Red Tuesday

If the market crash if 1987 was called Black Monday, the removal of virtual banking institutions in Second Life should be called Red Tuesday. Unlike Black Monday, Linden Lab’s recent decision to cut many banking operations that offer a return on an investment in Lindens (or any currency) is a very good thing. When Ginko first arrived in Second Life, something seemed a bit awry, but many people, much like myself, tried it out (I never put much, maybe 1k or so just to test out the service.) The novelty of banking in Second Life or rather, received a profit on the Linden without having to do much work, is a great novelty, even though Ginko crashed (and burned), there was hope that the stock exchanges would pick up the slack. There are two key problems in finance in Second Life that exist, and are its downfall. The first is there no guarantee from Linden Lab that any money you invest is safe (or any guarantee from anyone for that matter), and the second is that money is being handed to strangers for them to do whatever they wish with it.

It is my opinion, that pure linden investments in Second Life are not only foolish but unnecessary. Without any means of regulation, it always seems that stock market investments are helping those who have more than those who have not. Yes, it seems very much like a ponzi scheme or straight out fraud. The line will not stop here, there’s also a Credit Card that you can use in Second Life, which also seems very unnecessary (just buy some Linden with your REAL CC or use PayPal). There are plenty of ways to make money in Second Life, from contests, to freebies, to content creation, to playing the stock market game on LindeX. The only real investments that make sense in Second Life are “tangible” investments, such as land, content, scripts, textures.

Now, while Linden based banking has been axed by Linden Lab that does not mean banking in the future will be entirely dismissed. I’m sure if there was an investment option that backed linden to a currency value (for instance a CitiBank Second Life account where the amount of money in the account equals a certain amount of Linden) not only would banking be safer but possibly subject to the regulations of where that account is held (i.e. FDIC insured). Services such as SLExchange, OnRez, and Apez also seem to be safe from Linden Lab persecution (although when dealing with Lindens, I like to put them into my mattress as soon as possible.)

Today’s announcement really hammers one important fact when dealing with money not only in Second Life but online, why trust your money with anyone but yourself?

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