It’s a Wonderful Second Life
“You’re thinking of this place all wrong. As if I had the money back in a safe. The money’s not here!” – George Bailey, It’s a Wonderful Life
I’m a little behind on news, and I just saw this article in Technology Review this morning. In a nutshell, there’s a crisis of capital for the so-called banks of Second Life. (I say “so-called,” because although you can put money in, there’s really nothing guaranteeing that you can take it out again. The FDIC doesn’t insure Linden savings & loans.) Apparently it was triggered by a recent ban on gambling in Second Life, which immediately led to the pullout of the big cash depositors: the (former) casino operators.
Now there’s a bunch of trenchant observations begging to be made about this situation, and the Technology Review article touches on a number of angles: the lack of regulation in “virtual banking,” the potential opportunities for far-sighted entrepreneurs to get in on the ground floor of a whole new economy, the gradual perforation of the barriers between the virtual world and the real world, etc. etc.
But what I found most fascinating about the whole business was the user commentary following the article. (It’s worth noting, by the way, the relative dearth of name-calling and pointless flames in there. Whether this is due to a higher caliber of reader than just about every other site on the Web, stringent moderators, or just a general lack of traffic to the article, I can’t say.)
“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.” – George Bailey, again
There aren’t a ton of comments here – only are a couple dozen at the time I’m blogging this – but check out the number of Second Life advocates, and read what they’re saying. Essentially they blame the RL (that’s “real life”) media for creating the problem, grouse about how the naysayers are looking for any excuse to pooh-pooh what they obviously don’t understand (i.e. the future of the metaverse, of which SL is a harbinger), and patiently explain how in-game returns of 40%+ APR are eminently feasible given the lack of brick-and-mortar overhead of purely virtual banks. Suddenly the 5.5% APR I’m getting from PayPal feels like a huge ripoff! (Anyone else remember First Citywide Change Bank?)
I know I’ll come off as snide & pedantic by saying this (and I guess it wouldn’t be the first time either), but I abso-freakin-lutely LUV reading this stuff! The capacity for folks to cocoon up and explain away the signs of trouble is limited only by the intensity of their emotional need to really, really believe everything’s going to be OK. And it’s easy to laugh at the little computer-geeks and their pretend money, but think for a second about the US exchanges. Look at the debt instruments and credit assumptions that have been propping achievements like the Dow’s recent climb to 14,000. Are the bulls in that market any better?
Hey, wait… pretty much all my money is invested in those same markets. Crap. I’m going to go cry now…
Posted in The Web (2.0 and otherwise)