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Virtual Currency

Are Linden dollars real money?

Wednesday, August 08, 2007

By Erica Naone

Are the Linden dollars I discuss in my article on Second Life's economy real money? Linden Lab itself seems confused by this question. The company has encouraged people to think of the Linden dollar as real money by running the Lindex (where Second Life residents can trade Linden dollars for U.S. dollars), and by including a section on its website about business opportunities in Second Life. But it also carefully avoids legal responsibility through the language in the company's terms of service: "Second Life 'currency' is a limited license right available for purchase or free distribution at Linden Lab's discretion, and is not redeemable for monetary value from Linden Lab."

What I take from this is that Linden dollars are real money as long as Linden Labs allows them to be. For as long as they have an exchange rate with U.S. dollars, I can transform a virtual income into a real-life income. On the other hand, depending on Second Life for income is a risky illusion. Linden Lab's terms of service notifies users that the company can pull the rug out from under a virtual savings account at any time. No virtual income is safe as long as it depends on the whim of a single company.

This no-man's land -- where money is real, but only as long as it is allowed to be real -- is fascinating to me. I sometimes wonder if so-called real money is also a shared illusion -- the difference being that real money is backed by governments rather than companies.

Tags: second life

Comments

	a comprehensive theory of money vzn on 08/08/2007 at 11:00 PM
Posts: 4	read about a comprehensive theory of money. its not quite what you think it is. about inflation, deflation, panics, runs on the bank. so far, hackers are slow to discover the ultimate machine-- our money system. read it free-- a paper I wrote called "fractional reserve banking as economic parasitism" endorsed by two phd economists. printed in nexus magazine, 60k world circulation. #1 top downloaded economics paper. used by economics teacher in australia as standard classroom material. more info on request. "fractional reserve banking as economic parasitism" http://econpapers.repec.org/paper/wpawuwpma/0203005.htm recent supporting material: "confessions of an economic hit man" http://www.democracynow.org/article.pl?sid=04/11/09/1526251 Rate this comment: (Reply)

	believing in money jeep1104 on 08/14/2007 at 12:05 PM
Posts: 5 Avg Rating:	"Real" money has value only because we believe and trust it has value. A $20 bill is only paper, worth nothing. The value is in the characters made by ink that we perceive and trust. Don Bailey, Denver Rate this comment: (Reply)

	Second Life and the Greatful Dead willettte on 08/14/2007 at 3:03 PM
Posts: 1	Not saying that SL will end anytime soon, however, there were a lot of people who sold hotdogs in parking lots (made money indirectly from the G.D.) quitting their day jobs to join a following. Once the ride ended, there were many lost souls trying to figure out what they were going to do. Rate this comment: (Reply)