Second Life Experiences A Run On The Banks

from the virtual-depression dept

One of the aspects of Second Life that has gotten a lot of hype is the fact that it's not just a virtual world, but a virtual economy as well, complete with trade, currency fluctuations and banking. That being said, people that have actually tried to engage in sophisticated financial activity (e.g. forms of arbitrage) have found in-game institutions to be unsatisfactory for their purposes. These problems seem to be spreading, as in-game banks that offered depositors sky-high interest rates on their Linden Dollars are experiencing what could be described as a 'run on the bank'. It can't be a surprise to the depositors that these institutions are having trouble remaining solvent, seeing as offered interest rates were in some cases near 100%. Those are the kinds of interest rates tend to be indicative of Ponzi schemes and other fly-by-night operations rather than stable banks. If anything, this raises more of a psychological question more than an economic one: why would people trust their money to a bank offering these kinds of rates when they almost certainly wouldn't do so in the real world? Then again, these issues aren't really unique to Second Life. France's biggest bank, BNP Paribas, has just announced that it will freeze the assets of three major funds, as it struggles with issues related to the US mortgage market.

Filed Under: finance, virtual worlds
Companies: second life

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  1. identicon
    Bob, 9 Aug 2007 @ 5:47pm

    This is just a long list of symptoms....

    When Linden Lab, fearing the Justice Department of the US, decided to BAN Gambling, the "run" on the bank presented itself as just another symptom of the bigger problem with Second Life. That problem is simply that Linden Lab, the owner/creator of Second Life, has been making one bad decision after another. As Second Life has continued to grow in popularity and usage, albeit slowly, Linden Lab has continued to "Enhance" it's product, but fails to do the same with the infrastructure on which it's carried and the core program. Second Life has gone from a world of relatively non-annoying bugs, to a system that nearly imploded two weekends ago; it took Linden Lab over 48 hours to correct that issue, and then only temporarily. Second Life is now congested with World stopping bugs that destroy "user created content" in which the World itself is supposedly built upon. The bandwidth that carries Second Life to the masses has been stretched to a breaking point with all these "enhancements" and recently was congested even more by adding VOICE into the World. While the VOICE is supposedly between only two people, if you enable Voice on your client, then you can listen in their conversations. This means the voice packets of ALL conversations are being broadcast to everyone and only "enabled" if it's in "range". This has caused even more lag and latency issues since Voice itself has gone Live. The World of Second Life itself continues to groan under the strain, and I feel, as many of the oldest members of the Second Life Community do, that Second Life will eventually become so bloated with "Enhancements", bugs, and an un-retouched GRID, that one day it will just cease to operate.

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