Banking and In-world currency exchange

That was very eloquent of you, Sir. I find your remark very interesting and wish to subscribe to your newsletter.

Woof.

Very good comments made above by other users. Though, I must say, I think all laws will need to deal with where you are hosted (level3).

Couple other points:

You are now buying and selling the currency.

You control the amount of lindens, you control how the currency is traded, all IGE/GOM control is the price.

This will now be a commodity product. Is someone's lindens better than someone elses? Maybe my GOM lindens will go a little further or not wear out as faster? The answer is: no.

Therefore, price will be 100% the determining factor. The winner: IGE who has the lowest merchant account fees. Unless SL is becoming their merchant account .. ??

You'll probably want to get your lawyers to look into the Patriot act as well before you become a source for international money laundering.

Thanks for asking for feedback, Robin. I can understand how for the sake of the game you really want to make this work.

In fact, just having links to these currency exchanges on your website may run you afoul of a lot of these laws.

But maybe this just isn't an experiment in graphics engines. maybe this is an experiment of laws, as well?

Addendum:

I guess one solution is simply to let users buy, just don't sell the currency. IANAL, but that might keep you under the guise of "play money" .. as long as you get rid of those IGE / GOM links on your website.

And let's face it anyways, the only people who want to sell the currency are those people who are willing to go to a GOM / IGE / etc.

Is the apache team responsible if i host an online casino? Is the firefox team responsible if I use it to download warez? If I use PayPal to fund international terrorism, are they liable?
Linden Research Inc. provides its customers with an integrated solution for viewing, developing, and hosting 3D online content, coupled with an easy to use micropayment system and search engine among other things.
If Microsoft provides me with both IE, IIS, and some hosting space, are they responsible for me hosting kiddy porn?
No. *I* am the casino baron, terrorist, or pedophile. Not Microsoft or the firefox team. Not Linden either.

I like it.

Is it possible that this discussion has had real world effect on currency transactions in the past 24 hours?

Please, LL, do not go into trading you own currency.


$L Heading South on GOM




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I am against this since there would be nothing to stop them from just creating an unlimited supply of L$ to meet the demand at cheaper rates. I think the current system, with completely independent dealers, is best.

I'm not opposed to this idea. LL isn't proposing to get into the currency exchange business themselves. They're offering 3rd party traders a way to make doing business with them easier without having to leave the SL client to do it. I would be very much opposed to LL trading currency themselves, but so long as it's just a way to make it easier for people to use the 3rd party services it sounds like a good idea to me.

Third party currency exchanges already have the capability to handle transactions in-world, I don't see the need for Linden Labs to insert themselves in the middle of it.

Right now at a GOM ATM in-world, I can deposit and withdraw Lindens. There's nothing technically stopping GOM from enhancing their ATMs to also allow be to submit buy and sell orders in-world, or to offer a "buy lindens for $x.yz now" option to their ATMs. IGE can do this too.

If there *are* technical limitations due to missing functionality in LSL, then I think Linden Labs should add that functionality into LSL, rather than making themselves middle-men.

That said, I *would* be interested in seeing an option from Linden Labs to pay my SL account fees directly from GOM (or IGE) instead of from a credit card. That would remove Paypal as a middle-man. And, as I've already indicated, I'm all for avoiding/eliminating middle-men.

Now that's a good idea! Everybody wins! LL saves CC processing fees. GOM and IGE get more trading. And the rest of us get convenience and lower costs.

- Ace

I'm opposed to this.

This idea makes me very uncomfortable. I think the currency exchange process should be completely independent of Linden Lab and Second Life.

Also, given the problems we're having with 1.5, developer resources should be spent on getting us back to stability.

Resources need to be spent on improving scalability, as it seems like the grid is coming apart as the population grows.

LL needs to stay focused on the world, not it's meta-finances.

What problem are we trying to solve anyway? Let's define the problem and find a better solution for it.

Ok this is my feeling on Dollars for Lindens.

If the Lindens get into the business like There is, then please do it exactly like There does when you try to get There Bucks. Direct purchase with Visa Card, no going through a third party (Like Pay Pal, not GOM) and above all....

DO NOT USE PAYPAL. I had an old account that was closed due to inactivity and now they will not let me cancile it. They told me if I want a new account, I would have to get a new Bank Account and no way Will I do this.

I think its a good ideal so long as they do it the way there does... Direct Purchase.

I had too much trouble with Pay Pal and old accounts.

Now that being said, if some organizations like GOM were to boot Pay Pal and switch to direct Visa payments I would use them.

I agree to an extent with you. However I cannot use third party groups to get Linden Dollars because, Paypal, Will not let me use my current Bank Account (My only one) Because it is attached to an old un-used Paypal Account. If exchanges like GOM were to boot Pay Pal, and accept Direct Credit Card payments (Debit Cards too) I would use them.

You can set up an escrow account with us and get your Linden's via the escrow account - just find someone who will act as your proxy.

I agree. The current currency exchange system works fine, and it maintains the "arm's length" principal, which is a cornerstone of any business. LL throwing in directly with currency exchanges tears down that barrier. They might have to "buy in" - what would that mean, exactly?

I'm going to be perfectly honest here. The sound engine has been buggy since 4.0.0. Several times a day, I wind up getting taken out of my aircraft and set on the ground when I cross into a new simulator. Teleporting lands me in Water World half the time. I can't even do a basic search in a script window, and 24/7, there is packetloss for people all across the grid, even if they are totally alone in their sims and sitting perfectly still. Put yourself in my shoes and ask yourself, "How does it look that LL is talking about undertaking a huge overhaul of the way people trade currency, when there are so many problems that have gone unresolved for so long?"

If this is a project to be worked on by those who are not tasked with fixing these and other very bothersome issues, I can understand it, even though I think it is a bad idea (even if SL was reasonably bug-free, which it is not right now) for reasons I've already stated.

SEC/CFTC issue would be the biggest. If LL is seriously considering this then they should look into how PayPal works.

But i would like to see some regulations of the gambling industry of SL.

I think LL buying money as a proxy for the user through an exchange and charging it to your credit card is a legistical nightmare. But what i do think is a good idea is tighter integration with the Exchanges. This could be done with custom client windows (see below). Then at some later date when this is working, buying money via proxy could be added (as if you F*** up ANY part of this people will literaly hunt you down).

The window standard used for SL is pretty simple. Allow each exchange to have a set of windows that they must supply from their websites in the format that SL uses for windows. (the client loads the xml file from the website)

The best place to hide this new feature is under the money indicator; make it a menu.

mockup of menu


I wish LL had just posted the idea of tighter integration with the exchanges and left out the proxy buying.

I don't think this is a good idea now.

Thinking about all the ideas...

- This would be taking resources of Developers away from fixing bugs & adding features.
- The benefit is making something already easy, easier. I've used IGE and it took me all of 5 minutes.
- I understand LL might want a piece of the action, even 1% off the top could be profitable... but consider gambling is not the worst thing L$ have paid for. Forget getting the gambling commission involved being the worst thing that could happen; how about litigation for the "escort" services that go on? Or worse, what if someone comes in SL and is secretly selling child porn? Or other illegal things?

At first this seems like a good idea, but I believe it's a waste of resources, a legal hassle, and a huge legal risk.

More like "Go to list of currency exchanges" and then it goes to secondlife.com/exchanges or something like that, and on that page you have links to GOM and IGE and whoever else might get into the business in the future.

Well, let me start out by saying that I have an incredible "pro-GOM" bias. You'll be able to tell that by reading this post, but I thought I should be up front about it. VERTU only works because Zeppi (Jamie Hale) has put in a lot of long hours and hard work to make it work - by creating the Donation Boxes, giving us commission-free trades, placing and maintaining the DBs, and just being an all around huge help! When we first started planning VERTU, we contacted both GOM and IGE. IGE never even responded to our queries.

Second, let me say I haven't been able to find Zeppi's opinion posted here anywhere - and if said "this would be great" then I would say "hey, this would be great!" Because I don't really have enough of a head for financial markets to see the "bigger picture" here.

But with all those qualifiers out of the way, I would like to say that I think this SOUNDS like a very bad idea. First, because Zeppi has spent a LOT of time creating an in-world ATM system to provide just this sort of convenience to his users - and this would turn around and instantly remove that competitive advantage. It wouid essentially create a single "customer service experience" whether one used IGE or GOM. IMHO, the biggest competitive advantage GOM has is its dedication to CS and SL in general. This would basically reward IGE for having been lazy, waiting until Zeppi created an inworld system and then for LL to "nationalize" it. I think it kind of flies in the face of the overall model LL seems to have of leaving SL entrepeneurs alone to sink or swim.

However, I also recognize these third party traders aren't LL's primary concern. And I have to admit that this makes sense for the basic user population. I wonder how many newcomers we lose when they run out of money? It's very unclear, particularly if you don't read the forums, how one would go about getting more. And since we attract a crowd that isn't necessarily part of the hard core gaming community, you can't expect them to know of these sorts of exchanges upon arrival.

So, I guess what I'm saying is "dunno". <grin - sure took a lot of words to say it, didn't I?> I trust LL to eventually make the best decision... but only because they ask for feedback like this. So there is mine.

Transaction Costs are the only Differentiation

This will kill GOM. GOM has a 2.9% transaction cost with PayPal. IGE has probably a 2.5% or less transaction cost because of their volume and rating. Price will be the only difference and IGE will win. Hands down.


What will SL co-opt next?

Because of management missteps, the issue becomes (in part) - developing for SL is a dangerous path of what will they co-opt and what will they not co-opt?

However, that aside, we all need to recognize something, if SL doesn't make a feasible business there will be no SecondLife.

It's very unfortunate that they didn't start out of the gate selling currency. It's also very very unfortunate that they have made very irresponsible claims like "We will never sell currency" - this is selling currency.

It has undermined the credibility of all management (you know who you are).

However, most people have seen through the facade, hopefully management will have enough pride to own up to it.


Mistakes aside, this is fundamentally necessary

That all aside, I support SL in doing this. We all make mistakes and it's the faster you recognize them the faster things get better.

Liquidity, trust, and efficiency needs to be injected into the economy. There will be some creative destruction going on at first, but the new and far more responsive economy will be better for everyone.

No, they wouldn't be selling money. That's what There does. With There, you can buy an infinite amount of Therebux directly from the company. You can't (and won't) do that with Linden Lab, because they understand basic economic tenants such as inflation.

It's still a silly idea, though.

LF

How about another good reason not to do this:

Many (if not most) online games which use an in-game currency will at one time or another experience an exploit which results in currency duping.

Fortunately, so far, SL has not experienced this problem. However, as the monetary systems grow more and more complex, this becomes more likely.

Sure, you can say "well, they'll just double check everything and make sure all the code is carefully written" but I have two responses to this:

1) Don't you think those games that got dupe exploits were also careful with their money handling code?

2) Given SL's buggy instability lately on many fronts, is this risk worth taking, since one bug in the money handling system could ruin the entire economy?

SL has had a SOLID money handling system so far. Let's not cut into that stable structure and risk weakening or destroying it completely, especially for something frivolous.

You want to spend time to bring something in-world from the web? Bring the auctions inside.

Increasing the money supply and selling currency are two different things.

If they meant that they wouldn't increase the money supply beyond stipends, then they should have said so.

They are increasing money supply for USD btw, what do you think the $9.99 / month is all about?

Selling currency is providing a UI where people can buy currency.

No, actually they don't. You have to use paypal, yowcow, or send checks or money orders. You cannot currently purchase L$ using a credit card from a 3rd party exchange in-world. You have to leave the SL UI to visit a 3rd party website. LL is just contemplating making it possible to do business with these 3rd parties from within SL, including processing the credit card transactions. I'm not sure why people feel this is a bad idea. It would actually help GOM and IGE by making it easier for casual SL players to do business with them when they otherwise might not go through the hassle of setting up a paypal account or purchasing a money order.