Yet Another Run On A Virtual Bank

from the but-don't-get-too-excited-over-it dept

A couple years ago, there were stories about how there was a "run" on the virtual banks of Second Life. Later on, some reporters tried to suggest that the Second Life "credit crunch" was a predictor of the real world's credit crunch. That wasn't even close to true. Yet, with yet another story about a virtual world, we're once again hearing in-apt comparisons to the real world. The latest is a run on a bank in the game EVE Online. In this case, it looks like one of the guys involved in running the "bank" simply took some of the virtual currency out of the bank and exchanged it for real world cash (about $5k). The BBC headline calling it "billions stolen" is inaccurate, since it was only "billions" in the meaningless virtual currency. In the real world, it translated into not very much at all. The BBC article also calls it a "virtual version of the credit crunch." Again, this is quite inaccurate. In both the Second Life bank run and this bank run the problem was simply outright fraud by the "virtual banks" or those who run them. That's quite different than what has happened with the real world credit crunch, and it does little good to pretend otherwise.


Reader Comments (rss)

(Flattened / Threaded)

  •  
    identicon
    Frosty840, Jul 6th, 2009 @ 6:05am

    Again, the BBC, despite its long and respected history, is no longer a trustworthy news source.

    It may get the bare facts of a case correct (there was a run on a bank in an online game), as pretty much anyone with an internet connection can manage, these days, but apart from that, there just seems to be a great deal of almost wilful misrepresentation of any situation, regardless of politics or the status quo (comparing the run on a single, player run bank in a virtual world with an economy that extends far outside of the banking system, to the credit crunch, to which it bears no relation whatsoever).

    I know this might seem to be an overreaction to a story about an online game, but this is hardly an isolated incident.

     

    reply to this | link to this | view in chronology ]

  •  
    icon
    Dark Helmet (profile), Jul 6th, 2009 @ 6:28am

    Er?

    "Yet, with yet another story about a virtual world, we're once again hearing in-apt comparisons to the real world"

    Okay, I'm usually pretty good at interpreting the minor typos, but this one has a few possibilities:

    in-apt = inept?

    in-apt = within the application?

    in-apt = comparisons in the apartment?

     

    reply to this | link to this | view in chronology ]

    •  
      icon
      Chronno S. Trigger (profile), Jul 6th, 2009 @ 6:54am

      Re: Er?

      apt(p): (usually followed by `to') naturally disposed toward;

      So in-apt would be not naturally disposed toward.

      on topic, newspapers like to do this. It's a way to compete without doing anything extra; They try to be the first to guess what will happen or compare two unrelated past issues.

       

      reply to this | link to this | view in chronology ]

  •  
    identicon
    Anonymous Coward, Jul 6th, 2009 @ 6:40am

    "Again, this is quite inaccurate. In both the Second Life bank run and this bank run the problem was simply outright fraud by the "virtual banks" or those who run them. That's quite different than what has happened with the real world credit crunch, and it does little good to pretend otherwise."

    Having an advanced degree in economics I have followed the financial mess with extreme interest for the last 2 years copying and printing every article that I can find on what transpired.

    The only thing I can definitively positively state with 100% accuracy is that the news media does not project the issue correct. It is not that what is presented incorrect it is just that some of the dots (actually some of the most important dots) are missing. Just simply not discussed.

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    Comboman, Jul 6th, 2009 @ 6:51am

    Parallels

    In both the Second Life bank run and this bank run the problem was simply outright fraud by the "virtual banks" or those who run them. That's quite different than what has happened with the real world credit crunch

    Let's see, the people who ran the banks tried to make huge profits for themselves while defrauding the bank's clients. Clients panic and take their money out of the bank. How is that different from what happened in the real world? The technical details may be different, but certainly there are parallels worth exploring. If on-line worlds are a microcosm of society, then we should expect to see similar things happen in the games that are happening in the real world.

     

    reply to this | link to this | view in chronology ]

    •  
      identicon
      gotospaceordie, Jul 6th, 2009 @ 7:01am

      Re: Parallels

      My thoughts exactly! It is plain to see for us who think on a more abstract level...

       

      reply to this | link to this | view in chronology ]

    •  
      icon
      Bob Bunderfeld (profile), Jul 6th, 2009 @ 7:02am

      Re: Parallels

      It's different because people COULDN'T make a run on the Bank, at least in Second Life, because the person took ALL the money, cashed it in, and left the world. Leaving everyone who was, IMHO, foolish enough to place their "money" there, without any recourse.

       

      reply to this | link to this | view in chronology ]

  •  
    identicon
    fogbugzd, Jul 6th, 2009 @ 7:08am

    Headlines

    It is much easier to write great headlines and story lead ins if you don't know too much about the topic you are writing about.

     

    reply to this | link to this | view in chronology ]

  •  
    icon
    Bob Bunderfeld (profile), Jul 6th, 2009 @ 7:13am

    Mike is Correct

    I've been involved in Second Life for more then 6 years now. The so called "run on the bank" wasn't actually that, instead it was, as Mike points out, downright fraud. It had absolutely NOTHING to do with the economic crisis felt by the Real World.

    On the other hand, having run a Texture Store in Second Life for about 4 years, I can say that we started to see less and less transactions as the economic crisis worsened in Real Life. I wouldn't say that the Second Life economy, or any other virtual economy, was a predictor of the Real World crisis, but instead, I would say that these Virtual Economies saw the same issues as the Real World economy.

    One interesting side note though. The CEO of Linden Lab, M Linden as he's known in Second Life, when asked if he thought the Second Life economy would suffer during the Real World crisis said he believed that the Real World crisis would actually HELP the Second Life economy as more people would spend their Real World dollars in Second Life then for other entertainment mediums since they would, in his opinion, get more "value". At the time I figured he was just blowing sunshine up someone's butt, but, I must admit that in the past couple of months, the Second Life economy has started to show life again, and we are seeing more transactions in stores like mine.

    Does this mean M Linden was right? Does this mean that the Real World crisis will soon be over because the Second Life economy is on the rebound? To the first question, the answer is partially. M Linden was right in that more Second Life residents would find more value in spending their real world currence in Second Life, but, that doesn't mean that more people signed up to join the Second Life world because they saw more intrinsic value in their dollar in the Second Life economy. To the second question, please, you should know this answer without me saying it. Absolutely, without a doubt, there is NO CORRELATION between the Second Life economy and the Real World Economy. Those who say there is, are either lackays of Linden Lab and just spreading their brand of happiness or are disillusioned fools that believe everything they read in the Paper.

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    Bob V, Jul 6th, 2009 @ 7:24am

    The problem with any mainstream reporting of a niche story is the details are beyond any short story. Anyone who plays the Eve understood all the ramifications and nuances of the theft. There are some parallels on the surface and that's what the mainstream press is reporting on unfortunately once you scratch the surface the similarities become not so similar.

    And for those of you interested the great part of the whole theft was that it is completely allowed and accepted (and even expected by some) within the game. The only problem was when he sold the virtual cash for real cash. That was a violation of game rules.

     

    reply to this | link to this | view in chronology ]

  •  
    icon
    technomage (profile), Jul 6th, 2009 @ 8:05am

    there is some corollary...

    Eve touts that it's economy is basically that of a small country, roughly 80 trillion ISK (their in game currency). He stole 200bln. That is a quarter of 1% of the total money in game. How much of the total money in the U.S has the banks caused to be lost? The banks were a direct influence on the car manufacturers. The banks were the direct influence on the housing lenders. All this trickled down due to mismanagement. The same is happening in EVE. The difference is, EVE doesn't have a government offering bailouts to the people that lost money. Yes, there will be a credit crunch in eve. That big of a loss is going to affect prices for a long time. Just like that last big issue in EVE, the starbase Exploit - but that is a different story.

     

    reply to this | link to this | view in chronology ]

  •  
    icon
    Josh (profile), Jul 6th, 2009 @ 8:42am

    I play EVE, and aside from the inaccuracies of the BBC report, there's quite a few other things that have been overlooked, most likely because not many are actually familiar with the game, let alone EBANK.

    First, EBANK, despite (probably) being the largest "bank" in the world of EVE, has very small assets compared to the entire EVE economy. The 200 billion ISK is pretty meaningless when an average player of a few months to a year could easily have control of a few billion in assets, in an economy where close to 100 trillion ISK changes hands regularly.

    Second, EBANK and all other "banks" in EVE really aren't akin to banks in the real world, despite their names. They are entirely player run with no support from CCP (the company that runs the game). They are much closer to a private company with private investors and no government regulation in real-life terms.

    Third, Ricdic, the player involved was the person most responsible for running EBANK. While there was some type of a board and other trusted players, he was the face of EBANK. This is just a guess, but a significant portion (if not all) of that ISK may of actually been his in the first place. In real life terms, this is more akin to something like a CEO cashing out all of his stock - though if not all of it was his, it is more like the CEO stealing money from the company and running off to Nigeria.

    Fourth, this is unlikely to have any significant impact upon the EVE economy. Things like the territory wars out in nullsec space (where large alliance of players can "own" the space and its resources) have a much larger impact on the economy than a small corporation imploding however well known they were.

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    Anonymous Coward, Jul 6th, 2009 @ 8:55am

    since it was only "billions" in the meaningless virtual currency.

    Even if it's free to make it may still have value. It certainly isn't meaningless if you could trade it in for $5k.

    People in these games place huge amounts of value and meaning on these currencies.

     

    reply to this | link to this | view in chronology ]

  •  
    icon
    Mabmoro (profile), Jul 6th, 2009 @ 9:46am

    Further context

    Just a note to put this further into perspective, the bank itself has trillions of ISK still remaining. I cant locate the specific amount, but I recall reading that its still somewhere in the trillions.

    So, even though its not a good thing that it happened, overall, it wont affect much. I've still got ISK in an account with them, and dont plan on pulling out anytime soon.

     

    reply to this | link to this | view in chronology ]

  •  
    icon
    enduser (profile), Jul 6th, 2009 @ 10:58am

    Fair comparison

    It seems inevitable that whenever the subject of Second Life's economy comes up and its impact on the real world, MMO's like EVE and WoW are pulled into the conversation. The government's growing desire to tax these economies is a perfect example. While Second Life has an official real world currency exchange, such things are against the rules of the other MMO's and are done in a black market environment.

    Perhaps someone can clarify for me the reason Second Life's unique issues seem to bleed over to other companies' virtual worlds.

     

    reply to this | link to this | view in chronology ]

    •  
      identicon
      Chargone, Jul 6th, 2009 @ 2:25pm

      Re: Fair comparison

      simple: the newspapers and politicians have no idea what they're talking about.

      despite what they'd like you to think, it's not that complex :D

       

      reply to this | link to this | view in chronology ]

  •  
    identicon
    Ilfar, Jul 9th, 2009 @ 8:43pm

    Buy ISK with real cash okay? WTF?

    Last I checked, you can't buy ISK with real cash except through the cutout method of buying a time code with real cash, then selling that for ISK? Haven't played in a few months though, so not sure if that's changed since then.

    As Josh pointed out, 200b ISK isn't all that great an amount. By myself I could earn a good 2b a week (if I threw my normal life out the window for that period) and that's nowhere near the best a single player can do.

     

    reply to this | link to this | view in chronology ]


Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here
Get Techdirt’s Daily Email
Save me a cookie
  • Note: A CRLF will be replaced by a break tag (<br>), all other allowable HTML will remain intact
  • Allowed HTML Tags: <b> <i> <a> <em> <br> <strong> <blockquote> <hr> <tt>
Follow Techdirt
A word from our sponsors...
Essential Reading
Techdirt Reading List
Techdirt Insider Chat
A word from our sponsors...
Recent Stories
A word from our sponsors...

Close

Email This