Wednesday, November 5, 2008

Should Open Virtual Worlds Use the Second Life Currency? L$

The short answer to this is NO. The L$ is uniquely tied to the economy of Second Life and with Linden's limited payment infrastructure, especially lack of alternative payment methods and international payment method reach, the playing field is still open for a "gold standard" virtual currency for 3D worlds. The payment infrastructure (both accepting and exchanging and processing payouts/redeeming payouts from exchange transactions) needs to exist to underpin the virtual currency adoption, use and dispersion. So there is a huge opportunity for any entrepreneur to create an open payment platform to disperse an internationally recognized and cross virtual world/environment redeemable virtual currency unit.

In any event, Ginsu Yoon has blow this opportunity for Linden by repeatedly undermining the substance and nature of the L$ as a viable virtual currency by publicly declaring it a "limited license" for use at the "Second Life product" revocable at will by Linden Lab and other such on the fence spin

Anyway, read on for some interesting points in this article from "OpenSim Development: Show Me the Money!" By Sigmund Leominster, News Editor

At this year’s Second Life™ Community Conference (SLCC) in Tampa, Florida, a group of OpenSim developers and Linden Lab® employees ran a session called “Open Software for Open Worlds.” One of the topics that came up was whether the OpenSim environments would be able to use Linden™ dollars. From a financial perspective, Second Life business owners wanting to set up in alternative environments would benefit from having one currency. In the same way that Europe now has the Euro as an across-the-board exchange medium, so some sort of common monetary unit across virtual environments would be valuable. In the recent article The 4C’s of 3D’s, one of the suggested key factors for success in a virtual world is the ability to handle Commerce, which in turn requires a unit of currency. Second Life resident and businessman, IntLibber Brautigan, described money as Second Life’s “killer app,” the fundamental substrate on which a business can not only be built but thrive. On the Linden Lab side, Rob Lanphier, the “Open Source Busybody,” said that he was unsure at this stage how porting the Linden into OpenSim worlds could be done. According to Lanphier, “We’re not going to pretend we know how to export that in a way that protects Second Life’s economy. I can’t project a timeline.”

This is something of a step back from comments made in a Reuter’s article in July by Linden VP Joe Miller:

“I could see Linden offering economic services, trading services, search services,” Miller said. Some OpenSim worlds may respect Second Life’s intellectual property protections and commerce functions. The Linden Dollar, with a years-long reputation of solid financial backing, may be positioned to become the gold standard of virtual currencies. (Reuters).

Knowing that the number of virtual environments is likely to get larger, it would be prudent for LL™ to take on the role of “international banker” and become more involved in providing a virtual banking system based on the Linden dollar. Experience in the real world suggests that there is a tendency for monetary systems to converge, not diverge, and the costs involved with having multiple currencies and concomitant exchange rates would have businesses wringing their hands. But over on the OpenSim developer’s side, Adam Frisby said that he didn’t see money as being an essential in the early stages of a sim. “Money doesn’t belong in the core [OpenSim] product build.” Frisby is also the Director of Research for DeepThink Labs, a company that provides customized services to virtual worlds. For private sims that are simply an extension of a real-world company, used for conferencing, testing, development and so forth, there is unlikely to be any need for a monetary exchange system. But in the world of public sims, attention to the needs of in-world commerce in terms of a domestic currency may be critical. Waiting, as Frisby suggested, to “ask again in six or nine months” may be de-motivating for current owners of virtual businesses. What they want to do is expand into new worlds and start making a return on investment as quickly as possible: If there is no means of realizing a ROI, why would they bother?

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