Banks Banned in Second Life

Linden Lab has announced that virtual banking within Second Life is to be banned effective January 22 after receiving multiple complaints by Second Life residents scammed by bank operators. Banking and associated services have become popular in Second Life over the last two years, with many offering ponzi style interest schemes that usually sounded too good to be true. Ginko Financial was the best known failure amongst Second Life banks, owing 200 million Linden ($750,000) to depositors when it declared itself insolvent in August 2007. In a post on the Second Life blog, Ken Linden said that as well as not being able to provide protection to Second Life users with these banks running, their legality under law is also questionable. The decision is unlikely to affect virtual stock exchanges but may affect groups such as Second Life credit card provider Metacard, who also previously offered bank services as well. Second Life banks are experiencing a run on their funds as customers seek to get their money before the ban comes in place. Companies such as JT Financial have been inundated by customers wanting to know what is going on. Screen shot of the JT Financial crisis meeting below. Banking joins bestiality and gambling on the banned in Second Life list.

Related issues arose in a 1-1 between a Linden Exec and a Cornell Economics Professor where Linden repeatedly characterized SL as a software "service" or "product" and distanced SL from economic nomenclature; "Yoon dodged Bloomfield's questions about Linden Lab managing a monetary policy in-world by repeating his mantra about the metaphor being a distraction from Linden's business of offering a service to customers. Yoon likened Linden's business offering Second Life as “software as service” and drew parallels to both an Internet Service Provider offering e-mail services and a company like eBay offering a platform where customers can transact business amongst themselves. I found it fascinating that Ginsu dispenses with the usual metaphors like thinking of in-world activity as an 'economy,' Lindens as 'money,' or sims as 'land'....or anything that would interfere with his preferred metaphor of 'SL as product,' said Bloomfield after the panel. “This very pragmatic perspective does a nice job of making what seems novel and complex - World of Warcraft with real money? - seem familiar and straightforward (such as) E-bay and e-mail with great visuals.”

Bloomfield wondered what Yoon might be “throwing away” by eliminating the metaphors. He pointed to the fact that Second Life does have an economy and believes that Yoon should be thinking about “the supply and demand of product features that are traded freely among customers.” Regardless of Yoon's perspective, the “product” is still novel and complicated, Bloomfield said. At the start of the panel, Yoon admitted that he tends to see things in “black or white” terms and that his views do not always reflect the universally accepted views within Linden Lab. Said Yoon, "Give people what they want from a product perspective – Linden Lab has a responsibility and opportunity to satisfy user demand, to give them the product functionality they want.”" www.slnn.com/article/metanomics-ginsu-linden/