Banking and In-world currency exchange

Perspective...

Imagine that GOM designed an attachment. This attachment would give you the same control over your account with them as the ATM and their web page combined. You can see the latest charts, list the buy and sell offers, make your own, and even add and remove money of both types to your account.

Pretty cool idea, huh? Like a more powerfull version of GOM's ATM, but always with you when you need it.

Now forget the attachment, and let Linden Lab build it into the interface. It's more secure since it isn't written in LSL anymore, it's easier to use since the UI isn't limited to in-world objects and llSay's, and it's more obvious to new players than an object they have to attatch -- even if it comes in their new-uers library.

Add in that LL can now use their established CC billing abilities to cut out the Paypal middleman that has caused GOM so much heartache.

[ Note, they HAVE to also be able to put money ON players' CCs when they sell L$ if they want this system to be used by the big money-makers in the game. Otherwize, those players will need to keep using the old Paypal route through GOM's site. ]

Toss in an option to buy and sell to IGE at their going rate too, just to be fair.


So how I read Robin's suggetion is that Linden Labs is thinking about building GOM's ATM directly into the interface for them to make it more secure, more stable, easier to use (though it's pretty damn easy right now), and available to even the greenest resident.


I'm for it. [ As long as the note above it taken into account. ]

For some reason or other, I have never been able to use GOM, although I would like to. I just can't reach their site.

As I am under the perception that other SL-banks are not as involved in SL as GOM is, I don't know if I would trust them enough to use them, perhaps only as a last resort.

Therefore, any alternatives offered by LL sound attractive to me.

Also, I think this thread may have been started because after GOM and ICE, a third party seems to have appeared on the SL financial market. I think SL want a way to control these parties and minimize the risk of players being swindled.

Finally, I would like to add the idea of extendable LL accounts to the mix. Just as you are able to extend your land holdings, you would then be able to increase you monthly stipend by paying more US$ each month.

Despite having used these services in the past, and despite having to pay through the nose for it just because I'm in Europe, I would still be against this, principally for the reasons Adam and Kex have already given.

A couple of helpful details:

What surcharge (ballpark) is SL going to charge the exchanges to participate?

What maximum buy/sell were you thinking? About $50?

Are you going to auto-debit exchange accounts via wire transfers?

Would GOM even participate in this? Right now they have a mostly zero risk profile as they just charge a listing fee.. They would have to implement partially filled currency orders .. will people want to use GOM with partially filled currency orders?

What is the benefit of participating in this? Are you saying for a minimum buy in you get some return on your investment? So anyone could borrow some money and just pay off the loan with the return they get from SL?

Agree that scaling problems and bugs are top priority. That is what we are all working on now.

This thread is an attempt to engage everyone in much earlier thinking on this big issue of banking and currency. We aren't working on this or planning some imminent release - we haven't done a thing - we are just putting out ideas and listening at this point.

Clarifications:

We think that non-SL banks (GOM, IGE, etc) doing currency trading is the way to go because it establishes a market-based price for currency. That seems to have worked well thusfar.

We don't propose that we sell or create the currency directly (as some have misunderstood). This would be a way to automate the transaction between the user and an external bank.

We think it is important that L$ be bought from other users, not from us. Beyond being a fair way to establish a market, this means that incremental money spent buying things in SL goes into the pockets of those who created the content, not LL. This is a critical component of organic growth.

The problem we feel is important to solve for SL to:

New user joins SL and wants to buy piece of land or a gun or clothing for L$3000. New user currently has L$1000. What do they do?

Under current system, they log out, go to GOM or IGE website (after somehow even finding out that they can go there), re-enter credit card data and create new account. In case of GOM they then have to wait for their chosen bid price to be met (could be days?). Then log back into SL, go back to the place where they found the thing they wanted to buy, and pay for it. This seems like WAY too long for most people who are just getting into SL and don't know what to expect.

If we just placed the order for them (they pick the bank, we do the transaction and send the money to GOM or IGE or whoever in exchange for some l$ transferred to us), this could happen in seconds without logging out.

Tell ya what.

Go to a bank, and ask - "Do you sell canadian currency?"

If they say "no", then I'll happily say I misunderstood completely.

Pretty much any financial institution that sells currency, doesn't have a money making machine in the back room.

No, they have customers (users, in your parlance) who they act as a go-between.

The point I'm trying to make with this is that you are selling currency. Like a bank acting as a go-between for their customers, you are buying and selling currency.

You are not increasing the money supply (ok, well not dramatically at least) Anyways, I get that. Why don't you?


If you are wondering folks, why I am so bitter on this point, is because I invested a significant amount of effort developing a system which would make buying and selling currency much more efficient because I had the expectation that LL wouldn't do this sort of thing.

They have and they are co-opting my effort. This sucks.

However, all that said, I still believe it's the right thing to do. Let's just not make it worse by sticking to guns which should not be stuck too. Start thinking you're all bunch of republicans.. (just a little election year joke)

Actually, the lindens would probably be ever so happier if a user (or group of users) figured out how to do this first. Because for one, they love spontaneous invention. For another, it means they won't have to do it themselves.

The worst that happens is you release your tool/system, Linden Lab looks at it, goes "cool", and asks if they could integrate it into SL. Then you could take credit for being the one that invented the Holy Grail 'o' Money or whatnot.

LF

LF is right, the best solution is probably a totally user-created system. But this seems like a case where that would be very hard because of the need to have multiple accounts/credit-card relationships (both with LL and GOM, etc). This is a real problem - what new user wants to go and setup credit card accounts with multiple vendors? I can't see an easy solution to that other than LL doing the payment processing. Our suggestion here seems like the easiest way to do that - do you see any others?

Phillip--

I think the idea is great. It will make means for accessing L$ much easier for new people. Right now, I am hosting events on economics that tend to have a scary effect on newcomers when they realize it costs "HOW MUCH?!" for land nowadays. Your suggestion would also make money trading much faster and create a more competitive market for L$, which might help to further stabilize the economy. Lastly, with some intervention by LL, I would feel safer knowing my transaction was at least partly through them, so that an incident like the one that happened to GOM back in May-June does not happen again (anyone remember how badly GOM was ripped off?) LL's acting as a go-between for third parties gives a good sense of comfort, and it really shouldn't interfere with anyone's real world ventures as far as I can tell. I say... at least give it a go. If its functionality goes kaput, then let it be scrapped. Admit a beta testing period for a time being.

A beta would be cool. How would you test this? Setup a fake exchange and use the Preview Grid?

One side note to this discussion: if LL facilitates the purchase of in-world currency, then they are implicitly giving a real world value to the objects purchased in-world, to a greater degree than they have today.

If, for example, I use this system to purchase L$1,000 for US$4.50 so I can in turn purchase 10 vendors at L$100 each. I then place 5 of them in world and they are subsequently autoreturned by the parcel. However, they do not reappear in inventory. There is an expectation that autoreturn will function properly and successfully return objects to their owner. Those lost vendors have a real world value of $2.25. It may not be much, but it is out of pocket.

Who then do I turn to for compensation? Currently, the response from CS is generally 'sorry, it's gone' or 'go talk to the person you bought it from'. While these are still an unacceptable answers now, with LL blessing the in-world currency, the objects purchased with this currency will need to be blessed (and guaranteed) as well.

My point is that the in-world currency would no longer be "part of a game" and LL will need to take responsibility for items which are lost by the asset system. My concern would be that without this, there is a good chance that people who have lost objects through no fault of their own will in turn lose confidence in SL.

However... vendors are a resident-solution for prim management. One could just as easily put the object in a box and sell it the normal way. Vending machines are properties of the owner and as such problems with them need to be taken up with the owner. It's an in-world resident dispute if the vending machine doesn't work right; it's the marketer's risk using them as much as it is the AV's risk buying them. Same with if you put a buck quarter into a soda machine and nothing comes out... do you contact the police, or do you contact the vending machine owner?

(bug in this thread wont let posts be deleted)

Daemioth, I was using vendors as an example. Regardless of the exact type of purchased object - whether it be a vendor, single prim cylinder, or complex kinetic sculpture - to the owner there would a real world value associated with it. If a purchased object is lost due to a verifiable system glitch, then recompense should be provided by the keepers of that system.

I see that as pretty sensible. As far as I've known, any time there was a system glitch that resulted in a player's loss of ___, the ____ was compensated for somehow. In the case of vendors, specifically, that shouldn't be the case, but I'm sorry for jumping on your example.

I'm still opposed to the proposed solution. It increases LL's liability when they are at the same time shrugging off more problems onto us to resolve ourselves (see the new "buyer beware" section of the CS) instead of mediating problems between buyers and sellers.

I really think it shouldn't come both ways. If you're going to increase your involvment in currency exchange, then you need to also increase your invovlment in mediating problems with virtual items which are exhibiting signs of having more and more RL value by making changes like this.

I'd also like to hear how LL will deal with the obvious casino gambling legality problem? Implementing this change will make gambling in SL two steps closer to RL gambling, since widthdrawls and deposits will be that much more direct.

On an additional note, I'd rather see SL development efforts focused on implementing constructs to make it easier for us *all* to interface with the outside world, instead of giving new tools to just a few chosen currency-exchange institutions.

I'm still frustrated that XMLRPC is not fully implemented, and that we have very minimal ability to create any GUI elements via script.

If you're going to implement a whole GUI interface for third-party exchanges, why not generalize it a bit so everyone can make use of such a construct to implement their own projects to interface with the outside world?

However, please don't let this note distract from responding to the points I made in the pervious post.

I think that if this idea is really just a UI enhancement to increase access to user-run exchanges, then it is probably a good idea as it will serve to increase liquidity and help a lot of struggling newbies get on their feet more quickly.

However...

1. In my opinion, I think only purchases should be available through this type of system. Sellers should still have to list with each respective exchange.
   
2. There are some technical details that I believe will need to be worked out. As someone else mentioned (blaze I think?), how do you handle exchanges that do partial order fills versus exchanges which do not? I don't believe there are any that do yet, but it is inevitable.
   
3. What about guaranteed quotes? There is no such thing as a guaranteed quote in a liquid market. Let's say someone wants to buy some L$ and opens this interface which is sorted by price as Robin mentioned. Theoretically all those displayed prices are invalid within a nanosecond because the "best price" orders could have been filled already. The only way to guarantee a price is to place a limit order, which then may or may not be filled. Even attempting to subvert this behavior by using a dialog box at the time of purchase does not work because there absolutely is no way in a liquid market to guarantee a price without a limit order.
   
   That said, the only partial solution that comes up in my mind with regard to true market exchanges is to make sure the prices listed are NOT "best price" orders, but rather a price that each respective exchange is "very confident" it can guarantee given the current state of buy/sell orders.
   
   ...and finally, with THAT said, the only true solution to guaranteeing any particular price is to remove the market aspect entirely and buy and sell L$ at a profit like IGE does.
   
   The reason I am hung up on guaranteed prices is that the only way I can fathom for this to work well and "give people what they see" is to guarantee prices absolutely. It could be a bit disconcerting to see someone listing L$1000 for US$1.00, attempting to buy L$100000 and then finding that it cost you US$500 instead of the $100 you expected only AFTER the transaction takes place. That may be an extreme case, but I have seen people file lawsuits literally over pennies.
   

Whew! Thoughts?

This is something i would like to see worked on.

Even a simple enhancement of the existing dialog allowing more than 4 buttons would be a great help.

The ability to push/create an image window on someone's GUI as opposed to in game would be a great help as well.


I would love to be able to create many of the 'social' cardgames in SL but the existing GUI simply isn't sufficient. Theres potential out there for people playing bridge, or spades, or euchre, pinochle, tarot, hearts or any number of other games in a social context, but the lack of a really solid way to show 'hidden' information to selected players (such as a closed hand of cards) makes it exceedingly difficult, and pretty much ruins any enjoyment the games would otherwise offer.

In fact i would say lack of a solid scriptable GUI is probably the single biggest thing holding back game development within SL. Since most multi-player games involve SOME form of 'closed' hand or hidden information.

Philip Said:



The necessity of having multiple accounts with multiple vendors is a requirement you have defined, not one that is necessary for users.

The payment system I developed was an attachment (like a ring, etc).

It would use email/RPC to handle all communications. You would cut/paste the URL that the 'ring' spews out when you perform a buy.

I would allow for partial order fulfillment (necessary). To buy I would lock a certain amount in order to guarantee a price. Not that difficult. Similarly for sales.

The market could appear in world as a bunch of prims so you wouldn't have to go to another website to view what the current market looked like.



It would have the following notecard:


----------------------------------------------------------


Quick Start
-----------

To quickly buy credits at the current market rate plus exchange fees, simply wear the ring and

say by clicking "chat" and typing:


"slebuy 4000" <enter>




To quickly sell credits at the current market rate minus exchange fees, simply wear the ring and

say by clicking "chat" and typing:


"slesell 4000 <mypaypal@example.com>" <enter>




To view the current market, simply wear the ring and say by clicking "chat" and typing:

"slemarket" <enter>



To view this help, simply wear the ring and say by clicking "chat" and typing:

"slehelp" <enter>



Market Options
--------------

To buy at a particular market price, simply say:

"slebuy 4000 1.41"


This will buy $4000 L at $1.41 / 250 L



To sell at a particular market price, simply say:

"slesell 4500 1.43 [email]mypayal@example.com[/email]"


This will sell $4500 L at $1.43 / 250 L and send the money to [email]mypaypal@example.com[/email] when

completed (partially filled orders will be paid as well).



To close out the remainders of your trades (note, they may be partially filled)
say:

"sleclose"

All monies, both Lindens and USD will be returned to you immediately.


** Please note that as orders are partially filled you will be paid out. We do four disbursals

per day, 1 every 6 hours.

Exchange Fees
-------------

Our per block fee is %33 cheaper than the Gaming Open Market.

- we charge $0.02 cents per $250L


As with other services, we simply pass on the PayPal fees when you buy Lindens via PayPal.
If PayPal lowers these fees we guarantee we will lower them as well.

PayPal charges:

- 30 cents per transaction + 2.9% total amount for purchasing



Also note, if you sell at market price we deliver payment *immediately* for sold credits.

This service is not available with the Gaming Open Market.

If you prefer not to get the Lindens immediately, simply sell at a fixed price and you will

receive payment within 3-6 hours of your sell order being filled.



Note for the immediate delivery service, there is a 2% up to a cap of $1 for this service per

transaction.

I also do not like this idea.

Let the real life to $L transactions remain in the users hands.

LL already has land auctions etc... that bring chaos and drive some new people to be homeless, etc..... as I was a very early beta tester and seen SL go through many changes one I despise the most is the land auctions, next followed closely being the newly made feature of all released land becomes auction land....Can we say SL is becoming just a tad commercialized? I understand LL needs to make money...but Dam there is a limit. This would cross it with me, I DO NOT think LL should get a cut from ANY L$ to US$ and vice versa transactions, you get enough from land.

Please do not further commercialize SL against the users by controlling what benifit us users recieve from working hard in SL.

I know quite a few people that work hard that get a real life benifit from real sales of the L$ earned. I would hate to see their work get degraded by devaluing the L$ to US$.

On another note, us Americans are already taxed multiple times on the same $. We already have an oppressive government that hides its motives and truths from its people to further control them and keep them "in the box" Lets hope that we can avoid this feeling in our virtual escape our virtual paradise. If I remember right...something similar to "Virtual Paradise" and/or "Do what you can't do in real life" was in the first article about SL in TIME mag. back in mid to late 2002.

Please LL quit this downward spirial away from what SL once was, and what Philip once said he dreamed for SL (Yes Phil I still hold to the first ideas and stories/dreams of SL type conversations there were.)

I once loved SL so much I would find a way to get around the "time limit" in beta when we were limited to a set number of hours available to login.... I wish I could say that I loved it that much still, but SL has changed too much to the negative for me to even think that anymore.

So a big NO from me, I won't change this opinion in any form.

But as most companies are, LL will ultimatly do what they see fit, regardless of what we might like or dislike. It happens, what can we do about it?

I really don't think it's such a bad idea to do so (set up banking exchange for inworld currency). I understand we as consumer will try to defend our dollars and lindens... but geesh! This is the reason salary rates are dropping: people not seeing the value in services. If anyone asks me to take a package to a distant spot, I might do it for free the first and second times, but once I start getting those requests more frequently, the heck I'll charge!!! Of course!!!
If SL provides some interface where I can get my lindens In-world, safely and when I need it, why not pay a small fee for that? You don't wanna pay it? Well, you can go to the GOM and exchange there for free... it's just a matter of what are your needs.
money makes the world go round!

Ahh, after 2 and a half pages, someone finally makes the most important point.

What is wrong with the existing system? Nothing, as far as I can tell. I have bought through GOM before and sold through both GOM and IGE. This system does nothing for sellers, since they still have to use PayPal to remove their funds from IGE or GOM. It only helps buyers by slightly reducing the operating costs.

Personally, I don't see that the time that would be spent defining and developing the interface is really warranted, since there are so many other more vital issues at the moment. And there is certainly nothing "broken" with the existing system.

The problem we are trying to solve here is that neither GOM nor IGE have sufficient visibility among the average SL consumer.
People are unwilling to pay decent prices in L$ because they believe they should live off of stipends and rating bonuses instead of buying money. They are often unaware that their precious L$ are worth mere cents IRL.
This discourages creation and stifles innovation by making it less appealing to spend time building content for SL as opposed to just about everything else we could do to profit off of our time outside SL.
As long as an SL artist and programmer are earning less than the average fast food slave, SL will never be taken seriously as a platform for digital content creation and publishing.

Wasn't GOM in the MOTD though? You can't get more exposure than that. And they could easily make it look like GOM resided on secondlife.com meanwhile it's still hosted up in Canada eh.