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Bank Run in Second Life
Jamie found an interesting bit about a bank run in Second Life. The recent ban on gambling combined with a $12k theft from the 2L stock market has caused people to try to get their money back. The article mentions that this could supposedly affect 8.5M players even tho most estimates of actual hard core players in the system are in the 5 to low 6 figure range.
How to create a Self-Fulfilling Prophecy? Simple, just tell everybody that the 2L banking system is about to self destruct horribly.
h ecy
It's like a housing price crash you only need to send the correct message to make the stampede to avoid and the very thing you have been warning about comes into being because of the original message. Hell, I explained it badly, Wiki does it better...
http://en.wikipedia.org/wiki/Self-fulfilling_prop
If this sort of thing affects your finances in any major way, you're a moron for "investing" your money in a game. Just because Linden Labs decided to publish an exchange rate for their dollars and real dollars doesn't mean their dollars are a good investment vehicle. Their economy is completely unregulated, and their "banks" are run by anonymous people in foreign countries well outside the reach of US laws (the guy they interviewed is in Brazil, for example).
You might as well call playing the slots in Vegas a retirement plan, it's probably less risky.
Ginko also isn't a "bank" in the usual term of the word; it's not regulated or insured in any way and isn't impacted by any of the legal requirements of real world financial institutions. Quite frankly; you're an idiot if you trust them with your money.
Slashdot social media options: AIM, ICQ, Yahoo, Jabber and Mobile Text. Why no MySpace?
Yeah, kinda like how no one would ever say "price point" in cases where "price" would convey the same information. ("Sony's failing because they make the PS3's price point too high.") And when challenged on why they felt the need to say "price point", they would never go on a long, condescending diatribe about the economic theory of "price points", dodging the matter of why it was necessary to say it in *that instance*. And they would never feel smug and superior for doing so.
Apology to Ubuntu forum.
Well, SL really isn't much of a game. You can implement games inside it, but it's not a game itself.
And while some people do have lots of fun there, others do business. Business is quite possibly to do successfully in SL, but just like in reality they go bankrupt as well when things don't go as planned.
The most interesting part of the article to me, though was this tidbit:
Now, s/Linden dollar/U.S. dollar/ and s/Second Life/U.S./ and the sentence would still be correct. Go ahead, try it. Read it again. Because the U.S. dollar has no commodity backing...
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Okay, but why would you invest your money in any bank in SL, even if they have reasonable rates? You can get around 5% interest these days in an online savings account, FDIC insured and backed by a real life regulated bank. If you want more, you can go for mutual funds or individual stocks, all of which are regulated. Sure, there's a risk you'll lose everything, but these things are at least regulated so you have some recourse in the unlikely event that your stock broker takes off to Aruba with your money. I would consider investing in a Second Life bank as riskier than putting your whole savings into junk bonds or giving it to some random person on a street corner to invest for you.
If you want to throw some cash in there as a gamble, just to see what happens, and losing that money would not really affect you in any way, then go for it. However, the article tries to suggest that an SL economy crash would seriously affect a lot of people, and I would say anyone who is going to lose their shirt over this was probably going to lose it eventually in some crazy money-making scheme anyway.
Right. But what would happen if the U.S. dollar no longer had sufficiently high demand? As in, the government printed too much or currency, or everyone said, 'fsck this, U.S. dollars aren't worth nothin' in my book!' Again, it's not backed by another commodity. It used to be backed by gold, but is no longer. BTW, Linden dollars are also of similar 'limited supply', even if they're only virtual. (If you disagree with this, remember that there isn't enough U.S. currency on the planet to cover all of the outstanding U.S. dollars, because that money, too, is virtual!)
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That's a bit disingenuous - I challenge to post a link to a picture of "value." The very notion of value is virtual, since the universe certainly doesn't care whether there's gold in them thar hills.
And don't fall into the trap of thinking that gold is somehow magical in its ability to have value. Gold is only valuable because people say it is, just like the US dollar. The only difference is that the scarcity of gold is based on physics and the relative difficulty of building a supercollider, while the scarcity of US dollars is based on the desire of the US to have a functioning economy.
If you don't believe me, think about how you'd value the following if modern civilization were to collapse - potable water, food, matches, ammunition, tobacco, liquor, coffee, paper, gold. Now imagine everyone else thinking the same thing (because civilization has collapsed).
Reality has a conservative bias: it conserves mass, energy, momentum...
If 50 billions flies eat sh*t, it means that's worth tasting! -50: sub-troll
Maybe Computers will never be as intelligent as Humans.
For sure they won't ever become so stupid. [VR-1988]
Yes, I'm totally down with the sentiments at http://www.getafirstlife.com/. There is no need for a second life if you've already got a first one.
But then I stop and think for a second, and I realize that Second Life in general, and events like this in particular, and the attention they get, are good things for a specific reason. Most people don't have the vaguest notion how their first life actually works. Getting in on the ground floor of a micro-society that would like to mirror all the stuff its external macro-society has, but has to start from scratch, is incredibly educational.
The gambling ban is one example. Put aside the obvious explanation of conflicts with real-world anti-gambling laws for a moment, and assume that the inherent untrustability of player-run gaming is reason enough. Follow that through, and you realize that the problem could be mostly fixed with a regulatory program of standards, inspections, and certifications. Surprise, surprise: That's exactly what the Nevada Gaming Commission does.
The bank run is an even better example. Someone who takes their real-world bank account for granted may not realize that putting their money into the hands of a stranger with the promise that they can walk up to an ATM and take it back out any time is any riskier. When there's a run and the demand for withdrawals far exceeds funds available, they may realize that their deposits were completely at risk because there was no trusted body that could guarantee that they would keep an eye on the institution's behavior and back them up if they were unable to keep their promises. Guess what: That's the FDIC.
If anyone comes away from Second Life with a little more appreciation for the ways that even the most flawed government allows its constituents to live safer and easier, then I don't hate it. Say what you want about the furries who populate it; it's still an interesting social experiment, and I'm curious to see how closely its development of these kinds of infrastructures will parallel the history the real world. Perhaps people will seize this opportunity for new and creative solutions to well-known problems.
e.g. http://www.mises.org/fullstory.aspx?control=1595 but you're exaggerating its impact The fractional reserve system multiplies the impact, and... Really, take a look at the effect of exponentially increasing debt on the economy, society, on the environment. Look at who gets the cash and who gets the poverty. As long as people know the approximate range by which it will expand the money supply, they will demand an interest rate on their lending that eliminates this effect. Fine if you're in a position to buy government bonds. For the rest of humanity though? The waitress waiting tables for minimum wage.
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In regards to:
Now, s/Linden dollar/U.S. dollar/ and s/Second Life/U.S./ and the sentence would still be correct. Go ahead, try it. Read it again. Because the U.S. dollar has no commodity backing...
The US dollar is backed by the full faith and credit of the US government. Arguably more trustworthy than the owners of these virtual banks that we will refer to as "some dude"
It allows the government the ability to pay for anything it likes which leads to the inevitable increases in power of the political elite, the banks and the largest multinational corporations which service government interests.
It requires an exponentially increasing economy and debt burden just to maintain the status quo and make interest payments. This has a devastating effect on the environment and human being's work/life balance.
Those are just off the top of my head. There are more disadvantages.
The currency shapes our society.
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*recognizes nick* - No wonder you ever got help with your Ubuntu problems because you're a total asshat, and you keep whining. People well versed in the matter subject don't automatically dumb down their conversation and if we're discussing price theory and the PS3, price points are a necessary precision once you pull up a simple price-quantity curve. If you ever hear two doctors conversing at a gathering, they will probably also continue to use medical terms, even if in that sentence, taken by itself the same information could be conveyed using simpler layman's terms. You also don't want to hear why it's important to be more precise at times or learn anything more about the subject so you can take part in the discussion, instead you accuse them of elitism for failing to make it accessible to you. The world doesn't exist to accomodate you, and it's no wonder people tell you to put a sock in it.
Live today, because you never know what tomorrow brings
This is a real problem. Plenty of vendors sell the unauthorized work of others. In the case of one "artist", I found images just last night that I recognized from another, real world source, signed on each image by the vendor; the clearest example of IP "theft" I can think of, and certainly a lot more flagrant than any music sharing that pisses off RIAA so much. But I don't think it's that big of an issue. This kind of copyright infringement is rampant throughout the Internet. Look at the content of YouTube, for example. And at the same time this is going on, there are genuine, original artists to be found both in Second Life, and YouTube. To some extent, I see this as an example of the marginal value of both venues for creative expression. There aren't enough people in either environment for plagiarists to be recognized for what they are yet. Additionally, there's a tolerance on the internet for copyright infringement ... in part because organizations like RIAA and MPAA have made pests of themselves and created a "fuck you" attitude towards IP, and also in part because people in general tend to be lazy and inconsiderate of the work of others.
Might as well put it in the lottery. If they're returning 100% interest, then someone is getting screwed somewhere.
Banks make money through investing in other people's projects, and by loaning money for interest. Like everything else, it's a diminishing return, so you can't loan money at an equal rate to the interest rate you're giving your depositors, so either they're loaning your money to people at an interest rate that is higher than 100%, with no possible way to collect on a bad debt.
Chances are they were using that money to finance one of the now-illegal casino's, which would make sense, as that's about the only way to make money in SL that would actually require an input of cash. Now that they've tanked there is basically no longer any point in a bank that actually pays interest. There is nowhere for the money to come from.
ad logicam Claiming a proposition is false because it was presented as the conclusion of a fallacious argument.
And they've been holding interest rates steady, despite the obvious need to lower them to juice up the economy.
Pay attention, people! I believe that the U.S. economy is currently collapsing under its own weight. This collapse should be completed within the next 4 years. This is going to make the Great Depression look like a temporary market correction.
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"Dollars have a value because the supply is limited."
The supply of Confederate dollars is much more limited, but they are essentially worthless.
The only thing that gives anything value is what someone else is willing to do in exchange for it. People accept dollars in exchange for other things in many places, so it has value as a currency. Why do they do that? Only because everybody else does.
Let's go to the desert island model that's always so helpful. Two people on a desert island, one has water, the other has dollars. What's the inherent value of a dollar there? Nothing. There's no way the guy with the water is going to give it up unwillingly in exchange for dollars.
Now the guy with the water sees a rescue ship on the horizon, and offers the water for $100,000. Why? Because his perceived value of the dollar just went up, because he knows he will be going back to a place where everyone else accepts the dollar.
It seems odd that the value of currency is based completely on emotional things like "willingness," but really that's the way it works.
If moderation could change anything, it would be illegal.