FBSL Beginning Banking Operations

The First Bank of SL is beginning operations by offering Certificates of Deposit (Bonds) and Land Mortgages. You will find details regarding these services in the Classified/Services forum.

Land Mortgages
Certificates of Deposit/Bonds

Any comments on banking services in SL? About FBSL?

Before I look into this, I hope you can look into my e-mails and answer them about problems with your rental machines. Thank you.

Oh, sorry Random. I got your notecard, but haven't had a chance to look into the issues you were having with my script. I refunded the money you said you lost on the commission a day or so ago. Did you receive the refund?

OK, thanks, I found that refund in my transactions record, I appreciate it.

You know, some weeks ago, you announced that you were tiering down, and you sold your mall in Ross, and it seemed like you were getting out of the game. Then I think you posted that it was just a temporary burn-out but that you were still logging on, that your rental machines would still work, etc. But never seeing you online, I began to worry, and not seeing your malls or presence, I just wondered how you were maintaining service. When I couldn't reach you for 2 days over a $4000 transaction that just annoyed me and a customer no end, I really had to wonder. I've never had any of your scripts break or do anything but what you promise they will do -- they seem highly reliable. And I understand that there are issues like you have to reset them, you have to have money in your account to pay the commission, and you have to set them to group on a autoreturned land. So I couldn't get why it was not working right -- could it happen? And why?

It's worrisome to think of a thing that so many of us rely on like your rental script breaking down. It might just be a matter of a returned object triggering it to refund and spit back all the money -- could that be it? Yet I could have sworn I did everything right.

Anyway, I think your banking idea is very interesting. Are you looking for partners to kick in tier to the group? And how is the whole enterprise backed? Many of us have discussed the operation proposed by GinkoFinancial, and there is too much mystery surrounding it for most people's taste. Obviously, a mortage system has to have trust.

I was thinking of tiering down, but I won't be. Any of my products will still function if I ever leave SL. I coded them to work that way.

I never owned a mall in Ross. I had my rental systems for sale at several malls that have since closed down, so they haven't been available for sale. I would need to know what version of my rental system you are using since there was a bug that could result in such a situation, but I can't diagnose the problem without knowing that bit of information.

The tier for the mortgages is provided by the borower, or rented directly from me for L$1 per sqm per week. The enterprise is backed by the land used to secure loans, and the money given to the banking group by myself and investors looking to purchase interest bearing certificates of deposit/bonds. Just like a real Bank or Savings and Loan. Deposits are secured by the land used to offer loans, and by my personal guarantee that I'm not someone here that rips people off.

As for tiering down, I have a lot of land obligations in SL. I've thought about tiering down before for various reasons, but I've never thought about leaving SL. And I certainly wouldn't stiff anyone for any obligations I uphold. I'm a very fair and honest person, in SL and RL.

Hank, I think this is brilliant.

The only quest I have is about the land appraisal. Who's doing that and how's that gonna work? I think I'd like to risk a few bucks in your bank though. It sounds like a great idea.

Hank, these seem like very solid ideas, and a sustainable business model. Your biggest hurdle will be trust, I'm sure. Not that you're untrustworthy, but you'll need the reputation of the Rock of Gibralter to make this work long term.

Since I'm currently the only intial investor L$-wise, I do the appraisal myself since I want to ensure that the land mortage can successfully be paid for if the borrower defaults on the loan. Once things become automated (I'd rather start with a sound business model before setting up ATMs, etc), I'll probably contract with secondserver.net and their mapping project and use their data with a formula.

Your fee structure is quite high. In fact, it makes sense for users to simply go to GOM and purchase the L$.

Even if I am a premium member getting L$500 per week, your L$1/m tiering charge will eat all my stipends up even if I only get a 512m plot of land.

Just imagine if the user wanted to mortgauge a entire sim, wouldnt that be 65k linden a day? or did i misread something?

Its $1/m per week. That still does seem high to me, at least.

Even at 65k a week.. thats a big chunk of change. Hell even a 1024 plot would cost you 5.00usd a week for the cost of 20.00 a month.

My hat is off to Hank for doing this. Somebody's gotta do it.

Even if fees are a little on the pricey side, Hank is just safeguarding himself.

I too think it is a worthy effort. My concern is with what I expect to be a significant default rate. If someone has to resort to getting a mortgage here I cannot see how they are going to be able to meet payments as structured. The P&I combo should be more in-line with what you can expect this class of buyer to be able to afford. I'm not shooting the message or the messenger -- I just feel the reality is such that if someone is going to make the leap to an SL mortgage with this P&I they are probably a credit risk to start with.

Sorry, that was a mistake. It's L$1/sqm per month, or L$0.25/sqm per week.

If you were to mortgage an entire simulator, that's L$65536 per month, or the equivalent of US$260. If you were to pay Linden lab for a 1 sim tier, it'd cost you US$195. So for that amount of land, it wouldn't make sense to pay me. Pay Linden Lab instead.

If you were to mortgage half a simulator, that's L$32768, or the equivalent of US$130. If you were to pay Linden lab for a 0.5 sim tier, it'd cost you US$125.00. More or less the same if you also wanted to pay LL with US$. If you were to convert that equivalent L$ to US$, you'd only get US$125 after GOM and possibly less with PayPal fees (if you have them on your account).

If you were to mortgage a quarter simulator, that's L$16384, or the equivalent of US$65. If you were to pay Linden lab for a 0.25sim tier, it'd cost you US$75. Definately a benefit to pay me in that situation.

Basically I require the borrower to take on the responsibility of supporting the land tier for their land. All I provide is the upfront cash to purchase the plot of land. I only provide the L$ paid tier as a service for those who aren't ready to take on the responsibility of a tier. Remember, tiers have a "built-in" extra month of expense since you are billed for the maximum amount of land you own in a single month, and it's tricky to get the timing just right to have your land sold before your next tier date. It's a good deal for those who are just starting out or are not sure if they want to commit to a large land tier.

If you are going to own land in SL, then RL US$ tier fees are a reality. Some people like inworld cash, or don't want to have to deal with the money exchangers. In that case, a mortgage inworld makes sense.

Hank,

Considering the drawn out debate that occured about bonds, it's refreshing to see a complete business model.

Except.

As a lender, wouldn't you need to follow US banking regulations? Else, wouldn't you will be liable for criminal actions under loan sharking laws. Have you incorporated this into your business model once you start making something more than a trivial amount of income?

Remember, the FBSL only deals in L$. This is a game after all! I'm just exploring my fantasy and enjoying the process of running a virtual bank. No real money is being exchanged, stored, or distributed. It's just points in a virtual game.

I do however intend to make the FBSL follow, in the spirit of, RL US Banking regulations so that the business is fair and equitable for borrowers, investors, and owners of FBSL.

Would I be held liable by the US government for playing a game where I made my own bank and played banker? Good question. I wish the Lindens would help answer that type of question, but I doubt they would. For example, if you run a slot machine in SL where you win points (i.e. L$), are you now a RL casino? Or are you just playing a game like a Hoyle Poker game?

This is why I hope LL never gets in the business of directly selling L$, or exchanging L$ for US$. I know exchanging L$ can be done, but that's separate from playing the game and separate from the folks who design/run the game. If LL ever sold L$ or made their own GOM, IGE, or AnsheChung money exchanging service, I'd probably have to close the bank down as L$ would be directly tied to US$.

I basically applaud this effort, because I think we need banks and mortgages and builders' societies in SL, but I don't think anyone mounting these sensitive and financially risky efforts should be given a free pass just because they are famous or long-lived in the game, while those newer like Nicholas are slammed when they start something similar. I'm simply not for ceding pride of place to people simply because they got to a turf first, and I think they get the same kind of public scrutiny as anybody else.

Saying the FBSL only deals in L$ is a mightily laughable proposition. Um...you're never going to cash out on GOM? Ever? Not even your free stipends from the Lindens? Well, that's silly! And if it is "just a game" to collect these "points," then don't you risk people reneging on their debts and telling you, too, it is "just a game" that they don't have the markers in anymore? And if you seize their land for default on a loan and they endlessly grief you and put up harassment builds around you, etc., will you be able to call in the Lindens? Not. Because they'll say "it's just a game."

I was thinking of tiering down, but I won't be. Any of my products will still function if I ever leave SL. I coded them to work that way.

You made the kind of grand announcement people sometimes make, and seemed to have a lot of sales that way due to the attention. While I accept the idea that people don't have to remain in the game and can leave their products in the game, it troubles me, given the volatile nature of scripts.


I never owned a mall in Ross. I had my rental systems for sale at several malls that have since closed down, so they haven't been available for sale. I would need to know what version of my rental system you are using since there was a bug that could result in such a situation, but I can't diagnose the problem without knowing that bit of information.

I appreciate you taking full and frank efforts to solve these problems in-game. For those of you out there who also have these renters, it was v.1.5 free with 1 percent commission.
And the issue is not at all involving any loss of money, or failure to credit payment -- that appears to happen correctly. Rather, the issue is in notification of expirations that are inaccurate -- the machine is accurately showing the time paid, and the Linden transaction history shows a payment made (everyone always has that back-up for them outside of the game), but the notifications are screwy, i.e. repeatedly saying "you have 12 hours" when it is paid 7 days.

I was told by someone it was "your" mall but they obviosly were misinformed, but maybe they felt like it was "yours" due to all those rental boxes being in it. And I must say I'm of two minds about the whole rental box issue deployed by you and others -- it is fair to hold everyone hostage to commissions (whether they are steep or not isn't so important because they do add up) or exhorbitant fees just to rent in this game? Is this like a common carrier that shouldn't have such heavy fees? Is it a form of racketeering? I accept the conditions under which you issue these rental machines -- do I have a choice? (Oh, yes, I could pay $5000 a pop to the competitior to buy the non-commission one). I do want to point out that I once hired a scripter who, within one day, made a rental unit that did almost everything yours did, and put a price on it of only $150 no-commission. (Yours were $200 no-commission or free 1 percent). So sure, you can just blame the laziness of other scripters or entrepreneurial players in solving this monopoly problem of the rentomatics, but I do think it is legitimate to raise.

These questions appear to be legitimate to rehearse when a person announces they are setting up a savings and loan. You made an invention that everyone desperately needed to get by in the game -- and you undercut the competitor significantly -- congratulations. You collected a lot of money in RL dollars for this service, possibly way more than it could be legitimately valued, but that's food for another thread. So having made your millions, you are now in a position to "play bank". I'm heavily pro-capitalist and pro-competition and pro-free market, so I'm still trying to figure out why I'm not exactly comfortable with the rental box commission idea as the foundation for a banking business. I don't think the answer is to have the Lindens make a rentomatic but it is something other players could step up to the plate about.

I'm not being a whiner, unwilling to pay someone their due for their hard labor on a product of continuing use. I just want to ask questions about it, however, especially when it breaks down and loses me business!

The tier for the mortgages is provided by the borower, or rented directly from me for L$1 per sqm per week. The enterprise is backed by the land used to secure loans, and the money given to the banking group by myself and investors looking to purchase interest bearing certificates of deposit/bonds. Just like a real Bank or Savings and Loan. Deposits are secured by the land used to offer loans, and by my personal guarantee that I'm not someone here that rips people off.

I don't believe at all you are ripping anyone off, but I am made a bit uneasy by the concept of the commissions on rental machines, and even more uneasy by the ease with with anyone using these machines, if they malfunction (even 1-2 out of 100) will be branded as a wrecker and a cheater, when it will not be their fault.

As for tiering down, I have a lot of land obligations in SL. I've thought about tiering down before for various reasons, but I've never thought about leaving SL. And I certainly wouldn't stiff anyone for any obligations I uphold. I'm a very fair and honest person, in SL and RL.

I appreciate the willingness with which you are dealing with the problem of the evident malfunctioning of some of your rental units -- a few out of the hundreds I use, generally without any problem. I note that it came after my response here, after 2 days of no e-mail.

What troubles me most of all, however, is the concept that Linden patches can wreck the scripts players have established using LSL.

It's as if the Lindens are making one world, and we are making another, and it is at cross purposes.

Well, I need to make it clear that we are not investing US$ or any real-world cash. If I were to advertise the bank as investing real-life funds, I would be subject to RL banking rules. I just want it to be clear that this is a virtual bank inside of SL only. We do not deal with US$ transactions or conversions.

Now, can I convert money I make overall in SL via GOM? Sure. But it's important to keep the distinction that L$ is not officially equivalent to RL US$. The Lindens make that clear in the TOS, and I want to make it clear about FBSL.

Of course, calling SL a game doesn't negate the seriousness I have about designing and running the bank. It doesn't mean that I intend to play "bank robber" or "evil corporate genius" that runs away with other people's money. To the contrary, I want to design and run a profitable, engaging, serious virtual bank.

I won't speculate on the possibility of people griefing me for any reason. You can be griefed at any tiem for any reason, so it's silly to consider that possibility. If people want to grief me, then so be it. I'll use the tools I have at hand to report them so that they can be appropriately disciplined by LL according to the SL TOS.

Now, Random... I've been very patient with you, and have tried to fix the problem you were having with my machines. I know you have been very upset, and have been trying to tear down my reputation and my ideas with FBSL by continually posting off-topic posts. I'm not sure exactly what your motives are in this regard. I'm very sorry there was a bug in my rental systems. I can continue to apologize and/or try to remedy the problem, but apparantly that isn't enough for you.

It's apparant that you don't trust me, that you call me someone who "holds people hostage", is involved in racketeering, or someone who charges "exhorbitant fees". That's all well and good. But stop draging those kinds of false accusations into this thread. Create a new thread if you want to do that.

As for have I made "millions" in SL, or large sums of money on my rental system. Absolutely not. I've made jack on them.

Can someone else make a rental system? Of course! We all have the tools available to us. I just took a system I made for myself, and packaged it as a competing product. It had a bug. I've worked and am continuing to work on fixing it. The fix I gave you should have resolved your issue, and if it successfully did, I'll make a public announcment with updates available.

I'm glad you are trying to fix the problem with your machines -- that's laudable. But it's also expected, as just the nature of the business when you've created a scripted invention upon which thousands of people rely hundreds of times daily in the game. You don't get extra credit for that, especially when you charged money for it, and real money, all this time.

I am not trying to denigrate your reputation -- that's an absurd exaggeration. I am trying to question several things here that are perfectly normal to question, and would be certainly normal to question in RL. Your reputation stands or falls regardless of what I post -- I am merely asking questions, which is my right as a consumer of your current and your future product. Indeed, if manufacturers get on the forum and accuse customers bent on exercising their right to information as "ruining reptuations" and creating an atmosphere of intimidation and impunity, we cannot have a free market economy with the free movement of information, goods and services. Or perhaps you are not dedicated to such a system?

1. Is it right to endlessly charge commissions on inventions that people are forced to use in the game merely to do business, because of the special nature of the SL circumstances? This is a debatable question. I can see both sides of the issue. In RL, there are tolls, fees, excise taxes, and they serve a purpose. I firmly believe that individuals should have the right to sell their inventions for a profit but I do have a consumer's question of whether they have a right to charge excessively or repeatedly for the same good.

It's directly relevant to the question of banking, loans, mortages, etc. so to say this is a "hijack" of a thread is off the mark. They are about exactly the same thing! Throughout history, usury has gotten a bad name. In a free market economy, it is expected. Are there check and balances and restraints on it? The stagnant situation of a virtual world where there is no competition on certain basic utilities is certainly unlike real life and it is fine to question it. Is it OK to shake down fellow players who need or want land for their lives when Linden Labs already catches them coming and going with tier? I ask this question, I do not answer it.

2. Is it right to stand a banking business then, based on that inventions' income at least in part (no one buys the notion that you make "jack" off these machines)? Some people question the very nature of a banking or any other kind of business that seeks to make money off people's need to perform some transaction. I personally would be glad to see banks and building associations come into the game, but I also think it's fine to question their terms and statements that default back to things like "it's a game" and pretend that these Lindens would never be exchanged.

Just as Nicholas' banking proposal, regardless of its merits, foundered on his secretiveness about how he made the income and whether he could sustain customers' withdrawals, so your proposal that your bank would be hermetically sealed from Linden exchanges simply beggers belief. Nobody buys that, and they don't buy it because it is unnecessary -- have a bank, and exchange Lindens, who could stop you? Surely I'm not the only one who wondered about that statement?

3. Can players put machines in the world and then leave, and expect newer players not to question their positioning and performance?

You keep asking me if your new edition "fixed" my problems. But you don't "fix" a problem of tenants leaving completely because they feared malfunctioning rental units. And I can't replace every single one when I don't know if they work. And I can only replace a few that obviously malfunctioned and then wait to see if customers have problems, and I assure them I will instantly do any refunds or accounting necessary. Again, it is not a problem with the recording of a payment, which seems fine, but the announcement of an expiration in a few instances -- not all -- and that is enough to make people wonder what is happening.

I can charge whatever I choose for a product. I only offer the commission version so that people can obtain the product for FREE/GRATIS/COSTING NADA. I don't understand how offering a free product can be a bad thing, or why you are passing judgement on people who try to make it easier for people to obtain products. Also, I don't see why my rental system is connected to the bank. There is absolutely no connection between the two, period.

You are not forced to use anything I make, nor anything that anyone else makes. That's an absurd statement. You said that you hired someone to make a rental system. Great! Then use it. You decided to use mine. Great, then use it. If you choose to use someone else's system, or learn LSL scripting youself and make one, then all of the power to ya!

There is no right to any product that someone makes in SL. I am not a monopoly on anything, and trying to make me out like some kind of utility provider is just, well, nonsense.


The bank, again, is not based on the income of my rental system or whatever endeavor I choose to belong or particpate in. The Bank stands alone, by itself.

Do people exchange L$ for US$? Do I? Yes. Do I make a L$1 or 2 here and there on products I make that have commissions (and have commissions so that people can CHOOSE to get a product for free at the cost of having a commission). Yes. Is it all that much? Not really.

And again, I just want to make it clear that the Bank ITSELF has nothing to do with RL. We do not engage in investing, lending, or working with RL money. That is to protect the bank, the bank's customers, and the bank's investors. I never said "the bank would be hermetically sealed from Linden exchanges.". All I say is that we are officially a virtual bank inside of a game. We are not intended to invest RL monies, and we have no intention of becoming a RL bank.

As for other banks in SL, I'm all for seeing them prosper. I'd love to see competition. I'm just the latest person starting one, and I'm trying to build one slowly and carefully so that it can become self-sustaining and profitable for me and for the investors, while providing banking services that people desire.



Again, I'm sorry you are having problems. You keep roasting me on this point, and I'm trying and doing everything I can to satisfy and/or remedy your issue. However, I seem to be failing. What do you want of me?

For now.

My prediction is that this fine line between L$ and RL$ will slowly fade and disappear. As SL gets large, organizations like the IRS and the gambling/gaming commisions will take notice and force regulations.

For that matter, when banks first used computers, money was just 1s and 0s in a machine...

Interesting. I hope this works out for you

What I currently do is allow people to rent for 0.4 L$ per sqm per week and buy land once they saved up for it. I guess having loans/mortgages is interesting approach from other angle.

I'd be interested in deposits/bonds on large scale. But I'd need securities. Which I guess makes things tricky.