Philip Linden on the GOM L$/USD Exchange Rate

Yeah, Timmy, there is some bait and switch going on.

However, GOM keeps the margins pretty tight and market driven. They're also run by a couple of very straight up guys.

I'm sure if it was up to IGE they'd fatten them up big time if there was no competition.

Well, maybe, except for the fact that no one speaks proper English, they have terrible customer service, and they're not always right on time. I personally sold some $L and had to wait THREE WEEKS before I saw ANY of my money, and that was after I had to chase after them and try to communicate with Japanese employees who have a set script to read from, which basically means they have to guess what the hell you're asking about and choose the answer that best seems to "fit" your question.

GOM can take their tiny, reasonable cut of my cash any time.

While I agree that in order to purchase an order listed at $4 per block one must send a greater amount than the nominal price from PayPal, that doesn't make the exchange rate in any way "false". The exchange rate is determined by the aggregate motivations and values of all the buyers and sellers in the marketplace based on all available information. "Information" includes the existence of any deposit and commission fees.

Your post mentions the "discount rate charged by GOM for all transactions". This is a bit of a misstatement. It's true that a fee is charged for making a cash deposit. The reason for that is *we* get charged a fee by PayPal for receiving the payment. If we simply applied the total amount of any payment to your GOM account, we'd be losing money on every deposit. If we took a loss on every deposit, what would there be to stop some enterprising soul from bankrupting us by repeatedly depositing and withdrawing cash? Absolutely nothing. And that would suck.

If we wanted to incorporate the deposit fees into the listed price, should we do it invisibly? Bump the price of each listed order by 2.9%+$0.30? The market structure allows users to buy many different orders at once. If the extra $0.30 was added to *each* order, then those who purchased multiple orders would take a hit every time. Not to mention those who make a profit through buy low/sell high daytrading. Should they really be charged a *deposit* fee every time they trade? Surely not. The best solution for us was to charge the deposit fee at the time the cash was deposited.

So, when you say the exchange rate is "false", you're really saying "I feel that when people talk about the GOM rate, they should include both deposit fees and seller's commission fees". That is, of course, far more cumbersome than simply stating a number with the implicit caveat that "this number assumes you have cash available in the marketplace". Nothing false about it.

If the majority of buyers felt they only wanted to exchange $4 in total for L$1,000, then the "WANTED" prices would adjust accordingly. Similarly, with the commissions charged to sellers, prices would increase if sellers decided they wanted to receive no less than $N for their L$. That's how the market price is determined. The average motivations of all the buyers and sellers in a marketplace based on all available information.

I think the main problem is that you're thinking of GOM as a store. We are not a store, but rather a marketplace. Buyers who wish to use the market we provide are charged a fee to bring their cash into play. Similarly, sellers who wish to take advantage of our market pay a commission on their sales. The buy and sell prices you pay are determined by all the users on GOM, and are controlled by no one. IGE, on the other hand, is a store. They pay a set price to purchase your L$, then they charge a higher price to sell them. The price they buy and sell at is arbitrary and determined by one individual. This is a totally different business model and mindset. Some prefer the "point and click, fixed price" method of IGE, while others prefer the "open-to-all, best price" system of GOM. Both types of people are A-OK, but GOM and IGE are completely different animals and should not be confused as being remotely similar. Think Wal-Mart vs. NYSE.

Thanks, Blaze. We try to keep operations as economical as we can, and treat our customers the way we'd like to be treated.

I think this is an important point to make. Why do IGE and Anshe charge and pay what they do? One reason only. Because the users on GOM have collectively decided what a L$ is worth. If our marketplace didn't exist, the valuation would be totally arbitrary and at the whim of the most visible seller. Our market gives anyone and everyone an equal opportunity to decide what they think a L$ should be worth, and when buyers and sellers agree, a trade takes place. No price fixing, nothing arbitrary about it. If the price on GOM climbs, then arbitrageurs will buy from IGE and sell on GOM. If it takes a nosedive, then the opposite occurs -- buy on GOM, sell to IGE. Free money, and everyone's happy, because everyone has been able to make an informed decision. Supply and demand, and an individual's priorities rule the day.

An excellent example of the importance of a free market is with EVE Online ISK. When we were trading in ISK (at one point we were the primary exchange site for ISK trading), the buy/sell spread was about what you'd see for L$ -- a few percent. Now that we're no longer dealing in ISK, margins have jumped to ~50%. A free market keeps everyone honest.

Absolutely. This is the case. You have to put your cash in that marketplace, and getting there has some fees from PayPal and commissions are charged by GOM. This is understood by adults playing this market, even as whining entitlement brats don't get it.

The GOM is an index widely accepted in the game. Prices are pegged to it for land, goods, and services -- but especially land -- precisely because it is a very good indictator of value. Even people who never go on the GOM use the GOM's current rate of the dollar as a rule of thumb.

IGE has too many long delays, requires in-person phone calls which seem really intrusive and unnecessary, especially for long-established repeat customers, and has poor customer service.

I completely agree. GOM has a lifelong customer in me. I've been using their exchange since I joined SL -- first as a buyer, then as a seller. Every single transaction has been handled quickly and effectively. The proprietors are totally stand up guys with great support and a phenomenally slick service.

We're lucky to be the one MMO currently serviced by GOM. I wouldn't want to exchange currency any other way. They are my first and only recommendation to new folks with conversion needs.

edit: also, give me an aluminum bat and five minutes alone with any dirtbags who try to defraud GOM.

Im also a customer of GOM. Never had a problem and enjoy their service.

It warms my heart to know there are those willing to do violence on our behalf.