The State of SL Bank

It might be worth running your bank name past Linden Lab, I'm not convinced they would be cool with it. It's better to find out sooner than later.

Here is a thought. Cash out all of your L$ on the lindex, and transfer it into your paypal account with the money market fund activated! You will get 4.9% interest on your money, and you don't have to worry about the L$ losing value before you pull it out!
Thats what I do.

Sorry, I had run through every way to run a sucessful bank in SL at one time, and the harsh truth is that banks only work in the Real world, as there are real commodities to take from people who don't pay, and there are many laws to protect both the bank and the customer. I just still don't think SL is ready for any type of bank. they all go bottoms up, or end up getting too many people pissed at them. I would stay away from it and just use paypal.

Also, for the SL bank, the amount of work involved to keep it up will cost more than the profit the bank will make. unless you like to work for 50 cents/hr.

Yeah, you never know. That's why I don't use a virtual bank....

That isn't true.... Banks in the Real World have strick guidelines on what they can and cannot do with your money. Banks in SL are more like fronts for risky investment ventures. What is interesting is how much are they diversified in their risk management of exterior investments.

Forex Trading?
Junk Bonds?
Drug Dealing?
Arms Dealing?
Prostitution?
whatever..

Whatever the investment, how much risk is behind the curtain? If the hookers go on strike, will the interest rate in a SL Bank decline? If the DEA burns a coca field in Columbia, will all your cash be wiped out?

What happen to Mcgeeb? Seems like the L$ is getting out control and going back down, just as the always right RBD predicted. I sure feel bad for all those who followed the advice of folks who claimed the L$ was going higher.. Muahahahahahahaha


Source: /130/55/115616/5.html#post1121955


Ohh well. All the suckers will be left holding the bag. The average is L$309, just a few weeks ago it was L$297 or so... Hmmmm.. Seem like the L$ is getting back to normal.. Down Down Down...

Daily Summary
Last Close Date 2006-07-23
Last trade: L$307 / US$1.00
Last close: L$306 / US$1.00

Today's volume: L$4,484,187
Today's average: L$309.6498 / US$1.0

I wonder why some feel the need to hijack this particular thread with irrelevant market digests?

The issue on this thread is in regards to this bank, nothing to do with a daily sell message.

Re the banking idea, good luck with it, you will see a variety of opinions about whether this is viable or not, you obviously have made a decision on this and decided it suits what you are aiming to do, why the need to lecture you, informing you this is a waste of time, effort and space, I cannot fathom. I didn't see any comment about you demanding everyone who read the thread become a client or do the same thing.

As another poster put it, the way you have dealt with the enquiries is professional and responsive.

I wish you the same good luck, as I would wish everyone running anything on SL, be it for profit or fun.

Furthermore, everyone in SL has their own reasons for doing what they want to do. Who is anyone to judge what project someone wants to take on. I would think running a virtual bank that is successful is an accomplishment at the very least.

None of you know what the SL Bank's strategy is, and none of you have any valid info when you state what SL Bank is doing to operate successfully.

SL Bank is doin their thing, and you all should do your thing...

I was wondering if ur bank does loans or houseing fiance's duno if i spelt that right lol.?

Which part?


spelt = Spelled
houseing = Housing
fiance's = Finances
ur = You're
duno = Don't Know

Well an interesting development.

Let us all be frank, the people who are running this bank may well be out to scam us all, disappearing with our hard earned Lindens, and with us having no legal recourse....

Another possibility is that they may well be honest but misguided, and as some more experienced Second Life participants have noted, the entire scheme may well be doomed to fail.

Regardless of the first two points, Linden Labs may well intervene and either kill the idea off as inherently risky to their image or legal position. Or for that matter ruin the Second Life economy by creating Linden dollars out of thin air to cash in (US dollars) while the going remains good.

But.....

1)This is ABSOLUTLY NOT a standard bank. SL Bank is a Merchant Bank, a very different animal. Do a Google on that, link below.

http://www.investorwords.com/3044/merchant_bank.html

2) A "virtual currency" not issued by real life Sovereign Government is an idea that just may be awaiting birth. Of course it would have to have mass acceptance, on that point I note previous attempts to create an in game alternative currency to the Linden Dollar (Examples Gold Linden Dollar and Anshe Chung Dollar) failed because of lack of support.

But the Linden Dollar currently has mass acceptance, a Linden Dollar investment backed by tangible fungible real life assets does provoke some thought....

And one last possibility is that this is an investment opportunity of a SL-lifetime and the people that run this bank are brilliant and will make us all millions of L$! You never know. Just had to balance your gloom and doom with something a little brighter...

I could tell you many tales on that one.....the ultimate dream of a lifetime, a "get rich quick scheme" that works!!

Can anyone here script a Second Life Time Machine? After all if (while here in Second Life) I can both fly and teleport, activities that are denied me in first life, I should be able in theory to travel up the line to 2008 and see if this scheme works -


Then I will pop back and let you all know -

But....what true life story to tell you all./ I know the one...

I am sure most of us get both telephone calls and emails trying to sell us something on the back of something that seems too good to be true, you know the share that is going to go up 10 times next week, or a free holiday, or a chance to help some poor Nigerian "liberate" tens of millions into your bank account.

About 10 years ago I kept getting persistent calls from this guy who said we could inherit loads of money from a long lost relation on my wife’s side. Bullshit I thought, my wife has no external family we knew off, they all died off in her 20s.

But the calls kept coming despite my being rude to the person.....in the end to get rid of him I gave in and allowed him to give me his "pitch" over the phone. He wanted five grand (£ sterling) and when he got paid we would get loads more......

Lol I though, or ROTFLMAO to be more blunt

But....it was true. All he wanted me to do was to get my wife to sigh a form legally binding her to pay him £5K when we got an inheritance.....which after loads of thought we eventually did....and collected £30k cash (a very distant cousin 5 times removed)

So there, a true get rich quick story

(I reserve judgement on the bank)

Yeah why should anyone starts something new and actually do any work, when it is so much easier to rain down on someone else's parade and speculate the value of lindens all day long in this forum....

seriously... I can not believe that I come and go and check this thread and nothing changes here month after months. There are posts by sane people and then responses from others with alterior motives.

I suppose my main concern here (and I am hoping members of the SL Bank will be able to facilitate a series of answers) is the failure to see the economic realities before investors.

Now this impression is based purely upon the inherant nature of the economy we are dealing with vis a vis, one based in an imginary world.

This of course, does not exclude succesful merchant banking. After all, our own banking sustem is based upon a series of 'beliefs'- we believe the numbers existing within the global economy represent real tangble assests. Indeed, every man, woman and child justifies that belief when they hold a banknote- the bank note itself is NOT currency. It is a promisary note- indeed on UK currency it still says the words 'I promise to pay the bearer of this note the amount of...'.

It is heartening to see how durable and strong the belief in currency is.

So, in principle, the SL Bank is a good and powerful idea. Like the RL currency/investment markets, what is happening is the invesment in belief- in the ephemeral and intangible world of high finance. When someone says 'billions can be lost at the touch of a button' in regards to this world, they ain't kidding, but so rarely show an understanding of the volatile and inherantly 'faith' based foundation of such systems (proof of that statement- look to the psychology of a stock market 'crash' or a 'run' on a particular currency- often triggered by core data on periperals, brokers 'panic' and sell or buy, purge or liquidate based on a system of hunches, gut feelings, experience watching underlying patterns and on occasion, hard mathmatics).

Given this being so, we come now to the merchant SL Bank.
Lots of figures- all very interesting.
None of which lead us to the core issue.
Lots of quotes of people saying the indivduals behind this are brilliant. Which they may well be. indeed, I am hoping they are so they can answer my questions.
But again, a tactical avoidance on core issues (at least it MAY be a tactical avoidance- it could be a failure to see the core issues) is something that is making me ask some serious questions.

So to task- some questions... call them the tip of the iceburg...
1- If I go and invest my hard earned money into a bank in the RL, I have a series of laws which provide oversight for the bank in question. What oversight is there for the SL bank (several have asked this in varous forms I know)?
2- Does the SL bank adhere to ANY Banking regulations?
3- Considering U can invest in the SL Bank say, and being as I am a British citizen, can I assume that i will be covered by INTERNATIONAL banking law?
4- SL currency has a GENUINE RL value. It may be worth very little US$, but i believe the L$ is worth more than some curencies in the developing world. What liability do you have on your assets given this? Given the fact that you are dealing with real amounts (OK, real amounts that would only get as far as probably a small claims court, or maybe Judge Judy, but still...)
5- Investors in SL Bank. Are they shereholders? If shareholders, is the Bank then beholden as in RL to make a profit? As in RL is the SL Bank recognised by the law as PERSON with the rights certaintied to it (as we know, most banks and all corperations in the RL are given certain rights by law, and are treated as private individuals by the law in many nations).
6- Is the corperate identity of the SL Bank (which given above is legally recognised by law as a person) a MEMBER of SL? Is it registered with LL? If it is not a person registerd as a member by LL, then what is it? Where legally do you define the SL Bank?
7- What is your liability cover in the vent of a lawsuit.
Laugh all you want, lawsuits over actions taken in virtual environments have already been logged and indeed South Korea has a dedicated unit of police whose job is to investigate fraud in MMORPG's.

I am very interested in the answer to these questions, and would have a whole host more (mostly about the usage of RL economic models in a virtual environment- one which fundamentally has NO solid assests).

If you wish to answer them privately I can understand. I have no desire for predudicial information to beome available to competitors.

I do not ask this by the way, in some attempt to paint SL Bank as 'evil' or 'greedy'.
I am not 17 and having issues with my middle classed lifestyle!

Rather- someone who is genuinely curious as to the economic models being used in the environment and what appears to be a horrendous fallacy of transposing existing RL models upon a unique environment.

I am looking for information as opposed to data.

Hello there and thanks for your post. I'll try and answer your questions below:

1- If I go and invest my hard earned money into a bank in the RL, I have a series of laws which provide oversight for the bank in question. What oversight is there for the SL bank (several have asked this in various forms I know)?"

None. In SL there is no FDIC or Central Bank.

2- Does the SL bank adhere to ANY Banking regulations?

None other than those of which we have created for ourselves.

3- Considering U can invest in the SL Bank say, and being as I am a British citizen, can I assume that I will be covered by INTERNATIONAL banking law?

No. By investing in any bank or any project in SL,you are simply giving that money to someone with a verbal agreement of trust. There is no international law of banking which would cover you in the case of a loss.

4- SL currency has a GENUINE RL value. It may be worth very little US$, but I believe the L$ is worth more than some currencies in the developing world. What liability do you have on your assets given this? Given the fact that you are dealing with real amounts (OK, real amounts that would only get as far as probably a small claims court, or maybe Judge Judy, but still...)

None. Upon opening an account at our bank, you agree that SL Bank, SL Bank employees and/or anyone associated with SL Bank can not be held responsible or liable for any or all lose of deposit as stated on our TOS.

5- Investors in SL Bank. Are they shareholders? If shareholders, is the Bank then beholden as in RL to make a profit? As in RL is the SL Bank recognised by the law as PERSON with the rights certaintied to it (as we know, most banks and all corperations in the RL are given certain rights by law, and are treated as private individuals by the law in many nations).

No, they are not shareholders. Investors in SL Bank have no voting rights or say in how we invest our deposits or in what.

6- Is the corperate identity of the SL Bank (which given above is legally recognised by law as a person) a MEMBER of SL? Is it registered with LL? If it is not a person registerd as a member by LL, then what is it? Where legally do you define the SL Bank?

We are not registered with LL and have nothing to do with LL. Legally we are defined as an experimental bank in a massive multiplayer online world.

7- What is your liability cover in the vent of a lawsuit.
Laugh all you want, lawsuits over actions taken in virtual environments have already been logged and indeed South Korea has a dedicated unit of police whose job is to investigate fraud in MMORPG's.

As SL Bank is not involved in any kind of fraud, we are not very worried about this issue. Our TOS would cover all other possible issues of a lawsuit.

I should also note to those of you whom are new to SL, this is a banking experiment being run by a group of economics students as a research project. We are not-for-profit and any money made via this bank will be used for experimental purposes and/or to expand the bank. Much more info on SL Bank can be found in older threads found on this forum.

I hope this helps a bit,
Cheers!

A good post Danton Thirroul if I may say so, and from the questions you asked I would guess that you have some real life involvement with the UK and/or US financial services business.....as I do in real life.

You missed out on asking one important question, I trust you do not mind me raising this point and I certainly do not intend any disrespect to you.

My question is that I note at least one of the members of the SL Bank Group does not have payment information registered to his name in Second Life.

I believe that should be highlighted as an issue that needs to be resolved. In short all members of the SL Bank Group should have payment information recorded to their Second Life accounts.

The reason why is money laundering issues. In essence (and if it was legally necessary) a lawyer/solicitor could trace anyone’s real life ID with credit card or verified Pay Pal pre payment information. That is (money laundering) is exactly the same in VR as it is in real life.

Hello and thanks for your post.

The third avatar in our group was created to be used for tech support sometime in the future. Payment info may be added, but the account is currently dormant, and not in use. I assure you, no money laundering is taking place.

Cheers!

It helps a lot.
Let me clarify, I was not questioning as to your motivations- after all, making a profit is, in the world of corperate business, a MORAL position (those who find this statement alarming should actually sit down and read the rights and responsibilities of limited companies).

In fact your answers really excite me somewhat.

By nature i am one of those 'wandering scholars'- after completing my post-grad studies at King's College, University of London, I find myself seeking which masters/Ph.D subject I would like to do. This has led to several years wandering, eventually to me coming to economics (helped in no small amount by oncesharing a house with a retired Indian gentleman who was a former professor at the London School of Economics).

I am very curious as to your results so far. From your initial figures it does suggest that your results seem to match traditional banking templates to a degree. My substantive is the area where it does not.

SL is after all an exciting and emergant economy- my contention is at this moment, that all models used upon SL have been ones which are grounded within traditional RL economic models.

In truth I believe that those traditional models are flawed. That inherantly they work because we as SL users have only them to act as context and that as time passes eventually we will start seeing the potential of doing things VERY differantly, with models not based upon well know patterns of financial systems.

This is the contention anyway. Like any good scholar I have nowhere near enough data to maintain such a stance- merely postulate it as an idea.

So, if you ever get the time, i would be fascinated to talk to you and the others about the experience and results you have found so far. This is purely for academic reasons!

I wish you continued success in gathering interesting data!

Actually John, as i explained a little in the previous post- I am more an academic than being employed in any part of the fiancial services.

I guess ya could call my field 'behavioural economics'- but as in all things i try not to move into a subject without getting grounded in the basics.

One cannot talk, I feel, about financial systems unless you go out of ya way to UNDERSTAND the fiancial systems in question. I just add psychology and other subjects to the mix.


Damn good question as well!

Wish i had of remembered that!

LOL

Good.

I am reasonably sure you are not.

You have also explained most of the risks in a balanced way and providing people understand that, and you act honestly, then I wish you luck.

The risk factor by the way for other peoples interest is perhaps more than equal to trading the Dow on margin at $10 per point (one standard contract)

BTW I have taken you at your word, a group of students at University who are doing this as a project or thesis. Perhaps by now you are starting to understand the risks involved in looking after other people’s money.

Teufel, I have nothing against you or your bank, but I still you should call it 'Gamble' or 'Bond' rather than a 'Bank'.

Though it shows similarities to a bank, the name is misleading. As good as your intentions are, I see no guarantee of security of any money in it. Of course, if things go well, you'll be able to pay interests, etc, but once they turn bad, all people might lose some or all their money put in the bank.

You're about the 4th or 5th Bank appearing in SL, though I think one another bank (Ginko) is still alive, I have no idea about the rest. Maybe they just faded silently, or failed to attract enough people.

Anyway, any bank in SL so far was/is inherently VERY high risk, and I'm not sure the interest rate pays for that high risk for people. I might get 4% in a real life bank at 99.999% reliability, but if I only get 7% or 10% in a very unreliable SL bank, it's probably not worth it.

Unless I want to gamble, that is

BTW, what's your cash reserve ratio?

Hello and thanks for your post.

I can understand your concerns regarding risk. How players react to this risk based on possible return and several other variables is exactly what it is I am interested in.

It should also be noted that there are a good number of “banks” in the real world which are by no means insured or even a safe investment. A “bank” is simply an institution which borrows from its customers via accounts which are repayable to those customers. Banks mainly borrow and lend, but due to historically low interest rates a good number of banks even here in the USA, which are regulated by our Central Bank and the FDIC, have turned to riskier investment strategies. What we are doing with our bank is by no means novel, but the world in which we are deploying this bank is.

Our current interest rate equates to about 65% per year, not 7 - 10%, although we plan to offer lower risk/lower return accounts in the near future.

Based on the current situation in the Middle East and other fiscal, monetary and trade issues, most economists I know say that investing in a US FDIC insured bank is about a 96% safe bet long term and slowly dropping But this trend could change anytime based on future events.

We hold about 10% of (total deposits + total interest paid) in reserve for withdraws.

Cheers!

I love your name... almost seems like you are in a competition...

And lucky for me, the "Division" clan has been removed from the available choices list. Maybe one day we will get multiple currencies in SL, allowing for the ability to have a Reserve Currency.

Prices of goods and services will be quoted in the Reserve Currency Dollars, leaving all other currencies to buy/sell the Reserve. By default, creating a major market for currencies in SL and profits for currency traders. Assuming LL allows for such.

And make sure to pick up your Doubledown Fun Bucks too!! WOOO!