Stabilization Of L$

Yeah, and if one thinks about it... even if a person makes a 5 or 10 cent profit / 1000... what's that come to for a 250,000L sale... about $12.5 to $25 ? Hardly worth the effort or risk. Now if someone wanted to risk 2.5 million L, $250 might be worth the go. But as it is.... it seems to me kinda hard to play GOM against IGE because the returns are pretty low and inconsistent at best.

Well I'm still waiting for the price Linden Labs is going to set for trading as well. If it is cheaper for me to trade at a US$.10-$.05 teir, then why would I ever leave GOM. If they set the price to $US4.00 they are doomed immediately. No one will ever buy on GOM until the Linden Labs exchange reaches that price. If no one ever buys on the exchange, who in their right mind would trade on GOM.

Who in their right minds would ever buy another "linden dollar".

I'm just going to keep collecting what I get free, spend that frugally, and never put any more money into buying Lindens.

/me raises hand.

I am not talking about IGE, I was talking about GOM.

GOM cahrges when you deposit US into the account. You get charged by PP when u take the money out and put it in your bank.

2.9% + .30 by GOM, 2.9% by paypal.

It was in reference to taking your lindens from GOM ATM, selling them to IGE, taking that money back into GOM for re-trade.

and currently there still is a 10 cent differnce, 14 actually.

Actually it was at 24 cents today.

So I am confused about why you didn't think that was a great idea.

Trying to at the moment. So many outfits and toys to buy... 500L is not enough.

Now that part I will grant ya.

My original intention tho was to flood IGE with a crapload of sells, since that is exactly what they did to GOM yesterday/today.

I think if everyone with a vested amount of 250k+ jumpped over to IGE and sold to them, locking in the rate quicker than they could adjust it, they would have been/will be, seriously screwed, since they have already dumped a large portion on the market already undervalued, yet would continue to pay out at the higher rate.

A) Stupid on their part not to update their prices in relfection of what they did to the market in the first palce,

B) Might force them to rethink ever doing this stupid move again.

C) Will make ppl get more bang for their buck currently then GOM can provide.

It is not too hard, IGE is slow to change, I have made a nice sum of money this way. It is a lot harder to do it now that GOM has the 250USD limit.

I would assume, though that can make an ass of me, they will set the inital price to be competitive against the GOM/IGE rates. After that people will hopefully quickly switch to the new market letting GOM and IGE crush themselves out of the $L exchange.

Wellsir, for a time the Linden was close to making it as a kind of limited currency. As far as I'm concerned today has shown it's far too shaky for that.

You keep buying as much of it as you want, but from here on out I regard it as some kind of plastic novelty token you get at a carnival. You can buy it if it pleases you. Sometimes it even fluctuates in value, and that's kind of like a day at the horses, see if you can gamble up some money. You do that if it floats your boat.

Could you please point out the post where I said
"it's not a great idea right now" ?

The $L has been moving around a LOT the last several
hours, so no telling where you saw the numbers and
where I did.

However, as it stands now, I could
(as a normal GOM trader):

A) Sell 50 blocks on IGE for US$167.50, then
deposit in to GOM, paying US$5.15 in fees,
leaving me with $162.35

B) Sell 50 blocks "NOW" on GOM @ 3.27...
I pay .02 tier, so I only get $3.25 per
block, which comes leaves me with $162.50

C) Sell 50 blocks on GOM "For Sale" at best
rate of $3.28 ($3.30 - .02 tier), which leaves
me with US$164.00, but might not be able to
sell all at that rate (or soon)

So, it seems that in 2 of those 3 options
I am better with GOM right this minute.

Did I miss something?
(it's very possible)

Besides that fact... there are other advantages
which I will keep to myself.

Gabrielle

/me floats in his boat.

You didn't say that specifically, just what you implied.

BTW, when I mentioned it GOM was at 3.14 and slowly crept back to 3.28 where it is now, 9:30 EST.

So on my part it would assume someone is watching the market for the best possible strike time, something I am sure most don't do.

Well.. as long as we agree I didn't say that,
and you made it up.

Specifically I was only pointing out that you
were not taking in to account the Paypal fees
to get your $US back in to GOM.




However, now that you've stirred up the nest, let's do
some math... it seems you would have lost anyway....

You suggested to buy 250 blocks on GOM and
sell them on IGE at the rate of 3.34 which gives
US$835.00 (but actually their rate has been 3.35
all day, so that really gives $837.50)

To get your cash back in to GOM you end up
paying $25.48 in fees, and so are left with US$812.02

But, if you would have put it up "for sale" on GOM
at the rate of $3.30 (which the For Sale side has not
gone below) and taking off the .02 commision, then
you end up with US$820.00

Even if the GOM rate had been $3.25 (including
commision) then you still would end up with $812.50

So it seems GOM was indeed better.

Even though the "Wanted" side dropped down
to $3.14 for 30 seconds it popped back up fairly
quickly... and besides that... no smart trader would
pick to "sell now" when the Wanted side was that
low anyway, so I doubt you (anyone) would be
caught being that dumb.

Gabrielle

Only one prob with your math Gabrielle, I would then need to get my cash back into my bank account. So redepositing it into PP and re-withdrawing it would cost me another 2.9%.

But as was said,

Moot point ...

/130/e6/63293/1.html#post662075

Well, moot for now, until the next exchange in born.

However, my math was correct, because I'm assuming
most heavy traders want to keep most their cash in GOM
(where it was in the first place) for more trading.

If you TOTALLY cash out, then you can't trade with that
cash anymore. You had the cash in GOM (to buy the $L)
in the first place, right?

But... since GOM is shutting down, there are more important
subjects to focus on now.

Well, 3 items of interest at this point:

* GOM is closing down (according to claims was supposed to already have ceased trading last night 10pm). Observation: has to wonder why an organization would prefer closing down as to trying something different to see if it works.

* This pretty much leaves IGE and AC as the primary L$ vendors. I don't much worry about AC because (from what I understand) she deals only in amounts of 100k or more. IGE will charge whatever they decide, so I expect to see the L$ go sky high for a bit... until...

* Linden Lab takes over in L$ sales. Question: Will they do any better job than GOM or base their system on the same, flawed "stock-market-without-regulations" concept that allows people-in-the-know to manipulate the market?

Time will tell.

In all of this, I find I'm still left with one all-pervasive thought: I have yet to have seen presented a valid, stands-up-to-scrutiny reason why stabilizing the L$ at $4/1000 is a "bad" thing. 1) Who will it hurt? 2) Who will it rip off? 3) How is it bad for business?

About the only thing I've seen come out of this entire thread is the ones who don't want stabilization-- are those who play the market. And I can actually understand that. If they have used GOM to make some bucks, I can't blame 'em. That will continue if LL uses the same model for their L$ sales. I think LL would save themselves a lot of headaches and programming if they'd just say, "This is the price of L$, period." But then, that'd take all the risk, instability and profiteering away from the market. What fun would that be? LOL

Sigh. I don't think there is anyone that says that stabilizing the L$ is a bad thing. You just can't FORCE it to be stable using your model. GOM closed because they weren't making money. Simple as that. LL has already opened their market, and IMO, they have made it worse by not including a buy side. I think we will see a market slide. Free markets always win.

1. In this entire thread, I have yet to see a stands-up-to-scrutiny reason why the market can't be "forced" to stability. Sure it can. The pro-stability side has presented our scenarios and they've withstood all attackers. Not one of the anti-stability arguments have, at least as far as I can see, stood up to fire.

2. Haven't seen the LL market yet. Where is it?

3. They haven't included a buy side? Then how is their market open?

[edited addendum]

I just visited SecondLife.com and after some random page searching, FINALLY found their L$ site. Noticed 2 things:

1. They are selling, but not buying. This brings one question to mind: WHERE IS LL GETTING THE L$ TO SELL? Not accusing anyone, but sure sounds fishy... bound to bring some gripes & criticism. Hopefully site just isn't completed yet and the BUY side will be up asap.

2. The site isn't up and running. Try to buy... no soap. But, at least the WEBPAGE is there. LOL

We'll see. Until then, http://elfclan.net is up and running again, with STABLE PRICES.

2. https://secondlife.com/currency/market.php
3. LL rushed to get something out, I guess.

Just noticed the following info on the SL "selling L$" site:

>Fees for Selling Currency
Sellers of currency will pay a fee of 3.5% per transaction. Proceeds will be initially credited to your Second Life account balance. Sellers wishing to receive a payment by either check or PayPal will pay fees according to the schedule given below. To request a payment from your balance, send an email to [email]exchange_proceeds@lindenlab.com[/email] with the amount you would like to receive and the method of payment you would like to use.
Check sent by mail10.00 processing feePaypal transfer5.00 processing fee. (We are in the process of automating payment and will reduce this fee)
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Hmmmm... this is an interesting twist. It appears up front that if you sell L$ and leave your $$$ with Linden Lab (presumably to pay for game fees) then that's great, but if you want actual $US for your sale... you're going to pay hearty (ie, a base $5 transaction fee PLUS 3.5%)... far more than anyone else charges far as I can see. sigh

Note to LL: that's what I meant at the town hall when I said "doing something halfway".

It ultimately depends how you look at things I suspect. Stability tends to mean different things to people. But for sake of argument I'm presuming you are looking at some kind of currency peg.

There are perhaps several styles of currency in RL. Theres the free floating currencies like the US$ and GBP. There are pegged currencies like the Chinese Yuan. Or theres old fixed currency based on something like the Gold Standards.

Stability in real life on currency markets tend to be done by the governments buying or selling their own currency or securities like Gilts. however, if there are inherant instabilities in an economy you can run into problems. Argentina is probably a case in point, where the currency peg to the US$ resulted in them defaulting on their loanings and heading into an economic crisis. The reason being that the currency peg didn't enable them to react when the economy changed gears.

Free floating currency tend to suffer more if there is a difference in opinion between a government and the market. Black Wednesday is case in point, where the UK government wanted to maintain its membership of the ERM. It resulted in essentially speculators taking a ton of cash from UK Tapayers as the government used funds to try and prop up the pound (http://en.wikipedia.org/wiki/Black_Wednesday).

So how does this relate to Second Life. Well lets say you can only buy L$ at $4 block and sell at $3.5 a block. Well the problem is that at the moment the economy appears unbalanced, there is a lot of currency floating about, large sellers wanting to sell. So somewhere along the line somebody has to absorb that currency when it gets sold. We can see what happens when this issue occurs in the form of IGE closing down periodically to get rid of excess currency.

Inevitably however, these sinks of L$ have to start selling and this may force them to move off the peg and start selling within a "black market" so too speak at unofficial prices to clear their inventories. An example in RL of this is Zimbabwe where there is a very active black market for currency.

So LL has two options. Firsly banned anybody who trades currency at the unofficial rate and on third parties and to maintain a tight grip on currency control by doing it themselves.

Or secondly do it by managing the money flow as a country would. In SL this is not done by buying or selling currency but by these sinks.

Right now the exchange is running in beta mode. So the hours of operation are limited. The L$ that they are selling comes from other people placing the sell orders. All the money that is listed comes from SL residents. LL does not print money for the exchange.

Back to point 1. Look at every other online game. No other game that I know of used a GOM style exchange. All the exchanges I have seen where either e-bay type models, or fix-rate IGE style. In ALL the games, inflation has occured and prices have dropped. This is caused by the free market demand. As supply increases, and demand is stable, prices will drop. If you can show me ONE example of price fixing that has worked in the long term, I will change my mind.