SecondLife Bans Unregistered In-World Banks 353
GuruBuckaroo writes "Virtual Ponzi schemes — pardon, "Banks" — have finally been given the boot by the policymakers at Linden Lab's Second Life. According to the company's latest blog post: 'As of January 22, 2008, it will be prohibited to offer interest or any direct return on an investment (whether in L$ or other currency) from any object, such as an ATM, located in Second Life, without proof of an applicable government registration statement or financial institution charter. We're implementing this policy after reviewing Resident complaints, banking activities, and the law, and we're doing it to protect our Residents and the integrity of our economy.'"
That should've been done day one. (Score:5, Insightful)
Morons.
free advertising? (Score:2, Insightful)
Run on the banks? (Score:5, Insightful)
Just like the real world.... (Score:3, Insightful)
Let's see if real banks move in (Score:4, Insightful)
Being a bank in Second Life isn't very attractive to real banks, because they can't create money in Second Life, like they can in the real world.
secondlife must be the most hyped concept ever (Score:3, Insightful)
Don't you have a better way of spending your money ? Most fads on the internet I can sort of understand what they're about and what their 'pull' is but second life is one step too many for me to follow.
Re:That should've been done day one. (Score:2, Insightful)
No, it's an open invitation for there to be gaming because it's a game.
First They Came for the Gaming... (Score:3, Insightful)
Now it's the banks.
What good is 2L if you can't virtually explore the things there that aren't possible, safe, legal, or some combination of all of these virtually? I don't need every part of my life to have training wheels.
So how long before virtual sex entirely is gone too?
Followed by avatars who are too sexy, or provacative.
2L was a place were you could learn life lessons by being stupid. Now it seems intending to become one of the more restrictive Middle East countries instead.
SL Imitates FL (Score:5, Insightful)
We're seeing the exact process by which people create governments to protect our rights. Since SL already had what was equivalent to tribal and voluntary governments, we are seeing something much like the process SL'ers learned about in history.
Re:good time to become a loan shark (Score:3, Insightful)
In the end, currency is only worth what people agree it is worth. It bears repeating: Currency is only worth as much as someone else will give you for it. It's a symbol--it's like a variable, as it were.
I find gold to be more or less worthless in my life, save only as a plating agent for electrical contacts. I don't see any reason why a currency should be based on something that's pretty much useless outside the electronics and jewelery industries. If you want to base a currency on something intrinsically valuable to a large number of people, how about, say, fresh water? Sure, it's not worth that much, but if you don't have it you'll certainly notice it.
Do not mistake the symbol for the thing. Currency of any sort--even gold--is only a symbol for a certain amount of a product or service that you can trade it for with someone else.
Re:That should've been done day one. (Score:3, Insightful)
Yes, the fantasy of the Ayn Rand unregulated perfect market always comes crashing down when human nature gets involved.
As much as people hate to admit it, regulation is a necessary part of society. You just have to hope for the right balance. Too little is chaos, too much a police state.
Re:good time to become a loan shark (Score:3, Insightful)
A) There is enough gold to 'cover' it (because really, how can you be -sure- that there's really a dollar's worth of gold in there?) and
B) Said currency or gold will be accepted as a valid form of payment by anyone within the country. Fiat currencies are at least honest about this: there are various laws on the books that state that the currency is to be considered valid payment for debt. Legally, in the US, I must accept a dollar as valid payment; I need not accept any amount of gold as payment, as there is no legal requirement that I do so--I might choose to deal only in platinum, or iridium, or some schist or other.
Re:secondlife must be the most hyped concept ever (Score:2, Insightful)
Let me take a stab at this....
Ever bought software? Were you paying for the disc or the code?
Ever gone to see a movie?
Ever paid to do something or experience something?
Ever exchanged hard earned cold cash for a service?
Paying for intangibles that result in your enjoyment is something everyone does on one level or another.
Re:good time to become a loan shark (Score:2, Insightful)
The value is based on the the belief of the millions of idiots that spout the line about "intrinsic value of gold" - it's effectively self sustaining.
Re:good time to become a loan shark (Score:3, Insightful)
2. Adam Smith solved this problem about 300 years ago... Tell me: What is China going to do with that money except buy things from us? Fiat currency is only valuable if you spend it. The doomsday scenarios people here love to espouse where China intentionally devalues the US dollar make absolutely no sense. They simply wouldn't be in Chinas best interest.
3. Fiat currency really works remarkably well. It's based on the potential of an economy, not the potential of the gold supply. Just use right now as an example.
People here lament the weak dollar. But everything pushes and pulls until it's all back in balance... As the dollar weakens, American-produced products are more affordable overseas. So, they purchase more of our products, which puts more Americans to work and increases American GDP. This results in the dollar rising in value. It will continue to rise until American products become too expensive, which depresses demand for American goods, which causes the dollar to stabilize or weaken again, and the cycle continues...
Re:That should've been done day one. (Score:3, Insightful)
Look at social animals. Those that live in groups. There's always an alpha.
Re:That should've been done day one. (Score:3, Insightful)
This really should have been a given. IRL in an anarchy without regulations, you can still find the corrupt bankers, tie them to a tree and let them starve while crows peck out their eyes... and send a message to other potential corrupt bankers. In SL there was absolutely nothing you could do. Period. Giving them money in trust was idiotic.
And Eve isn't any better. Nor are the 'lotteries' and 'gambling games' people try to run in mmorpogs from EQ to Wow. Even reputation isn't relevant when someone is leaving the game anyway and now just wants to fuck with the other players.
It seems like it would be in a vendor's best interests to operate in a system where a set of rules dictate portions of its behavior. Then trust is less of an issue and competition increases as new players join the market.
Travelling merchants in medieval time hired security and travelled in caravan's to distribute the cost of said security. And they deposited their profits at multiple respected banks in multiple countries to protect themselves from the fact that banks were also unreliable, and even the countries they were in weren't entirely stable.
Even today its possible to have your assets siezed if they are stored in a country that under goes regime change, or to lose your deposits if the bank goes under. Its just not terribly likely with major banks in stable first world countries. But Hitler did it in Germany to the Jews, for example. And even today first world countries do this to 'suspected criminals' in certain cases... and the scope of when they'll do it has been rapidly expanding lately in the US.
Its always in one's best interest to have security so that trust is less of an issue, whether your hiring your own caravan gaurds yourself or funding goverment to provide regulation and police services through taxes.
The people getting ripped off in SL and other games, and even often in RL, simply don't and usually can't perform competent risk analysis.
If someone came up to you on the street, wearing a mask, told you their name was 'drpeeper', and asked you to put a chunk of your savings in his bank (by which he means put money in the cardboard box he made himself with the word atm printed on it)... would you? What if he had a few shills also wearing masks standing around telling you how great he was, and how they'd made $50 dollars in interest in the last couple weeks alone on a $1000 'investment'?
If you tried it for fun, using money you could afford to lose, and found that it worked, would you then be convinced and drop a lot more money into it?
Or would you realize that even though it worked once, you STILL have no gaurantee, and the more money you put in the box the more likely drpeeper is going to disappear with it, and suspect that indeed, his entire plan all along is to disappear with it once the box is full enough. Because if he's not there tomorrow, there is sweet fuck all you can do about it.
If so, go home and sign control over your money to somebody competent.
Re:good time to become a loan shark (Score:3, Insightful)
No, its not. Even if it was, so what?
What fly-by-night idea are you referring to that Adam Smith came up with?
China may have leverage because our government currently wants to keep selling them debt, but they debt they already own gives us leverage over them, more than the other way around: they are counting on us to pay it, so who has the leverage?
Fiat currency has, on balance, everywhere in the world, worked better than commodity or representational currency ever has, because it isn't as subject to short-term extreme fluctuations based on the market for a single commodity of any commodity or representational system, doesn't have the exchange value problems of multicommodity systems, and doesn't have the limited range of values for which exchanges are practical and logistical issues faced by commodity systems, particularly single commodity systems.
This is independent, largely, of who is "holding cards". Clearly, anyone holding dominant power in the world economy or over critical resources can disrupt any fiat, representational, or commodity system—though this is easier with representational or commodity systems, where they are vulnerable to most of the same attacks that are possible against a fiat system (particularly a representational system) as well as efforts directed at disrupting or distorting the market for the underlying commodity.
No, the fact is fiat currency is real (and pure currency). Commodity and representational currency is far more unstable in the short-term because it is something other than currency, and is therefore more exposed to particular external uncertainties.
Re:good time to become a loan shark (Score:3, Insightful)
No on is being "robbed" of anything. Money is a medium of exchange. Failing to exchange it for something of value may result in its value changing before you do so. The extreme short-term volatility of commodity money is not preferable the gradual long-term decline in value of most fiat money, since the latter much more than the former can be managed by purchasing productive assets with the money in some reasonable time.
No, its much more volatile, though the more extreme fluctuations may have a greater tendency to average out over the extremely long-term. But short-term volatility is more damaging than long-term decline in value, because the long-term decline can be managed by purchasing productive assets, while the more extreme short-term volatility of commodity prices is harder to manage. There are plenty of long-term stores of value available to participants in the economy: the essential and indispensable role of government-issued money is in a medium of exchange, not a long-term store of value.
Re:good time to become a loan shark (Score:3, Insightful)
That's because people are stupid.
Changing to commodity or representational money will not change that (if anything, it will be a symptom that that problem has gotten worse.)
Re:good time to become a loan shark (Score:3, Insightful)
If you think any of that has any truth to it at all, I've got another paranoid delusion to show you.
http://www.loosechange911.com/ [loosechange911.com]