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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.
Ginko is a resident run bank, which has nothing really special about it. You can it on their own a href="https://ginkofinancial.com/">website: They only claim to have 18,875 accounts, quite a few of which probably were created as a test. Nowhere near the 8.5 million claimed.
:-)
Ginko's problem was their insane interest rates, which IIRC varied somewhere between 100% and 30% per year. I think it was 70% for a quite long time. People accused it of being a Ponzi scheme, which given that enormous interest sounds likely. That's why I never put a cent in it
Video Games are designed to be fun and typically fantasy based. People will give away money to the makers of video games for hours of enjoyment.
The reality is that anyone who lost money on this is getting what they paid for.
The dangers of knowledge trigger emotional distress in human beings.
SL is full of people ripping each other off or ripping real world works off..
SL can either be fun or dangerous depending on what you take it to be.
Example Someone ripping off investors is no different than Suzanna Soyinka (a resident who runs a sim) selling Copyright works of White wolfs Clan Symbols. Except that the IRL companies do not know about it. Tons of residents sell (C) works and get away with it. But no one stops it.
In game these people actually know about it but they were foolish to invest. They even have their own stock marker where in game companies can IPO. BUt no one really regulates it.. Its a new frontier. Eventually once it becomes web3.0 which i predict SL will be... It will end up being regulated.
init 11 - for when you need that edge.
The whole concept of virtual money that is traded in a virtual environment was a "bank-run" waiting to happen.
Linden-dollars (or whatever they're called) are backed by the full faith and credit of Linden Labs. Which is a lot less comforting to the average person than being backed by the U.S. government. Once Linden starts to lose credibility (and how was money "stolen" from the stock market) all those Lindenbacks are going to be worth the bits they're printed on.
I'm shocked, absolutely shocked to find gambling going on here.
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I knew this was coming.
In the past couple of weeks I heard of at least three people who had trouble getting money out of Ginko.
Word gets around quickly in these cases; as soon as people found out Ginko isn't paying out withdrawls they lose confidence and want their money back, just as would happen with a real bank.
Thankfully I have no money in Ginko. No way in hell I was ever going to trust them.
The value of first-world fiat currency has been far more stable than the value of gold. A gold-standard economy can collapse for no meaningful reason simply because the supply of gold is restricted. Those "thousand years" you mention were filled with wars over a useless metal!
"The article is lighter on details than it should be for an article that spans two pages, but it looks to me like someone set up yet another "bank", promising high returns (and actually delivering for awhile), that was actually just a pyramid scheme. Once the pyramid gets big enough the creator always grabs the money and runs, and people cry and write articles about it."
Al very true, but in the end it might just be the game which is a pyramid scheme, not just the bank inside the game. If Lindon were to pull the plug out of the game right now, where would you go to exchange your Lindon Dollars for real ones?
These "banks" and other "economic institutions" are given more legitimacy than they deserve, and their impact is grossly over-stated.
Before casinos were banned the daily SL economy was about US $2 Million per day. That's the total amount of all transactions between residents that Linded Labs (who run Second Life) knows about. It's currently running about US $1.4 Million. That's a big hit, but the difference was people putting money into slot machines. The banning has hurt some people running unregulated gambling scripts, and benefitted the idiots that were feeding them. A wash, AFAIC.
The Ginko thing also only affects a scammer and his victims, and is only US $0.75 Million. Less than a day's economic activity. Those people payed into a ponzi scheme, and like the gamblers, they had no reason to expect a return. Some might say that whatever the "banker" invested in will suffer, but until proven otherwise, his "investments" are probably real-world. That money is already gone from the economy, and it's not an economy-crashing amount even if some of it actually is invested in SL.
The real danger is to the land barons, who continue to buy up all the virtual land The Labs has to offer; much of it up for sale as casinos also sell off their land. Them, and Linden Lab itself, who stand to lose tier payments on land people can't afford to hold. But if a hypothetical sell-off is short-lived and is absorbed by new members and other residents suddenly able to buy cheap land, LL stands to gain as they get to re-sell land that is abandoned; land they already sold once and will get to sell again. The most likely scenario is that land re-sale prices (prices residents pay each other, not The Labs) will go down some, and The Labs will be unaffected. It is probable, in fact, that they want land prices to go down so people will buy more of it. They make much more money on monthly land payments than they do selling land (i.e. server space) to land barons.
The fundamental flaw with gold is that it's only actually valuable because people desire it and it's relatively rare at the same time.
Flaw? Gold is not THAT rare. Major countries sit on huge stockpiles of gold and literal gold mines. If they so chose, they could release massive quantities of gold into the market which would instantly deflate the value of everybody's holdings and crash the economy of any country stuck on the gold standard.
Russia, for example, could dump some of their holdings. This would possibly halve the price of gold, instantly. What, then, would that do to the US economy if it was tied to gold? Chaos. Imagine waking up to find that your investment has lost half its value and you can't even sell it.
Even now, private investors see gold as the miracle investment but it still suffers from the same weakness. A Russia or China or someone else could instantly make that miracle investment into miracle whip.
You don't want to give other countries that kind of power to destroy your financial structure. You don't want to be tied to something you cannot control or worse is controlled by people who oppose you and won't hesitate to undermine what you want.
Sig for hire.
Me lost me cookie at the disco.
Actually, those with money would leave the country and live well because their cash just became worth a whole lot more. Those without would starve.
If those with money left this country in the dead of night, those without could simply raid the storehouses of food left behind. OR, better yet, actually take over the farms stolen by the white man to begin with.
People certainly do need to eat, but there would be no investment. Most likely what you would see would be alternate fiat currency like we saw during the great depression.
Fine with me. Alternate fiat currency takes control out of the hands of the central bankers and returns it to where it belongs, the local villages.
It would mean that we'd be in the same position as Germany pre-WW2. Either we keep paying or we default on our loans. Defaulting on our loans would cause a world-wide economic disaster, so the most likely course of action for other countries that thought we were going to do so would be to threaten to invade if we tried it.
We're going to default on our loans anyway, eventually, so why not do it in one fell swoop? It's not like anybody believes the lie that wealth is created out of nothing, and that's what we have left in the United States at this point, a service economy, a whole lot of nothin'.
It is sensible precisely because it works and doesn't cause us to ruin billions of lives by sending the entire world into a depression.
And it's completely unsustainable and will eventually collapse, ruining billions of lives and sending the entire world into a depression anyway. Once again, all this does is hasten the inevitable.
SJW: a person who perceives an injustice, and while correcting it, commits a greater injustice.