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.
Re:That should've been done day one. (Score:5, Interesting)
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However there's one big difference. In SL, there's anonimity. There is no recourse. There is no sort of court or penalty available.
In RL (actual society of a mythical better one i dream about) you would be a lot less anonymous in running a bank or "bank". Even without banking laws and WITH a simple "responsibility" law you'd still be stuck paying back the money or working it off.
I don't think comparing SL and RL is
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However, I will argue that RL death is not in any way the same as losing popularity or even entirely losing your character/account in SL or any similar online venue. Death is final, you can always re-create a character which is nothing more than bits stored on a server. The worst you lose there is the time invested. Sure it might not be fun anymore but there will always be other choices for entertainment.
If i lose my warcraft
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So yes, he will never actually pay off the debt. However, seizing all of his assets and putting him to productive work sure does more than letting him continue to cost society money.
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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.
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Re:That should've been done day one. (Score:4, Informative)
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It didn't have a bad reputation. Before the scheme began it had no reputation. In this case, without rules from LL, all it does it make it harder users to trust institutions without a rep external to the game. The problem may be resolved in regards to one SL bank, but if the prob repeats then it reflects on SL when nobody wants to come on line and play. SL can't not act without harming their own reputation.
If no regulations exist, then banking in Second Life can't be trusted at all. It seems like it would
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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 m
Works in EVE Online (Score:2)
I think they might make an exception if the scamming was done by exploiting bugs in the game mechanics. But if it is simply misplaced trust, you get no compensation at all.
Even so, the economy in EVE is still working.
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Relying on contracts is reactive and shifts enforcement of regulation to the courts, which as we have often discussed on slashdot is slanted to those who have more resources to argue their position (think **AA).
I'll take a reasonable amount of preventitive regulation that doesn't require the employment of 3rd parties to mount a dispute.
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Look at social animals. Those that live in groups. There's always an alpha.
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It is a combination of "keyboard courage" that comes with being effectively anonymous, and the fact that most humans will treat other humans poorly if they think they can get away with it.
Rules help make a society, even a virtual one. Without those rules, everyone is prey.
It just goes to show you that the old addage is still strong: If something seems too good to be true, it probably is.
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As long as you don't exploit game bugs to exploit others, you are ok.
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No, it's an open invitation for there to be gaming because it's a game.
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LL should have had exclusive control over their currency and the exchange thereof to begin with. Allowing other parties to do this for them was an open invitation for them and their users to get shafted.
Morons.
Much like us Americans and our Visa, Mastercard, and small problem with Banks (Sub-prime mortgage, anyone)? We've let other parties value our money for ages -- after all, if a credit card company can add 30-40% interest (in the name of "fees" and crap like that), how's that different then them changi
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Virtual Trust? (Score:5, Interesting)
Re:Virtual Trust? (Score:5, Funny)
for (counter = 0; counter < 100; counter++) {
sprintf ("People are stupid.");
}
Re:Virtual Trust? (Score:5, Funny)
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time_t prev_time;
class sucker;
for (counter = 0; counter < sucker.population(); counter++) {
if ( (time()-prev_time) > 60 ) {
prev_time = time();
sucker.born();
sprintf ("People are stupid.");
}
}
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I think there's a rather obvious problem with that. The print line should be:
sprintf(stdout, "People are stupid.\n");
Otherwise it doesn't compile.
(Disclaimer: Yes, this is intended as a joke.)
Re:Virtual Trust? (Score:5, Interesting)
There's a simple answer to that. People are stupid. They think that money grows on trees and all they have to do is give it to some virtual "bank" and they'll enjoy some staggering rate of return. In truth it is the idiots who follow on behind who are paying the interest for the ones in front.
I expect SL has become very popular with con men for this reason. Wouldn't surprise me at all if all sorts of ponzi schemes, pyramid scams, matrix scams, and just plain old fashioned fraud happen every day on SL because there is so little regulation and a lot of gullible people within easy reach.
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Or at least it does for new joiners.
Remember kids... (Score:4, Interesting)
The crooks may still wear black, but they pack all new weapons now.
Re:Remember kids... (Score:5, Funny)
free advertising? (Score:2, Insightful)
Re:free advertising? (Score:5, Funny)
My sentiments exactly. And I work with hundreds of nerds/engineers/etc.
All of the people I know seem to have first lives.
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there's nothing to do, sure you can "build" stuff, but the editor is clunky. and outside of that it's one big IRC chat with the same level of conversation you'd expect from a general chat... if you can even find anyone to talk to.
the engine is on-par for a 1995 game and without a predictive movement algorithm, when you move around and it has a 2 second lag between your keypress and the actual movement on the screen
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The reality is that it's a low resolution, reeeeeealy slowly loading version of the Metaverse, heavy on furries and flying penises. But hey, it's a start.
The Office (Score:2)
Run on the banks? (Score:5, Insightful)
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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.
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In what way can a bank "create" money in the real world?
They can't issue or print money. All of their assets are actually based on real world assets. They may use the deposit you have registered with them to underwrite other transactions, but I don't get the sense they can just "create money".
Am I missing something here? If banks could just create money, our eco
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Your money truly is just bits in a computer, and the law governs what the banks are allowed to make those bits say. The printing of currency is not actually involved in the process of _creating_ money. Printed currency is just a token, one of many means of moving the values of those bits from one institution to another.
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PERIOD.
Everything else is a middle man taking a cut and screwing either the seller, the buyer, or both.
So, educate yourself past asking if you'd like fries with that, and don't believe ANYTHING that the only r
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No, a value-added process creates value not money.
Money is created in a number of ways: issuing currency obviously, but also the action of banks. If you deposit $100 at a bank, the bank loans out most of it and retains a fraction (say, for simplicity, 10% or $10 of the $100), along with a similar fraction of all the deposits it receives from other people, to cover withdrawals.
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They can't really create money IRL. They can create debt, and if they don't put that debt to good use, banks lose a lot of REAL money. My Bank of America stock is down 20% in a matter of WEEKS. I thought, if Warren Buffet owns it, it can't be too bad. Looks like Buffet and I are both fools, now.
If they really could just create money, I demand BAC create enough mone
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What stops a bank from making a loan (and collecting interest) in Second Life? What stops them from investing in some brilliant "object maker"?
In short, I don't follow your reasoning... if Second Life is ok with banks that register with them, then why can't that registered bank do everything a real life bank does?
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.
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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.
Entropia Universe (Score:2)
Last year, 5 banks opened up in Entropia Universe, each with a minimum of $100,000 capital for making loans. You can check your in-game items into a safety deposit box at such a cyber-bank, and receive a credit line (in real dollars), using the in-game item as collateral.
Each bank is sanctioned by MindArk (the software company that made the game), and is allowed to set any policies that they w
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.
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If $L weren't exchangeable for real world dollars and purchased with them, there wouldn't be a problem here. There is a difference between a virtual world which allows you to simulate things that are illegal in the real world and a virtual world which provides a vehicle for doing, in the real world, things that are illegal in the real world.
Job Opportunity! (Score:3, Funny)
Brett
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.
SL mimics real life (Score:2)
Virtual Assets (Score:2)
OF COURSE Virtual assets are not tangible real items. What they represent is effort/service on the part of somebody. When you "buy" something in Second life you are not buying a Virtual House/dress/etc, you are paying for the service/labor involved in the creation of said digital content. Looking at it in that way does not make it so cooky.
One could say when you "buy" an ebook you are not actually buying a book, but pe
Charging interest is evil. (Score:2, Interesting)
I'm not a very religious person, but even the bible states that charging interest is akin to theft. It's simply making money
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The only other way to create an atmosphere of lending is to base the return off of the return of the money. This happens today when an investor invests in a company. He can get his investment out, but also gets a part of the company - a reward for enabling the enterprise. Also, a st
But you do this already (Score:4, Interesting)
In the olden days "dollar bills" wire actually silver or gold certificates. You could trade these paper certificates for the actual gold or silver. Prior to this, you'd carry it in a coin purse. But the paper money while more subject to wear, was lighter and literally more flexible and therefore comfortable. A US Dollar was based off the Spanish dollar and was settled on 371.25 grains of
This limited inflation (the only way to deflate the currency was to send bankers to the hills to mine metals) and was real value.
Then in 1913 two things happened: we got the Federal Reserve and the 16th amendment. These two institutions, both once non-existent, rule the country today. With the creation of the FR the US borrowed money from the FR ]]at interest[[ setting up a positive feedback loop of inflation. In order to do this they also had to decouple the money from the metal backing, which was completed in 197[2?] under Richard Nixon. If you want to see real inflation, it is measured in the M3 statistic, which the Fed stopped publishing recently. But you can see it here [shadowstats.com] Instead of talking inflation, the Fed tries to talk CPI - which is an aggregate from several industries. Notably absent is the mortgage market, which ask anyone, its costs have doubled in the the past 5 years. But the CPI leaves this out, and only includes rents, which have stayed disproportionately low because of all the house seekers.
Today the paper you move about is as valuable as those bits in the computer. If the word "certificate" appeared on them it would be completely a different situation. You could go to the bank and get metal, whose value wouldn't ever go down. But now, you can't expect to leave $30,000 in the bank and have the same buying power 10 years later. Over the last 90 years, the dollar has fallen to just $0.04 of its original value, as valued by the silver market.
But getting back on topic - any kind of calamity that shakes the confidence of Americans will affect the buying power of the dollar. Not a new vein of gold, not a run on banks, not a stock market crash. The only absolute value is cold hard cash. And by cold and hard I mean a metal.
--Epilogue--
I often wonder what all this means int he grand scheme. If you have money, this is an issue. If you have debt, it is actually a good thing because debts are paid off with future, depreciated money, and they take that money at face value. (Which an old bill is rarely worth.) The key here is to have one foot in both areas: pay off debts with inflating currency and have your investments in metals-backed currency.
There has been a movement to inflation-proof currency, known as the Liberty dollar. These were negotiable certificates which actually were redeemable for metal. The Federal Reserve shut it down and seized all the silver, because this, while completely legal, are the one thing a person can do to retain control and live outside the system. If it ever got popular (and I believe it would, particularly in times of inflation) the Federal Reserve would have competition that couldn't be influenced by it. The important thing to note is that it would be no different of a situation than America, pre-1913.
Finally, note that the Federal Reserve is not Federal (it is private) nor is it a Reserve (it holds nothing - the gold it once held is unaccounted for.) The only worse-named entity is Social Security.
Re:good time to become a loan shark (Score:5, Interesting)
Second, gold doesn't have intrinsic value at all. The value of gold fluctuates all the time. All the gold standard did was fix the price of gold. While the gold standard was tenable for a time it didn't work in the long run because it's not stable. Your money supply is dependent on your gold supply which in turn limits your economy. You can't have more dollars than your fixed ratio to gold. New discoveries of gold can also create deflationary shocks.
There's nothing special about money at all. It's a medium of exchange. It has what value we agree it has, no matter if the medium is a piece of paper or a string of bits or a hunk of metal.
Re:good time to become a loan shark (Score:5, Interesting)
The way it's set up now every country in the world is gunning for bankruptcy in the end. You can't sustain a system of constant debt growth forever. We need to find something to base money on that isn't a commodity controlled by the few and also isn't debt. Or we can just continue to fight wars and reforming nations and start over every time the debt ceiling is too high.
In regards to the article, I find it hilarious that you can't even run a virtual bank without a real life charter. That just slays me. I think the line between virtual and real just blurred beyond recognition.
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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 would
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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 deb
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It's axiomatic that the government will cheat on the currency, so a fiat currency has a huge advantage: the government doesn't have to hide what it's doing, which makes the whole process much more visible, predictable, and accountable.
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Neither of those two "values" - a century of zero growth, or tripling in a year - are anything like the change in value of our economy during those periods.
This "gold standard is sacred" nonsense is about a stupid as basing an economy on, say, a specific government declaration of production increase 5 years from now.
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The currency system actually works.
(Other aspects of the economic system don't, and deliberately so, because the narrow interests that have the most influence in setting the rules benefit from the brokenness, but that's a different story.)
Well, no, the heat death of the uni
Re:good time to become a loan shark (Score:5, Funny)
Re:good time to become a loan shark (Score:4, Interesting)
http://video.google.com/videoplay?docid=-9050474362583451279 [google.com]
Watch it. Learn. Our system of currency is based on nothing more than a pile of lies and a mechanism for transferring wealth into the hands of the wealthy. It is also based on perpetually accelerating the rate of growth, which is so laughably unsustainable that it's amazing it has lasted this long.
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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]Re: (Score:2)
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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.
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Let's instead move to the Uranium-235 standard, or better yet, the joule.
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What is the intrinsic value of gold?
You see you are looking for an axiomatically based discussion here. There is a number of theories. But the test of any theory is practice. Regardless how the intrinsic value of the gold can be philosophically shown, the fact remains that under gold-based currency money does not lose value. Under government-promise based currency (fiat) money ALWAYS loses value. So people are constantly lose their savings under no-gold currency standard. That's just how it's always been. Why would you assume that it
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A) There is enough gold to '
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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.
Re:good time to become a loan shark (Score:4, Interesting)
I am sorry, but that's simply incorrect. A check is a draft. As described by the UCC article 3, it is an order to pay. That's why all checks have the words "pay to the order of" on them. A check is a written instruction to a storage institution (ie, bank) to pay (or transfer ownership) of what you store with them. It is distinctly different from as a promise (such as IOU) in that you cannot be sued for writing a check. While it is against certain laws to write "bad" checks, the act of writing a check itself does not create a liability to the person to whom the check is written. No promise is made there. If you make a promise (as with an IOU), you do create a liability -- you can be sued for not fulfilling the promise. As for the claim that a check has to be drawn against a government-backed currency, that's pure fantasy. It is nothing but an order (a command) to pay to the presenter (or to the person whose name is written on the check).
You are correct that bank notes are in fact notes (ie, promises). But I wasn't arguing for bank notes. I was saying that some banks may be trusted enough that the notes that they issue will become "as good as gold" as the expression goes. But would only be because they have the reputation of paying out the gold upon presenting of the notes. The first time they fail to pay, their promise would become worthless. Bank notes would be rated in much the same way as the bonds are currently rated -- by their trustworthiness.
Not all those layers were solutions. Some did occur naturally to fulfill market-place needs, but some were not. Fiat currency did not solve any problem other than the government's need to issue as much money as they saw fit. That's bona fide debasement.
When I say that these issues have been resolved, I'm referring to the fact that the argument for the central bank (as proposed by Hamilton) have been thoroughly reviewed and consequently rejected by the writers of the Constitution. The banking system was perfected about fifty to a hundred years prior to the American Revolution. It was perfected in England where the practice of writing checks to banks and using bearer checks as currency started. Fiat currency is based on trust and trust is not something that can be demanded (as is the case with anything dictated by law). Trust is only something that results from people's own judgments. In the absence of trust, the exchange must involve something that has unquestionable value. The fungible nature of commodities makes them perfect as a medium for such exchange.Re: (Score:3, Interesting)
A check is an order to the bank. To the recipient, it is a promise that there are sufficient funds in the account to cover the draft (and, on top of that, that the order will not be cancelled before the draft is presented through a separate communication with the bank), a promise which is, all too frequently, false; which is why, even with all the modern infrastructure to increase trust by
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This is only true for the trivial case where the "value of currency" is measured in how much gold you can realize from it, and even then only when gold itself traded for nothing but its metal value is the currency.
Gold-backed currencies can lose value on the market, even when the value is measured in gold, based on the perception of the stability and reliabi
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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.)
That's elitist and more importantly inaccurate. It's because people don't have a choice. If they don't invest, they lose their savings. That's what will change. It will remove the NEED to invest. So the only time that people will invest will be when they are sure.
Given that the most damaging bubble (and its subsequent bursting) in the history of the US economy occurred while the US was on the gold standard with free convertibility -- and gold/silver currency is the only part here that isn't part of the current system, free exchange of property is not, contrary to your misinformation, illegal -- I see no reason to believe this.
I assume you are referring to the crash of 1929. That is an interesting argument. But it only goes to prove that 1913-1933 we were on gold standard in name only. The largest effect on the general public from the crash was not loss of inve
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Really? So inflation didn't exist AT ALL under the gold standard?
Pretty much. Surprising, isn't it? We've all gotten so used to inflation being a norm, that we don't even believe it's possible to live without it. Granted more gold can be found. But again, judging from the past (which is always better than what can be judged from some promises) the amount of gold that can be excavated/refined per year is negligible compared to the gold that is already available. The amount of gold that is found in any
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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 r
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I find your ideas intriguing, and would like to borrow money from you at the rate of interest you propose. You are offering to lend at that rate, right?
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Can you offer any evidence, studies, proof or explanation as to how you came to that conclusion, or are you considering your argument self-evident somehow?
>>Obviously the real cost is less than half a percent thanks to technology.
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Why Second Life is the Greatest MMOG Ever (Score:2)
Warning: Prob. NSFW due to flying penis attack (Score:2)
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Bitching about SL in general because of financial scams within it is like trashing the entire Web over the very first web-phishing schemes.
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