Robert Bloomfield, a Cornell University economist and virtual-world watcher who had argued that self-regulation deserved a chance to fix Second Life’s financial problems, says he believes that banks will face runs and be unable to pay depositors, triggering new losses. (See “Second Chance for Second Life.”) But he says that the larger Second Life economy, which by one recent measure has more than 300,000 participants, would not be profoundly affected because people will still be able to make, buy, and sell digital goods and exchange virtual and real dollars.
Yesterday, within Second Life, depositors appeared to rush to withdraw money from remaining banks, such as Midas Bank and BCX Bank, and some waved signs saying, “Linden Lab: Give Us Back Our Banks Now!” By one account, avatars of bank owners gamely stood guard outside their virtual institutions. “In a half-dozen of the largest banks, I saw the owners, CEOs, and chief financial officers all standing in the foyers, putting up notices and attempting to reassure their depositors. The bling! The prim hair! One man even wore white gloves,” wrote Prokofy Neva (whose real name is Catherine Fitzpatrick) in her blog.
Bloomfield is hosting a forum on the matter in Second Life today at 2:00 p.m.; the forum can be found here. One open question, Bloomfield says, is whether the ban would pertain not just to banks but to stock-market exchanges that have also popped up in Second Life. Linden Lab declined to participate in the forum, Bloomfield says.