The Gamer's Quarter

[Mister Toups]

linky linky

I don't understand much of the economics-talk in this article. dhex? can you help a brother out?
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where were you when nana komatsu got a wii?

[Scratchmonkey]

From what I've read, the basics are:

- There are plenty of indicators that money can be made through SL, through leverating poorly-set exchange rates
- Financial exchange between lindens and dollars is controlled by a small amount of poeple
- Large-scale exchanges are basically not allowed
- Exchange transactions are "tweaked" to wind up giving a 4% real return, which is roughly equivalent to the rate you would get on a savings account
- SL people are defending SL in the comments because hey, *they* made money through SL, therefore everything must be on the up-and-up

So, according to the first four bullet points, SL seems to represent a chance for somebody who knows how to make money from money to generate an excellent return. These people then exhange a large amount of real-world money for linden (in-game currency). Then, when they attempt to exchange the linden back to dollars they find that their exchange options are limited -- they can only exchange a small amount of currency at a time and return a lower rate than expected.

I'm not actually sure that this is a canonical pyramid scheme or Ponzi scheme because I'm not seeing where the there's an initial high return paid out of the initial investment of others. It certainly seems iffy, even if Dr. Yiff can make $120 a month making virtual swords (when he could be making at least 10x that amount working as an actual artist for a game developer).

Ponzi and Pyramid schemes

[dessgeega]

so i guess the real question here is how can i make money off of second life?

i hear it has a pretty impressive sex industry.
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[Winged Assassins (1984)]

As a scheme I prefer the trapezoid.
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[dhex]

[Nana Komatsu]

The OP link is to Valleywag, which likes to create much ado about nothing to get lots of attention.
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resetbutton.net: videogames for unattractive people

[Scratchmonkey]

I'm just going to post the chatlog of me and mr. hexler talking about this:

m: that second life article was interesting

Thom: yeah, what did you think about that?

m: i'm not sure what he's pissed about
whether or not an internal economy is accessible to the external economy doesn't make it more or less "big"

Thom: yes

m: it's a very liquid market that just doesn't have any uses outside of that particular environment
do people tout sl as a moneymaker?

Thom: I think so
it's promoted as such
very heavily

m: ahh

Thom: the mag cover that accompanies that article is about somebody who's become a multi-millionaire, unquote, through real estate in Second Life
and they've had in-game press conferences to bally-hoo the "new virtual economy" and how awesome it is

m: hmmm
right
well, it's i9nteresting
just of extremely limited utility

Thom: yeah

m: dunno if that's really a ponzi thing though

Thom: I don't think it is

m: anymore than buying video games on the collectibles market

Thom: it certainly isn't a canonical one

m: right

Thom: it seems to me to be a very controlled yet unregulated market
which basically boils down to it being most useful that the people that run it
not unlike most third-world economies

m: yeah
that's a very good comparison, actually

Thom: the thing that they're complaining about is that it's essentially insulated against speculation in currency exchange

m: right
by preventing large dumps

Thom: which makes me wonder if that sort of thing happens with "real" economies
warning: I'm probably going to post this chatlog in that thread

m: sure
well in some sense i'd have to say yes
the asian flu of hte late 90s for example
(thanks george soros)

Thom: gotcha

m: but the issue was a lot more complicated than that
depending on whose interpretation you like most
but in the sense that all money is both "unreal" or symbolic and that nearly every country has some kind of weighting via a central bank (or being tied to another country's currency, which is controlled by a central bank)
the difference being that second life currency is only useful in a limited place and time
so a better comparison would be gift certificates
or a kind of private currency like liberty dollars
http://en.wikipedia.org/wiki/Liberty_Dollars
except it's not backed by any other kind of commodity

Thom: no
it seems to me that the original article was "this seemed like a real easy way to make money and then it turned out that they're basically preventing you from making money easy so this shit's a scam, yo"

m: right
sour grapes, et al

m: i wonder if sl becomes big enough if there'd ever be enough of a margin for private groups to offer exchanges for, like, dvd players or whatever

Thom: http://cgi.ebay.com/SL-Second-Life-Secondlife-Two-Million-Linden-2000000L_W0QQitemZ180076683187QQihZ008QQcategoryZ4596QQrdZ1QQcmdZViewItem

m: if there were enough people interested in buying SL currency, there'd be enough of a profit margin for operators to get in on it
a ha!

Thom: http://cgi.ebay.com/10000-Linden-Dollars-Second-Life-L-MONEY-NR-BIN_W0QQitemZ140076374558QQihZ004QQcategoryZ4596QQrdZ1QQcmdZViewItem

m: that's a ridiculous exchange rate
222:1

Thom: I suspect it's somebody who figured out how to make loads of money in the game and then realized that he was basically prevented from moving it out himself

m: yeah

[Redeye]

In Second Life I found a Pyramid object that contained an advertisement for itself:


"Want to make money? Pay 10 Linden to be authorized to copy this Pyramid, when you place a copy of the Pyramid it costs an additional 10 Linden. If somebody pays your Pyramid the copying fee they get in on the deal in the same way, except the payment is split between you and me..."

I remember thinking "That's just so... meta"

wow

I am going to see if I can find the coordinates of this thing, maybe take a snapshot.
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I felt sheer anarchic joy when I ran over my first pedestrian.

[dhex]

for dess, but it's not very good (nsfw)

on the plus side the author's name sounds pretty porn-star-ish.

also nsfw:
http://www.getxcite.com/

i like their pr guy's obvious fake name. beyond that, well, the world has needs.
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[Redeye]

lol


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I felt sheer anarchic joy when I ran over my first pedestrian.

[Swimmy]

This would be a great primer on the danger of a centralized monetary system.

Basically, what everyone else said: You can't influence the exchange rate through arbitrage, and therefore it's a scam. Except not really, because that was the de jure case for most major currencies for most of the last century. Of course there were underground markets for currency, as price fixing tends to produce, but that's more difficult here because of the way the monetary system is owned and operated.

If a currency crisis popped up in Second Life, that would be some major research material right there. A crafty grad student could launch a career from something like that.
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"Ayn Rand fans are the old school version of Xenogears fanboys."
-seryogin

[Nana Komatsu]

Looks like it'll be a bit harder to make money in SL for now:

http://news.com.com/eBay+bans+auctions+of+virtual+goods/2100-1043_3-6154372.html
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resetbutton.net: videogames for unattractive people

[Scratchmonkey]

Four paragraphs into that story:

"The ban does not affect the virtual world Second Life."

[Nana Komatsu]

I guess I didn't RTFA.
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resetbutton.net: videogames for unattractive people

[player 2]

My friend who works at a very conservative banking firm told me that her firm is very interested in making a break into Second Life. Even if it is not completely fluid with real money, there's definitely enough money to be played w/ within the game that will eventualy seep its way out of the game.
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Wii #: 8749 9109 9732 3653

"It is a peaceful way of understanding life, to play"
_Marcel Duchamp