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In an interview with Duranske, Sanchez, who says he is in his twenties, explained that he started a bank in Second Life after reading the biography of a famous banker. “In the beginning, even if I were to fail, it would be fairly easy to just pay people from personal income,” Sanchez told Duranske. The problem, Duranske says, is that the idea doesn’t scale. According to Ginko’s website, current deposits total more than $750,000 in U.S. currency–an amount that Sanchez probably can’t cover using his personal income.

Matthew Beller, who works for the U.S. Securities and Exchange Commission and, as a hobby, writes about Second Life, says that the current growth in Second Life is “an unsustainable boom.” Because the Linden dollar has no commodity backing, he says, the Second Life economy is in danger of crashing when provoked by any sufficient shock. Although the recent shocks may not necessarily cause a run on the Linden dollar itself, Beller says, the danger remains, should additional shocks occur.

As long as Second Life financial markets remain unregulated and mysterious, Bloomfield says, it will be very risky for people to invest in them. There have been recent efforts to increase transparency, however. A Second Life Exchange Commission is now forming, and it’s working to establish standards for in-world businesses. In addition, the heads of two of Second Life’s major stock exchanges, the International Stock Exchange and the Second Life Capital Exchange (formerly AVIX), recently agreed to allow Bloomfield to analyze their data and release the types of reports that are routine for real-world exchanges.

In spite of the turmoil in Second Life’s financial sector, Bloomfield says, he thinks the game’s economy will survive as long as there is continued growth in the demand for virtual goods and services, as well as for real services, such as programming in-game systems. “That, to me, is far more important in determining the future of Second Life’s economy than little hiccups in the world,” he says.

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Credit: Second Life

Tagged: Business, Second Life, e-commerce, avatars, financial systems, Linden Lab, financial markets

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