting point, the the US

              • An interesting question to ponder is what might happen if the US government removed the legal requirement of accepting US currency to settle US debts, even if the government itself continued to accept it and pay its debts with it.

                There is no requirement to accept USD, or anything else, as payment. If you were to contract with me for a service, there is no restriction on my accepting bunny rabbits or seashells in the exchange. Legal tender laws don't mean that someone has to use a particular currency to

            • by Colin Smith ( 2679 ) on Wednesday August 08, 2007 @11:02AM (#20157715)

              My snot has limited supply too, but it's not worth anything.
              Your snot is just one among billions. There's a plentiful supply. Dollars have a value because the supply is limited, if there was an infinite supply, nobody including the government would accept them as a form of payment for anything, including taxes. Try printing them off yourself and see what happens.

              The reason a lot of economists like currency based this way is that you don't have to hold productive commodites (like gold, which can be used for hi-tech equipment) out of production, just so it can be used as money.
              It doesn't have to be debt though. Look I agree debts can be useful, but there's no particular reason that money has to be based on it, or even on gold. Money is a valuable commodity of it's own, really that's how people think of it anyway. The only problem with unbacked currency is the government's propensity to roll the presses 24 hours per day, seven days per week, 52 weeks of the year.

              e.g. http://www.mises.org/fullstory.aspx?control=1595 [mises.org]

              but you're exaggerating its impact
              The fractional reserve system multiplies the impact, and... Really, take a look at the effect of exponentially increasing debt on the economy, society, on the environment. Look at who gets the cash and who gets the poverty.

              As long as people know the approximate range by which it will expand the money supply, they will demand an interest rate on their lending that eliminates this effect.
              Fine if you're in a position to buy government bonds. For the rest of humanity though? The waitress waiting tables for minimum wage.
               
              • by 2short ( 466733 )
                "Look I agree debts can be useful, but there's no particular reason that money has to be based on it"

                If you can't use it to settle debts, it's not money.

                "'As long as people know the approximate range by which it will expand the money supply, they will demand an interest rate on their lending that eliminates this effect.'

                Fine if you're in a position to buy government bonds. For the rest of humanity though? The waitress waiting tables for minimum wage."

                Yeah, life under the gold standard was a workers paradise
              • Re: (Score:3, Funny)

                by Belacgod ( 1103921 )
                I won't accept anyone else's snot but the GP's to pay my debts! Everyone else's snot is counterfeit!
              • Re: (Score:3, Insightful)

                by Bluesman ( 104513 )
                "Dollars have a value because the supply is limited."

                The supply of Confederate dollars is much more limited, but they are essentially worthless.

                The only thing that gives anything value is what someone else is willing to do in exchange for it. People accept dollars in exchange for other things in many places, so it has value as a currency. Why do they do that? Only because everybody else does.

                Let's go to the desert island model that's always so helpful. Two people on a desert island, one has water, the o
          • Re: (Score:3, Insightful)

            Right. But what would happen if the U.S. dollar no longer had sufficiently high demand? As in, the government printed too much or currency, or everyone said, 'fsck this, U.S. dollars aren't worth nothin' in my book!' Again, it's not backed by another commodity. It used to be backed by gold, but is no longer. BTW, Linden dollars are also of similar 'limited supply', even if they're only virtual. (If you disagree with this, remember that there isn't enough U.S. currency on the planet to cover all of the
          • Re: (Score:3, Interesting)

            Um. Nope. The US dollar is worth something because it has a limited supply.

            Only if the something in question has some objective value. I can print off a few hundred CGMUs (Control Group Monetary Units), making a very limited supply, but I don't imagine that would make them worth money to anyone else*.

            Unlike the other commodities you mention, US dollars have no inherent utility. The "full faith and credit" of the US government determines their utility. Their scarcity determines their market value. You need b

          • by 2short ( 466733 )
            "go look up 'fractional reserve banking' "

            Assuming you have looked this up yourself, why do you persist in pretending the governments borrowing of money is anything like "printing" it?

            Mind you, irresponsible borrowing of money is a really stupid idea. But it is an entirely different stupid idea than the government creating new money and spending it, assuming the currency system were set up in such a way that that were possible, which it is not.

            Something being in limited supply does not make it valuable unl
        • Re:Vast exaggeration (Score:5, Informative)

          by Control Group ( 105494 ) * on Wednesday August 08, 2007 @10:28AM (#20157163) Homepage
          Yes and no. That's a subset of the reason. The larger reason is that it's illegal in general to demand payment in some other form of currency in preference to the US dollar. That's what the phrase "this note is legal tender for all debts, public and private" means. It means that, if you're going to do business in the US, and if you're going to engage in a financial transaction, you may not refuse the US dollar as a currency to complete the transaction.

          It is not legal to require payment in pounds sterling, gold bars, or years of indentured servitude.

          Basically, the US dollar is worth anything because the government says it is...which is, ultimately, a function of the citizens of the US saying that it is. Which, ultimately, makes it no different than gold (except, of course, that the finite supply of gold is imposed by the universe, while the finite supply of dollars is imposed by the Fed).
          • Re: (Score:3, Informative)

            by UbuntuDupe ( 970646 ) *
            That's not quite right. Legal tender laws don't say "You must accept dollars while operating in the US." They just say, "If you declare that you accept 'US dollars' as payment, you must accept *these* notes." That is, you can't agree to accept dollars, and then not accept dollars. If you specify a contract that references gold, the law doesn't change that -- after all, how would contracts regarding gold mines operate?

            "You are contractually obligated to dig one ton of gold from this mine."
            "Hahah! Invali
            • You're right, I was (perhaps over-) simplifying. Obviously, both parties can agree beforehand to perform a transaction in some medium of exchange that isn't dollars. In cases where such is not stipulated ahead of time, however, dollars need to be accepted as payment. That is, dollars are the default form of payment: it isn't legal to provide a commodity and demand after the fact that you will only accept payment in gold.
        • Re: (Score:3, Interesting)

          by sfjoe ( 470510 )
          That's the whole reason US money is worth something, because the government guarantees they will accept it in payment of taxes.

          Well, that's *A* reason but not "the whole reason". The US dollar is unique amongst currencies as it is close to being a global currency. It is accepted in nearly every country and some countries even use it as their own official currency rather than print their own. People accept it as having value because the know it will retain value in the future making it the world's foremost r
      • Re:Vast exaggeration (Score:4, Interesting)

        by DaleGlass ( 1068434 ) on Wednesday August 08, 2007 @10:21AM (#20157049) Homepage
        Well, let's look at the stats, then.

        There are 18,875 accounts. Right now there are 34,822 people logged in (see http://secondlife.com/ [secondlife.com] ). In the last 60 days, 1,646,830 people logged in. So the total Ginko userbase is not all that great compared to the amount of people who use SL.

        Next, it's quite reasonable to assume that a good portion of those 18,875 are by people who put there L$1 (USD $.00370) as a test, then forgot about it.

        Now, they say their deposits are L$94,441,798 = USD $349,784. But, Ginko's claims about the amount of deposits were cast into doubt by several people, and that number seems to include interest, that is money they would be expected to give, but which none of the users actually put there.

        Average amount of money per account is $349,784 / 18,875 = $18.53

        Looking at the SL statistics:
        US$ Spent Last 24h: $1,433,039
        LindeX Activity Last 24h: $223,005

        You can see that even the claimed amount of money isn't all that huge, and after years of operation at the enormous interest they claimed, most of that cash must be accumulated interest anyway.

        While I bet some people will lose something quite significant, I don't think it's nearly as big as the article says.
      • Course it is. Financial institutions sell it to each other (and you) in unimaginably large quantities.

         
      • Now, s/Linden dollar/U.S. dollar/ and s/Second Life/U.S./ and the sentence would still be correct. Go ahead, try it. Read it again. Because the U.S. dollar has no commodity backing...

        Ahh... Mindless US basing FTKW (For The Karma Whore).
         
        Truth is you also go s/Linden dollar/99% of all RL currencies/ and s/Second Life/99% of all RL countries/, and still be correct.
    • Re: (Score:3, Insightful)

      by eln ( 21727 ) *
      Okay, but why would you invest your money in any bank in SL, even if they have reasonable rates? You can get around 5% interest these days in an online savings account, FDIC insured and backed by a real life regulated bank. If you want more, you can go for mutual funds or individual stocks, all of which are regulated. Sure, there's a risk you'll lose everything, but these things are at least regulated so you have some recourse in the unlikely event that your stock broker takes off to Aruba with your mone
      • by ivan256 ( 17499 )

        I would consider investing in a Second Life bank as riskier than putting your whole savings into junk bonds or giving it to some random person on a street corner to invest for you.

        I agree. It's stupid.

        But putting a tiny amount of money into a high risk "investment" scheme is riskier than putting your whole savings into junk bonds? Come on. This type of high risk investment can be perfectly reasonable as long as your overall position is well diversified.

      • Because 70% is a lot larger than 5%, of course.

        Now, I think that Ginko is very likely to be a Ponzi scheme. Not necessarily intentionally though, I think they did try to invest that money to be able to provide that interest, but of course that sort of profit is awfully hard to make and we're seeing the result.

        The thing about Ponzi schemes is that they work, for a while. The early investors DO get their interest. It's the later ones who get screwed. So if you're not terribly ethical, you could put money into
    • Re:Vast exaggeration (Score:5, Interesting)

      by UbuntuDupe ( 970646 ) * on Wednesday August 08, 2007 @10:16AM (#20156989) Journal
      Okay, I think I have some expertise on this, because I actually ran an SL "bank" (under a broad definition of "bank", but I called it a bank). I can tell you that 100% interest rate in SL is NOT "insane", and I can tell you how to "earn" that kind of interest without a Ponzi scheme.

      First, some background: (as of '03 when I played) in SL, they make it so that they "recharge" your money to a certain level each week, sort of like welfare. The day of the week varies between people. So, if you store your money with a trusted party, it will look like you're poor and you'll get money despite not being poor. I believe at the time it was something like LD 7000 that they would recharge you to. My bank served the function of the trusted party: I'd hold their money (through a script) over their recharge day.

      Oh, and yes, I was very open about this, and told admins I was doing it. They didn't care.

      Now, this doesn't explain how exactly you'd employ someone's money to make more money (like the banks claimed). However, it shows how, using some tricks, you can start with e.g. LD 7000, and "earn" 7000 more each week ... that's definitely more than a 100% yearly effective interest rate!
    • Heh. Nice site. Huge interest rates paid by "investments", but no information on the website as to where those "investments" are; or, for that matter, who would need a "virtual investor" as opposed to a real one, secured by real contracts. They list on the website a total of ca. $350k USD they claim in assets (or is that just liquidity), with a cap of 1%/day in withdrawals.

      So yeah, my money is on Ponzi scheme: these "scams" aren't always done with the intent to defraud; often they're based on the well-mean
  • How to create a Self-Fulfilling Prophecy? Simple, just tell everybody that the 2L banking system is about to self destruct horribly.

    It's like a housing price crash you only need to send the correct message to make the stampede to avoid and the very thing you have been warning about comes into being because of the original message. Hell, I explained it badly, Wiki does it better...

    http://en.wikipedia.org/wiki/Self-fulfilling_prop h ecy [wikipedia.org]
  • People are idiots (Score:5, Insightful)

    by eln ( 21727 ) * on Wednesday August 08, 2007 @09:59AM (#20156791) Homepage
    If this sort of thing affects your finances in any major way, you're a moron for "investing" your money in a game. Just because Linden Labs decided to publish an exchange rate for their dollars and real dollars doesn't mean their dollars are a good investment vehicle. Their economy is completely unregulated, and their "banks" are run by anonymous people in foreign countries well outside the reach of US laws (the guy they interviewed is in Brazil, for example).

    You might as well call playing the slots in Vegas a retirement plan, it's probably less risky.
    • Re: (Score:3, Interesting)

      You might as well call playing the slots in Vegas a retirement plan, it's probably less risky.
      Definitely less risky. In Vegas you know exactly what the odds are, they may be against you, but they're known. I would say that a better analogy is investing in rich Nigerians who want to get their funds to the west.
    • Re:People are idiots (Score:4, Informative)

      by esampson ( 223745 ) on Wednesday August 08, 2007 @12:38PM (#20159295) Homepage

      ..Just because Linden Labs decided to publish an exchange rate for their dollars and real dollars doesn't mean their dollars are a good investment vehicle...

      Just to pick nits but LindenLabs doesn't really publish an exchange rate, at least not in the sense that you would seem to imply. What LL really does is act as a middle man between two players exchanging LindenDollars for US Dollars. The person selling the LindenDollars sets the sell rate at whatever they wish and their money goes into a big pool with a tag for that exchange amount. When another player wishes to purchase LindenDollars they set the buy rate at whatever the maximum is that they are willing to pay and if there is anything in the pool at that sell value or less it is purchased at the sell value originally tagged. LL makes a little bit of money from the deal as a brokerage fee.

      The exchange rates published by LL are the low, high, and average exchanges of the day so the values aren't set at all by LL. Now technically, yes, you are correct when you say LL publishes an exchange rate but the implication in that statement seems to me to be that they set that exchange rate. In this they no more set the exchange rate than, say, the Wall Street Journal when it publishes the exchange rate of the US dollar against the Yen. The value isn't really arbitrarily set but is set by the faith people hold in the currency.

      None of which is to really say that people investing large amounts of money into LindenDollars aren't being foolish. It seems to be a very high risk investment. Just that there is a bit more backing up the value of the LindenDollar than a company saying 'this is it'.

  • Another scam? (Score:4, Informative)

    by jandrese ( 485 ) <kensama@vt.edu> on Wednesday August 08, 2007 @09:59AM (#20156795) Homepage Journal
    The article is lighter on details than it should be for an article that spans two pages, but it looks to me like someone set up yet another "bank", promising high returns (and actually delivering for awhile), that was actually just a pyramid scheme. Once the pyramid gets big enough the creator always grabs the money and runs, and people cry and write articles about it.

    Really people, there is no reason to invest in these "banks" in SecondLife (or any other game). Your money is safe in your own account. It's not like it's any safer in one of these "banks", in fact the opposite is true since you're forced to trust a random guy on the internet who has absolutely no laws or regulations backing him up.

    The ban on gambling shouldn't have made too much difference. Everybody knows that every form of gambling in SL was fixed anyway. I don't know anybody who actually used them.
    • Re: (Score:3, Interesting)

      by AVee ( 557523 )
      "The article is lighter on details than it should be for an article that spans two pages, but it looks to me like someone set up yet another "bank", promising high returns (and actually delivering for awhile), that was actually just a pyramid scheme. Once the pyramid gets big enough the creator always grabs the money and runs, and people cry and write articles about it."

      Al very true, but in the end it might just be the game which is a pyramid scheme, not just the bank inside the game. If Lindon were to p
  • Either someone expects virtual money to be created on the fly for them, or they're just cashing in and never expect to return a cent.
  • What Do You Expect (Score:2, Interesting)

    by mfh ( 56 )
    Video Games are designed to be fun and typically fantasy based. People will give away money to the makers of video games for hours of enjoyment.

    The reality is that anyone who lost money on this is getting what they paid for.
  • tho? (Score:5, Funny)

    by CompMD ( 522020 ) on Wednesday August 08, 2007 @10:02AM (#20156823)
    Every time you use "tho" in place of the actual word "though," God kills a kitten.
  • by QuietLagoon ( 813062 ) on Wednesday August 08, 2007 @10:02AM (#20156825)
    So we have to read articles about news in a fake world?
  • "Halting State" by Charlie Stross is out in October. It starts with a bank-raid in an MMORPG by a bunch of orcs with a dragon for fire-support and then gets weird.
  • by Rixel ( 131146 ) on Wednesday August 08, 2007 @10:08AM (#20156909)
    You're thinking of this place all wrong. As if I had the money back in a safe. The money's not here. Your money's in Joe's imaginary house...right next to yours. And in the imaginary Kennedy house, and Mrs. Macklin's imaginary house, and a hundred other imaginary houses. Why, you're lending them the money to build, and then, they're going to pay it back to you as best they can. Now what are you going to do? Foreclose on them?...Now wait...now listen...now listen to me. I beg of you not to do this thing. If Potter gets hold of this Virtual Building and Loan there'll never be another decent imaginary house built in this imaginary town. He's already got charge of the imaginary bank. He's got the imaginary bus line. He's got the imaginary department stores. And now he's after us. Why? Well, it's very simple. Because we're cutting in on his business, that's why. And because he wants to keep you living in his imaginary slums and paying the kind of rent he decides. Joe, you lived in one of his imaginary houses, didn't you? Well, have you forgotten? Have you forgotten what he charged you for that imaginary broken-down shack? Here, Ed. You know, you remember last year when things weren't going so well, and you couldn't make your payments. You didn't lose your imaginary house, did you? Do you think Potter would have let you keep it? Can't you understand what's happening here? Don't you see what's happening? Potter isn't selling. Potter's buying! And why? Because we're panicky and he's not. That's why. He's picking up some bargains. Now, we can get through this thing all right. We've got to stick together, though. We've got to have faith in each other.
  • You're thinking of this place all wrong. As if I had the money back in a safe. The money's not here. Your money's in Joe's S & M fetish dungeon...right next to yours. And in the Kennedy's warehouse of flying penises, and Mrs. Macklin's Fur-suit emporium, and a hundred others. Why, you're lending them the money to build, and then, they're going to pay it back to you as best they can. Now what are you going to do? Foreclose on them?
  • by blueZ3 ( 744446 ) on Wednesday August 08, 2007 @10:19AM (#20157033) Homepage
    The whole concept of virtual money that is traded in a virtual environment was a "bank-run" waiting to happen.

    Linden-dollars (or whatever they're called) are backed by the full faith and credit of Linden Labs. Which is a lot less comforting to the average person than being backed by the U.S. government. Once Linden starts to lose credibility (and how was money "stolen" from the stock market) all those Lindenbacks are going to be worth the bits they're printed on.

    I'm shocked, absolutely shocked to find gambling going on here.
    • Re: (Score:3, Informative)

      by venicebeach ( 702856 )

      and how was money "stolen" from the stock market

      Apparently it was an inside job. Someone involved with fixing the ATM system hacked it. Full story here [reuters.com].
  • Saw this coming... (Score:4, Interesting)

    by ZorinLynx ( 31751 ) on Wednesday August 08, 2007 @10:30AM (#20157183) Homepage
    I knew this was coming.

    In the past couple of weeks I heard of at least three people who had trouble getting money out of Ginko.

    Word gets around quickly in these cases; as soon as people found out Ginko isn't paying out withdrawls they lose confidence and want their money back, just as would happen with a real bank.

    Thankfully I have no money in Ginko. No way in hell I was ever going to trust them.
    • by Erbo ( 384 )
      I was using Ginko myself, primarily to assist in cashflow management. (As a club owner, I need to make payroll on a per-event basis, as well as prize money expenditures.) Needless to say, I've stopped that. My Ginko account has about L$450 in it, primarily interest on earlier deposits that have long since been withdrawn, and I'm pretty sure I won't see that money anytime soon.

      Apez [apez.biz] might be a better answer for the cashflow management, but my business partner has had trouble with them, too, in the past.

  • At least... (Score:3, Funny)

    by wpegden ( 931091 ) on Wednesday August 08, 2007 @10:33AM (#20157223)
    at least we're finally seeing some believable estimates as to the number of active second life users. 5 to 6.
  • If 50 billions flies eat sh*t, it means that's worth tasting! -50: sub-troll
  • should be: from the it's-a-wonderful-second-life dept.
  • So, the same morons who want to tax SL funny money are going to allow deductions from SL, right?


    Oh, wait--they CAN have it both ways. Never mind.

  • Some perspective (Score:4, Interesting)

    by amyhughes ( 569088 ) on Wednesday August 08, 2007 @11:59AM (#20158639) Homepage
    These "banks" and other "economic institutions" are given more legitimacy than they deserve, and their impact is grossly over-stated.

    Before casinos were banned the daily SL economy was about US $2 Million per day. That's the total amount of all transactions between residents that Linded Labs (who run Second Life) knows about. It's currently running about US $1.4 Million. That's a big hit, but the difference was people putting money into slot machines. The banning has hurt some people running unregulated gambling scripts, and benefitted the idiots that were feeding them. A wash, AFAIC.

    The Ginko thing also only affects a scammer and his victims, and is only US $0.75 Million. Less than a day's economic activity. Those people payed into a ponzi scheme, and like the gamblers, they had no reason to expect a return. Some might say that whatever the "banker" invested in will suffer, but until proven otherwise, his "investments" are probably real-world. That money is already gone from the economy, and it's not an economy-crashing amount even if some of it actually is invested in SL.

    The real danger is to the land barons, who continue to buy up all the virtual land The Labs has to offer; much of it up for sale as casinos also sell off their land. Them, and Linden Lab itself, who stand to lose tier payments on land people can't afford to hold. But if a hypothetical sell-off is short-lived and is absorbed by new members and other residents suddenly able to buy cheap land, LL stands to gain as they get to re-sell land that is abandoned; land they already sold once and will get to sell again. The most likely scenario is that land re-sale prices (prices residents pay each other, not The Labs) will go down some, and The Labs will be unaffected. It is probable, in fact, that they want land prices to go down so people will buy more of it. They make much more money on monthly land payments than they do selling land (i.e. server space) to land barons.
  • by dircha ( 893383 ) on Wednesday August 08, 2007 @12:30PM (#20159175)
    "this could supposedly affect 8.5M players even tho most estimates of actual hard core players in the system are in the 5 to low 6 figure range"

    Oh give it the fuck up already. It was just 2 weeks ago we covered this. Second Life does not have 8.5M active subscribers. It does not have 5-6M active subscribers. IT DOESN'T HAVE HALF THAT.

    Second Life has 20-30,000 active subscribers, THAT IS ALL.

    I'm so goddamn sick of this media blitz on Slashdot by Second Life's lame fanbois. You're damn right this is inflammatory, because I and a good number of the rest of the readers here are sick and tired of seeing these folks abuse Slashdot with their little fake media drama, as often as several times a week, to benefit the bottom line of Linden Labs.

    At least give us someway to filter these stories out. People who want to stay abreast of the latest little events in this insignificant virtual "meeting place" can read the fan sites instead; I'm sure they do.
    • Re: (Score:3, Informative)

      by DaleGlass ( 1068434 )
      Just a little correction: The 20-30K number is the amount of people logged in right now.

      Since people generally can't remain awake and logged into SL 24/7, there's got to be more active accounts than that.
    • Re: (Score:3, Informative)

      by emurphy42 ( 631808 )
      "5 to low 6 figure range" does not mean "5 to 6 million"; it means "10000-99999 (5 figure) to the low end of 100000-999999 (6 figure)". Which, lo and behold, matches right up with your "20 to 30 thousand" (not to mention the previous reply's "actually it's rather more than that").

Maybe you can't buy happiness, but these days you can certainly charge it.

Working...