Linden Currency Manipulation

After the ratings adjustment I took a look at the leaders board for the first time in a while. Have you seen the net worth board lately?

The top leader has 10,752,074!!!!!! That is TEN MILLION SEVEN HUNDRED THOUSAND FIFTY and change. OMG Figure it out.

On GOM 25K linden sells for about $100. US now. That means the net worth leader has the equivalent of about $43K US tied up in SL, which is about 22700. GBP, or 32896. EUR!!!!!! Am I doing something wrong here? $43K buys a small house in many areas of the US, or a nice car.

Even if net worth includes the value of land owned, the number indicates the amount of money these leaders have tied up in SL.

GOM and IGE have about $28K US and $38K US, which is about 14K GBP & and 20K GBP respectively (21K EUR & 29K EUR.)

The other leaders are maintaining incredible amounts as well. One has the equivalent of $12K US (6300.GBP, 9100. EUR,) and another has about $6k US (3100. GBP, 4500. EUR.) Etcetera.

I think its really, really unwise, risky, stupid, careless, and every other comparable adjective, to use SL as an investment vehicle for that much money. LL could close its doors tomorrow without notice and the leaders involved would lose a significant amount of cash. LL could make buying and selling of Linden against the TOS and ban the members who participate. GOM could close its doors. LL could start giving land away for free making the value plummet. The Linden dollar and Linden land investment has ZERO protection.

I recently spoke to one of the leaders in world who told me that most of the Linden sold on GOM belonged to her and she gave me a heads up that the price would be increasing soon. Not only is she manipulating the value of the linden by cornering the GOM market she was passing on an inside trading tip. No, I didnt buy any Linden low in order to sell high after hearing her tip.

In the real world the SEC regulates broker/dealers and the currency trading is regulated by various currency and commodities exchange acts. And the legality of inside trading tips and market manipulation by a trader? Well look at Martha Stewart. Others who have tried to corner RL markets in various commodities in order to manipulate prices have ended up in federal prison. Anyone remember the silver coin grab?

Since the Linden can be converted to real life cash, we dealing with a virtual economy that could one day be controlled legally. In the interim, what about market manipulation of value of the Linden dollar by one member, or a few members? Should the trading of Linden be regulated in some way?

$43,000 USD invested in Secondlife.
Would any of the "d00d it's just a game" crowd care to chime in?

Its a profitable game?

BB

I think that with the existence of un-manipulated exchange markets (e.g. GOM), that one person is not capable of cornering the market on currency exchange. That is, if broker A decides to sell at L$100/US$ and the rate at broker B (as determined by the open market) is L$250/US$ then broker A would not sell many L$.

Furthermore, if broker A attempts market maniuplation by dumping L$ on exchange B, then there have to be buyers at the asking price or nothing happens to the equilibrium price. If the dump does cause a change in equilibrium prices, then there was market elasticity or sumptin.

Considering that six months to a year ago when the block size was L$250 it equalled $1 USD, that means the value of L$ has been more or less constant, despite a few troughs and peaks. Sounds like a tempest in a teapot to me. It also seems that most sellers are pretty good about not undercutting the market or creating artificial scarcity. If those top earners decided to suddenly dump all their L$ onto the market, the L$ would crash. Why would they do that?

I wish we could trust the RL market to be so rational, sanguine, and responsible. But we can't., and that's been demonstrated over and over. So we regulate and control. What makes it different, that the SL market can be trusted like this, and the RL market can't?

Aha. d00d, it's just a game....

I'm not saying that it isn't possible... just that there's no evidence that any single powerful player, or those at the top of the net worth board, have had any deleterious affect on the market.

I believe you. I'm pointing out that even with a valuation in the tens of thousands of USD, the stakes aren't high enough to encourage some of the behavior you see in RL, the economic system and community are still so small in SL that discovery and condemnation are easy and mean something, and the Lindens themselves are the regulating authority. All of these are characteristics of a game. Ergo, d00d, it's just a game.

The SL market can be trusted to act as an artifically created market, one that is extremely vulnerable to the vicissitudes of LL, their investors, and other inWorld and RL forces.

Any individual player in the top 3 Net Worth making statements about having the power to directly effect the value of the L$ might be connected to other currency exchanges and/or others with a fair amount of liquid US$. These possible connections would not be that difficult to establish, and keep very private.

I do know that SLEx has/had plans to enter the currency market and compete against GOM and IGE; and if the player being referred to is who I think it is, then that could have something to do with her statement to you kathki - especially now that she owns 30% of that venture.


All very interesting...

Without breaching any sort of confidentiality, I'm going to say that this is absolutely false. Since the beginning of February, SL members have sold somewhere in the neighbourhood of L$31,000,000 though GOM. That number is divided among well over 300 distinct sellers, with the distribution such that no single SL member is individually responsible for more than 5% of the total sales volume. There are enough people engaging competitively in buying and selling across the buy-sell spread that any attempt at a gross manipulation of the value by one or a small group of people is unlikely to succeed.

I hope this helps allay some fears.

Believe me Seth, valuations of considerably less than " tens of thousands" have triggered SL and RL contract-breaches, betrayals, slander, deceit, actionable events, etc. etc.

Such behavior has, is and apparently will continue.

LL will only regulate within the TOS Seth - and there are RL & SL complexities that have involvements far beyond the TOS to be of any "regulatory" value. They have a very effective "...on the fence...cover yer ass..." legal approach to issues that straddle both SL and RL.

Just another day in paradise!

I think what amazes me most is the incredibly high amount of cash that some have invested in SL. It would scare me to pour that into SL. 40K ...wow!

that is just the L$ value. you haven't considered the land value, which is probably in the range of 30000 USD.

as with all investments, there is an inverse relationship between risk and reward. some have higher risk tolerance.

Yeah, I'm with you there Katy! I'm sitting on about 800k L$ currently but it's all accumulated without investing any RL money beyond tier and subscription fees. I sell it off to cover my fees, cable bill, and a sushi feast now and then I don't like to think of it as real money until I actually cash it out. Until then it's still play money. If I thought of it as real money in the bank I'd get all jaded and it would be harder to have a laid back attitude about it all. (And before anyone asks, no... that doesn't mean I'll give you some!)

Some people have a lot of money in L$, not because they've made a huge killing but because they buy land in US$ at auction and sell/rent it in L$. It's no different really to someone buying a ton of money on GOM or IGE. They may be making money of course, but you can't tell how much they're making just from their total ballance.

It also seems that L$ can't rise to more than US$5/L$1000 while the stipend on premium accounts is at L$2000 a month and its usually going to be quite a bit less. If it rose higher than that you could just create alts for US$10 a month to get the extra L$. Of course, LL may put the price up in the future.

Been there, done that.

During the summer the price rose to ~$6/L$1000 and I know of more than one person who took advantage of that to make some free stipend money.

I probably wasn't being clear. Tens of thousands of USD are enough to "corrupt" individuals and perhaps small partnerships. But the similar kind of corporate or industry-scale activities that wreak havoc on economic systems simply can't exist here. So I'm not sure that you can compare an individual's motives or behavior to a larger RL economic unit. That, and the other factors I mentioned above indicate that SL is a simple model of RL systems, a game, in other words.

In a game, one individual can have this sort of power, and on a personal level we can react to tens of thousands of USD as a lot of money. While I agree with katykiwi Moonflower that it's an awful lot of personal liquidity to put at risk in a game, I'm not sure that RL comparisons mean much here.

Oh, and I didn't claim that LL was comparable to U.S. regulatory and reserve agencies, just suggested that it was the only possible comparison that presently exists. And since it's not a good one, that also indicates that SL is a "game".

Hope that clarifies it.


Edited for typos.

If a person wants to risk $40 grande US on price manipulation on an economy that grows 20% in volume per month, then let them. Ultimately my prediction is that the money base will far outreach what one person can manipulate, and that person will wind up sitting on a lot of money that they will have to sell below cost.

In other words, while one person can drive up the cost in the short term, in the long term they're just screwing themselves.

As we venture into new areas, including the precarious speculation of financial issues, no doubt historical precedents will be set as we move along the timeline. A few years ago, investing money through inworld currency in "a computer game" would have been laughed off brazenly, but we can no longer laugh as the reality is upon us.

There's definite risk vs. reward, but that's just how some people have made (and broken) their lifelong dreams.

It seems to me that the person at the top of the leader board has a real problem. Her SL holdings are larger than the entire amount being traded on GOM. If she were to cash out in a hurry, it would definitely cause the value of the currency to crash. So to a certain extent, she's stuck with her SL investment.

i think you don't understand - she is a currency exchange just like gom and ige.

IGE.com~GOM.com~ANSHCHUNG.COM

is IGE stupid? no! IGE is rich.

My point remains the same. I'm not sure why you feel the need to insult me anytime you talk to me. So fuck off, Jauani.

huh?!

$40K is a lot of money?

Yah, right. A lot of people have invested 10x times that in far far shakier ventures.

Hell, I've watched people drop that in a single blackjack hand..

my dad invested 50k in nortel networks