the SL Economy

The simplest solution is for LL to ditch the LindeX.

$L can still be traded for USD, just like it was prior to the LindeX coming into existence. LL creates problems with the US laws because LL themselves are facilitating the trading of $L for USD. If they did not do that, the laws would not apply to them or their business "SL".

The TOS already states that $L has no value. It would make little difference to make it against the TOS to for individual players to trade it for USD. There have always been people willing to pay USD for $L and there always will be, as long as the grid stays open.

The only thing that creates a problem is the fact that LL facilitates the trading of $L for USD THEMSELVES through an exchange called the LindeX, which they own. These problems would all go away if LL ditched the LindeX.

Please see my other posts for the legal issues and links.

Personally I think the fluctuation in value between the L$ and the US$ is part of the issue.

If there were a fixed ratio, it would less resemble (in legality) an actual currency. Granted, I could be wrong, and I don't think it would solve every issue, but it certainly might close up a few gaps.

As for what might help the SL economy, I believe there are too many drains and not enough faucets.

Sure, people can create and sell, but quite a few of the markets within SL are over-saturated. As for the suggestion of "see something -> make it better", not everyone is capable of that (and it's mirrored in RL).

We've all certainly seen people wanting to make a fast buck, and dozens (hundreds?) of analogies SL to RL (and vice versa).

One of the issues may very well be that successful businesses, or the majority of them, don't take their increasing popularity and growth and put it back into the community vis a vis employing residents. Quite often their own avatars are used to model clothing for pictures of new creations, or alts for various things.

[Flame retardant: I do realize that several do]

I, myself, never managed to reach a point in my clothing design that allowed me to do so. Lack of talent? Marketing failure? Didn't stick with it long enough? take your pick. But I'd like to think that I'd have taken the next plateau in sales profits and pumped a percentage back into the economy by hiring models etc.

In any event, the simplest answer to the question is stability. Beyond that, employment.

Yes gambling is gone Jessy. I think we all understand that. The larger point, that many miss is that in order for businesses to be able to cash out and make the creation process worth their while, SL needs to exist. It cannot continue to as long as LL brings liability upon themselves and subjects ALL our businesses to US law.

LL's ownership of the LindeX is what brings the liability. They themselves facilitate the trading of $L for USD which makes our "virtual" activities here subject to US law. If the LindeX did not exist, neither would the liabiltities.

We aren't just talking about gambling here. We are talking about every single virtual activity in which one either earns enough $L to make creativity worth their while or engages in any activity that in RL would be legally questionable. This includes the fashion industry, the furniture industry, scriptors, builders, land speculators, escorts, DJs, dancers, campers, club owners, role players, etc...

As long as LL gives $L USD value themselves, our activities are subject to RL laws. $L has always been traded for USD and will continue to be, but as long as LL does it, we all lose.

Ask Anshe how she traded her $L prior to the LindeX? It has always been done - the LindeX is the liability - NOT the activities here.


Please click my name and read my other posts. I realize they are long, but they do contain the facts along with the research to back them up.

I wholeheartedly agree with you.

Lots and lots of real life money is made here and that is what makes SL unique. In fact, so much money is made here that everyone wants a share, including the US government. And how is it the US government can even get involved if everything we do here is "virtual" and doesn't really exist in RL?

The reason is not because we can trade $L for USD, but because LL THEMSELVES facilitates the trading of $L for USD by virtue of their exchange called the LindeX. That's why the TOS states that $L has no USD value. If they didn't state that, LL would be in violation of creating its own currency. LL's ownership of the LindeX brings liability for all of our virtual activities and makes SL subject to RL laws on gambling, pornography, taxes, capital gains, etc....

Getting rid of the LindeX would not prevent anyone from individually trading $L for USD. It was always done before the LindeX and will continue to be done after it's gone. But as long as the LindeX remains, the liabilities will remain and all of our businesses will be subject to the whims of RL laws.

Because of the LindeX, It is quite possible the whole concept of LL issuing $L is completely illegal itself. Under US Federal Securities laws, it could be construed as issuing an unregistered security. Because the $L is traded for USD on the LindeX, are they in fact issuing securities for USD? If so, that IS DEFINITELY illegal under federal securities law - virtual or not. Technically securities, for all intents and purposes, are virtual anyway because you just don't see actual stock certificates anymore. $L is no different because if you buy $L basically you are hoping someone will pay more for it, or that you can exchange it for something with value, so it appears they are acting like a company issuing stock, i.e. selling virtual securities. ALL BECAUSE THEY OWN THE LINDEX.

Because of US Federal Securities laws, we may see some "qui tam" litigation as the result. This would certainly bring on a US DOJ investigation and possibly tie up any resources LL might have to defend itself.

Qui tam lawsuits are quite unique. They are basically filed by individuals on behalf of the government. They are also sometimes called "whistleblower" lawsuits.

This type of lawsuit is particularly attractive in our litigious and greedy times because the government is required to do all the work basically and the person filing the suit is entitled to 15-30 percent of the total recovery. Additionally they receive protection from retaliation.

In 2005 alone, a record $3.1 billion was reclaimed from corrupt businesses from qui tam actions. My math sucks, but isn't 15% of 3.1 billion something like 450 million. That's quite an incentive.


"In qui tam provisions the government gives private citizens the right and the financial incentive to retain a private lawyer to file a lawsuit to act in the place of law enforcement."


Lawyers will take these on in a heartbeat without even a consultation fee. It would not surprise me to learn that one has already been filed, but I seriously doubt anyone on this forum would bother since the posts aren't read or taken seriously to begin with.


Just my two cents.



You can read more about these here.
http://www.whistleblowerfirm.com/faq.html#1

Read about securities laws here:
http://www.sec.gov

Yeah you definitely can't take the profit out of SL once it was introduced. While artists do create for art's sake, they also want recognition in the end, and no better recognition than the financial reward. Without it SL would be a dull place.

The problem is that LL can't simply ditch LindeX, because they don't just use it to sell L$. They also use it to regulate the value of L$.

(Insert very valid legal worries about how they can possibly claim it has no value while at once taking action to regulate it.)

At the moment, the L$ is at L$266/267 usually, which is about the intended rate. (A long while back LL stated they'd think an acceptable exchange rate would be L$250. However, it's been proven that psychologically it's better for the exchange rate for a micropayments currency to be an awkward number, as it makes it more work to calculate exactly how many US$ are being spent, and so people don't bother and spend more.)

However, in order to obtain that rate, LL are selling millions of L$ each month. They can do this because they can create as many L$ as they need. A third-party exchange couldn't do that, so the value of the L$ would become unregulated, which would be likely to create a boom/bust cycle like most real economies have. (The L$ supply would become less, so the price would go up, so people would buy less, so demand would drop, so the price would rise, and so on..)

The problem is that this cycle can be harmful and damaging. For example, during the "people buy less" phase, smaller businesses will lose customers because people have less spare L$, and they may fold. Although this is accurate if you see SL as a simulated virtual world, it's actually being sold as a creative and business platform - and LL would not like it if a new exciting business started up but then failed and went bankrupt because it started at the wrong time. That would create a nightmare for their budgeting and marketing.

What would be the point of commerce, with an enclosed currency? That is not the definition of commerce, but one of trade and barter. The internet, which is the direction for SL, to become the 3D internet, relies heavily upon the ability of free market trade between the many countries that are involved within the platform. You can take a view on what exactly SL is to you, but the ability to trade 'through' SL is not done simply by chance, otherwise it is simply just another encapsulated version of There.com or The Sims Online etc..

With the right business model and plan, we do make a profit over and above our expenditure, despite employing over 40+ people in SL, and why shouldn't we? For the most part we reinvest a large portion of that profit in people and or facilities and not always on the basis of making more profit. For instance, is there another modelling agency (just one of our companies within the group) that actually pays models while they are training, along with a predictable income for those that train them? On top of that, not only do they keep the items they are modelling (most accepted method of payment in SL), (client preferences accepted), but also a good wage? We do that because we believe in people.

Oh Noes -

'They banned Gambling in SL so now LL is going to get shut down by the feds!'


Doesnt that seem somehow Backwards?

LL can and should ditch the LindeX. They should also continue to regulate the economy by issuing more L as they see fit just as they have always done. Ditching the LindeX would not prevent them from issuing more L into the economy because $L would then have no USD value, in line with the stated TOS. They did it prior to the LindeX and can do it after. They CANNOT do it without liability while operating an exchange in their own company. The entire economical downfall of SL can be attributed to LL's ownership of the LindeX.

I'll be happy to repeat it over and over again until ya get it.

Lindens arent a unregulated real currency.

Lindens only have one use - to buy stuff in Second Life.

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You can sell them to other people - so they can buy stuff in Second Life.

You can buy them off other people - so you can buy stuff in Second Life.

Sure they have value - to people who want to buy stuff in Second Life.
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They are as much real life currency as Chuckie Cheese Tokens.

Ohh I get it - I just think its lame.

Look, them banning Gambling is not some giant admission in a change in the Virtual Status of the L$.

This isn't about a closed currency. It's about NO currency, which is the point being made here. If the LindeX closed, the trading of the $L for USD would continue just as it did PRIOR to the LindeX. However, for LL to facilitate the trading of $L for USD places them in a position of liability. The whole reason for stating in their TOS that $L has no value is to protect themselves from a Federal Law that makes it illegal to make your own money.

Yet, they GIVE $L a USD value by operating the exchange and facilitating the trading of $L for USD. So in effect, they are violating their own TOS and are not protected. They open themselves up to legal problems for that reason.

Who cares about age identification unless you are underage? It's not hard to find a way to prove your age.
I pay ALOT of money back into SL everymonth. Even though I own NO mainland land, I make sure I still have an account that makes me pay LL money each month because I feel I should have to pay a member fee. Those member fees go to other things that eventually get around to helping SL out as a whole. I also pay for an island through LL (not a resident) so my tier also goes to them. Personally, I have no issue with paying for what I use. Why would you?

You are right, it's not an admission. It's an oversight.

According to the Lindex exchange, Lindens have one additional use:
You can trade them for USD

I believe Gisela has done her homework.

You can sell them to people who want to buy stuff in Second Life. I mentioned that.

I agree. Chuckie Cheese tokens can't be exchanged for USD. Doesn't that make all the difference?

Sure they can, you can sell the tokens your kids didnt use to other parents coming in.

Not the same thing.

I don't have to sell Lindens to another citizen to convert to USD. I can just "transfer" to paypal...

You can't do that for C.C. Tokens.

When you use the LindenX

The Lindens dont buy your Linden$

Other residents do.

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So yes,

you have to sell your Lindens to another citizen to convert to USD.

Paypal accepts lindens?

No, paypal doesn't accept Lindens. I don't know the details about how the system works, but I know when I buy or sell lindens, it's attached to my Paypal account, and I don't need to know how it works.

I suppose 'technically' Colette is right...but you can't compare C.C. Tokens to Lindens...because C.C. Tokens don't have an economy attached to them, nor can you exchange them for USD on a dime (no pun intended).

I think you guys are getting too technical (which I guess is unavoidable when discussing economy and money exchange)...however, as far as the average citizen is concerned Linden is USD, and USD is Linden.

Linden have a value, and we can transfer back and forth at will. You can't do that with Monopoly money.