Noodle III: Bank Panic in Second Life Prompts Battlefield Promotion of Regulators

Bank Panic in Second Life Prompts Battlefield Promotion of Regulators reveals interesting parallels between physical and virtual worlds—it’s real money, after all.

Bank Panic in Second Life Prompts Battlefield Promotion of Regulators

“What? I can’t go to the grocery store! My bank’s automated teller machine refuses to dispense cash, and I’m planning a big cook-out tonight!” What’s an avatar to do?

It turns out that an inworld bank failure this summer cost residents about $750,000 USD and led to a run on Second Life banks, which eventually precipitated intervention by the highest authority available, the virtual world’s creator, Linden Labs. But the root cause may well have been LL’s earlier intervention in the economy by banning gambling on the site.

According to Second Thoughts, gambling was a very lucrative business that offered jobs to newbies, Second Life’s version of immigrants who are a vital part of the economy. Read more about this engaging story, “Cheer Up, Ben: Your Economy Isn’t As Bad as This One,” (23 January 2008, The Wall Street Journal).

Like many games and virtual worlds, Second Life has its own currency, but Linden Dollars are convertible to outworld currency like Euros or U.S. Dollars. There is an increasing number of entrepreneurs whose outworld livelihood is earned entirely inworld. IBM’s Sam Palmisano is very excited about Second Life because it’s a growing economy with innumerable possibilities to do business. In October 2006, just over a year ago, Second Life’s GDP was $150 million USD, making it bigger than ten outworld countries.

Let me ask you this: from a practical perspective, what’s the difference between these economic relationships:

  • Your home country’s economy and Second Life’s economy
  • Your home country’s economy and the Marshall Islands economy
  • They each have defined relationships and means to transfer wealth between the distinct entities.

What is the difference between spending time in an exotic Pacific island (for a vacation) and spending time in Second Life?

Leave a Reply

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

  

  

  

This site uses Akismet to reduce spam. Learn how your comment data is processed.