Does the L$ have intrinsic value?

ROFL LOL


That is classic... as if...

Silly question - at the moment L$1000 is worth US$3.96

QED!

The TOS statement is simply a getout for LL in the event of such things as LL pulling the plug on SL, or the system simply loosing your in-game money (which by the way is why I keep the bulk of my L$ in GOM and try and keep that right down whenever possible).

Saying that something you can buy with a 'hard' currency has no intrinsic value is clearly nonsense.

This is percieved value, not intrinsic value.

But we're not talking about your fair state, and we're not talking about books and pretzels either. How about if:

1. We're in Second Life exchanging virtual goods (data, which you still haven't demonstrated has any real value at this point).

2. I give you a 1.

3. You give me a 0.

(this virtual world is endless streams of 1's and 0's, not books and pretzels, although the 1's and 0's may be visually represented as such on a computer screen)

Has a taxable event occured, and if so how do we tax these 1's and 0's? Is there some law covering this?



I've been up all night and it's 10:10am my time. I must confess that I haven't read your link. I do see the words "offshore, gambling, regulation, congress" in the URL though, which indicates to me that you may have googled the wrong thing. It seems that you may have been looking for offshore gambling venues using real money to conduct gaming operations. What you need to look for, specifically, is US based virtual gambling operations using funny money to conduct gaming operations. Do any of your links cover this? If so could you provide that link specifically? I'll take a look when I wake up.




I don't know a whole lot about Al Capone, but I pay my taxes.

The day "RL" tries to regulate the SL universe, license casinos and securities and having the tax man spy on people's transactions, is the day that LL must change jurisdiction.

Yes, when I sell L$1000 I perceive US$3.86 (not US$3.96 - that was a typo) which is real money... So L$1000 has a real value.

It's about a perceived as your monthly salary, if that's only perceived, it has no value, so you won't mind not having it this month because you are giving it to me?

Come ON, pleeeease...

You wouldn't sell that 1000 if someone didn't percieve it was worth the money. It has no intrinisic value. Contrast this with a tangible object which has intrinsic value (Though it also has a percieved value).

If you are in the US, or many other countries, try arranging a liaison with a juvenile or organize some sort of domestic terrorism on SL and see how long it takes for the police to come and kick in your door.

I'm surprised that the casinos in SL haven't attracted attention yet. I'm sure it's just a matter of time before they are banned. That also brings up the question of whether the currency used in those games falls under the classification of gaming chips or tokens, which is considered equivalent to currency under gambling laws.

I'd say no because any value it has in relation to $RL is purely subjective. It's worth, it's value is only realized in a closed virtual enviorment populated by a few thousand people.

I'm not *trying* to be argumentative, but I am confused by your definition.

For example, I may hate peanuts and so they have zero perceived value and zero utility to me personally. However, according to the Chigago Board of Trade, those peanuts have perceived value and utility to their brokers. So my perception is not sufficient for valuation.

The only reason a US$ has value is because I can exchange it for things of utility, or conversely, if no one perceived a US$ as having value than it would have no value. Similarly, L$ have value because people believe them to have value and are willing to trade them for US$ or scripting skills or vitual goods and chattel in game.

Which does bring me to one of Sean's point's above: you are right, the book and the pretzels were tangible. But I've also bought software via download (and paid taxes on the purchase) of a "mere" collection of bits. I have bought fonts similarly which is even less of a "machine" than software is. Finally, I've bought music through iTunes music store, which is even more ephemeral than any of the above.

So what contains value or utility? As before, my answer is that which someone, somewhere is willing to exchange something for. The only difference between a chunk of gold and a Cubey Terra aircraft is that the community of people who consider the gold to be fungible is larger than the set of people who consider CT aircraft so (yes, I know that Terra Aircraft are copy,no-xfer to protect his customers' purchases, but you get the point, furthermore Terra craft are cool and I actually like peanuts).

Right, because your perception is only part of the equation, you also have the perception of the other people who exist within the peanut market.

Blaze, he's such a trickster.

See, it's a trick question. All items, solid or digital, have many things intrinsic to them. Gold has an intrinsic density. Air has an intrinsic fuidity.

One thing they can not have intrinsically is value. Value always comes from outside, becasue value is entirely a human invented concept driven by perception.

The L$ appears to have the shared perception of value to some degree - everything from the minimal value of it being tradable for fun things in-world, or the more maximal value of it being tradable for an established, "real"-world currency.

Doc's example of the paycheck is interesting. It points out what shared perception of value really is. We all have tacitly agreed that money represents access to resources. That is, we've given it value, and commonly enough that we never bother or need to question it.

This article gets close to the issue here:


SEC to sue internet investment game
OUT-LAW News,

The US Securities and Exchange Commission (SEC) has won a judgment in the US Court of Appeals which allows it to raise a lawsuit against a Dominican based internet gambling company which the SEC claims was running an illegal pyramid scam.
The US Securities and Exchange Commission (SEC) has won a judgment in the First US Circuit Court of Appeals which allows it to raise a lawsuit against a Dominican based internet gambling company which the SEC claims was running an illegal pyramid scam.
SG Limited ran a web site named StockGeneration, which included an interactive investment game where users sent money in exchange for “shares” in fantasy companies. Users then either made a gain or loss on their investment depending on the performance of these “shares”. The performance of the fantasy companies was entirely at the discretion of SG Limited. The web site attracted over 325,000 players from around 70 countries.

The SEC is looking to reimburse investors for their losses, and originally raised an action against SG Limited in June 2000, alleging that the web site amounted to a pyramid scam and violated US securities laws. However, because the web site did not trade in actual shares, presenting itself only as a game, the court said that the SEC had no authority to interfere.

The Appeals Court decision agreed with this in part, but did concede that the SEC may have some authority over the site due to the fact that it represented an investment contract of sorts to users. SG Limited has been ordered to suspend the web site and its assets have been frozen by the court until the matter is resolved.


http://www.out-law.com/page-1994

This IS an interesting read. It doesn't quite get there since it is still dealing with the real world and real money, rather than the virtual SL world and it's virtual money. Another problem is that it's not US based as is Linden Lab, the facilitator of the virtual casinos in question. We're getting there though.

I think what I'd really like to see personally, is some kind of precedent from inside of one of these worlds.

Great catch, Smiley.

More information:

http://www.sec.gov/litigation/litreleases/lr16590.htm



More hilarity:
http://web.archive.org/web/19991013090846/stockgeneration.com/ideology.cfm

http://web.archive.org/web/19981212033053/http://www.stockgeneration.com/

http://web.archive.org/web/19990921225150/http://stockgeneration.com/

http://web.archive.org/web/20030719124143/http://www.stockgeneration.com/

http://web.archive.org/web/20010201145100/http://stockgeneration.com/


Fascinating piece of history.

(Without reading whole thread.)

Yes, because you can turn it in to trade for real money.

At least today you can. One never knows about tomorrow.

coco

Definitions found by Google

They are interesting reading material. The conclusion I reach is that the L$ has about the same intrinsic value as the US$, the €, the £, the ¥... since neither of those currencies are currently based on the value of the metal used in the coins.

Note that while the L$ is not directly backed up by "gold" or a "state government", it is backed up by at least a commodity, virtual land (which I always argued to equate to Web space), and it definitely has perceived value, since people are willing to exchange it for other currencies (US$) in a relatively stable way (ie. the L$ fluctuates over the year as much as, say, a barrel of oil ).

Ah well - we're discussing semantics

I do not know about intrinsic but when i look on my credit card statement i sure am paying for second life,and I am not whining,,and while real(as in US dollars) life money may not have intrinsic it is a known fact love is not going to pay the rent.

If the US government were to fall tomorrow, though - or simply declare that the government will no longer accept the notes in circulation as payment for debt - you wouldn't be able to pay the rent with dollars, either.

This is the second time in just a few days I've seen someone
make this kind of statement, which is quite silly.

First, what WOULD they accept?

Second, the government does not decide what has value to
people.... people do! The government can declare this piece
of green paper is worthless, but if I can trade it to a guy for
a loaf of bread, it still has value to me. And if that guy takes
my dollar for his bread and then trades it to another guy for
flour, then it still has value to him... and so on.

Gabrielle

You see people make that statement because it's pretty much the truth, taught in economics classes the world over.

You can trade a moldy sandwich for a car to the right person; this does not make moldy sandwiches an overall medium of exchange.

Of money that is not in itself a valuable good (gold coins, foodstuffs, whatever), you've got "hard" currencies - backed by actual valuable goods and a promise to exchange the notes or coins for whatever the equivlent amount of goods are - and "soft" or fiat ones, worth something solely because a government says so and promises to take them in payment for debt. The fact that you or your neighbor have "this piece of paper is worth something" so deeply ingrained into you you'd take them even without a backing authority says more about you than the dollar.

The L$ is basically that second type. This means it has no fixed value, and isn't even backed by the promise of something as big and relatively stable as the United States government. Really, the only thing that you can ever, for sure buy with lindens are uploads and ratings... and first land.

Given the limited nature of first land, and the fact that said land can be manufactured at will by Linden Labs, it's not sufficent backing to make the L$ "hard"... but it does provide a correlation - take a combination of number of users, amount of land, and amount of L$ circulating and somewhere in there you get the value of a Linden.

Nothing has intrinsic value. Values reside solely in one's own conceptual mind. If enough people agree to share the same concept of value on a thing, then it give an appearance of reality to that value. But at the root, value does not exist outside the mind.