How to turn 70,000 USD into 100,000 USD

edit: To clarify, I'm less interested in the person who actually does this, but rather the possibility of this happening and its impact on our economy.

I probably should have made that more clear ..

-----------------

Please note the speculative nature of this posting.

My intention here is less to say that this is the mostly likely outcome but rather to propose the possibility of it occuring and even to highlight some of the dangers of it happening.

It occurs me that someone could drop 70,000 USD onto the SL currency market and purchase all L$ from 280 to 200. There are few speed bumps along the way (261 being the most notable one). But, now would be a good time to make this sort of play, as the L$ seems to be dipping .. so there would be some friction on the way back up

And given that we will soon have a volume of 40,000 USD / day fairly soon .. this is not an extremely unlikely scenario.

In fact, it could be to someones benefit to stretch out the market more so that the support levels are at higher numbers, thus some of the market manipulation we are seeing.

The first and most obvious problem such a player would have to contend with would be all those who excitedly sell their spare L$ thinking they're getting a great deal when the market dips to 200L$.

I could see some bigger players dumping, and they would no doubt be an issue. At this point I suppose the thing to do would be to wait for the market to slowly rise .. and then to repeat the process.

The biggest risk is that you will have a rather large repository of L$ to contend with. A risky and worrisome scenario for those who are not well heeled.

The other problem is that LL might not be set up for these large transactions and doesn't wish to be.

The final problem (there are probably others) is that this could create a very complex pricing problem across SL. Suddenly everything gets a lot more expensive. In fact, people could lower prices and less demand for the L$ could accelerate its rise back upwards.

Yes, because almost everyone playing SL had $70,000 lying around and would be willing to take a risk and might not earn all of it back.

(Edit: Plus, like you said, I'm not sure LL would let you get your Lindex tier that high.)

Why does everyone have to have that kind of money and tolerance for risk?

Why not just one person out of 140,000 people?

Cheaper prices are unlikely in terms of current content providers lowering prices. I've not seen this happen substantially, even after LL quit offering events subsidies, and after the elimination of the ratings stipends. Those, everyone predicted, would cause prices to get lower in SL. I watched carefully, and did not see it among current content providers.
Perhaps this is because changing one's product, once it is out there, is a bit of a pain for folks with multiple retail locations, unless they use centralized servers.

As for big players dumping, I'd expect that. I predicted a month ago wide-scale tiering down. I'm expecting this to be a trend till summer. If people sell their lands, they will have excess $L to liquidate. The correlation between land and $L is firm.

Sweet, anyone wanna loan me $70k? I promise to pay it back with $20 interest...

To clarify, I'm less interested in the person who actually does this, but rather the possibility of this happening and its impact on our economy.

I probably should have made that more clear ..

There are rate restrictions on payout from the Company.

Yes, you could sweet-talk for more, use alts, and so forth... and in the end, they would profit (directly) a bit too from all the transactions, even if (indirectly) the customer base was harmed by LindeX turmoil.

Odds are, they would 'fix' the economy for the users and in so doing, 'un-fix' the 70,000 USD investment.



Who would allow TENS of MILLIONS of investment USD and ridiculously many man-years of effort by *all* of us get trashed?

So some goofball could make 30k USD, give a third to Uncle Sam, and buy a used Toyota Camry with what's left?

If you see tiretracks on such a person's back, they were laid down by the Second Life economy launching.

Well, I see some risk to the economy but it is counterbalanced by the increased confidence which would occur in the value of the L$.

I sure hope someone tries that nd gets burned Hint: the daily volume isn't the total available L$ mass. More like 30 times that amount, I think

it would almost work... but there are other currency exchanges out there, and no one would *BUY* at L$200 per, in the lindex when they could still buy for $280 per on IGN

I'm under the impression that this has already happened. As I understand it someone scooped up L$18,000,000 or something right before the transition from GOM to LindeX? If so, the economic impact was as follows:


1. Many residents who were desperate to sell L$ at any price got some (aparently) much needed liquidity. The person conducting the transaction got a VERY low avg. price in exchange for providing that liquidity, although the L$ price would have moved a lot as a result of this transaction.

2. The person conducting the transaction then made a significant gain SELLING that L$ to other residents (or perhaps the same residents lol) who were desperate to BUY L$ at any price when LindeX came online.


As far as I know there were no economic impacts except for a lot of people looking to trade currency having someone to trade with in volume. I think it would be very good for the economy if a few people were willing to take on these kinds of risks regularly. It would be nice to see the money moving faster during times when it's stacking up and residents are desperate to sell at any price. That said, I think it would also require a better exchange model.

That is the basic problem. The worth of the Linden is basically determined by the market, which is mostly *correct* in valuing it-that is the market is efficient or at least mostly efficient. By buying up Lindens and attempting to make a killing you run the risk of a substantial market correction. All the trading would be one way till the market reached its optimum efficiency once again, probably the level at which you bought. You are then basically forced to sell off your currency and eat the transaction charges, which would be considerable.

If you can identify some kind of exploitable inefficiency in the market, as with the introduction of the Lindex, then you might be able to make this work.