The banks are shutting down!

Ginko ATM in Second Life Well, they are in Second Life, at least; Linden Lab, creators of the anarchic virtual world, have stepped in with a major change to the terms of service that bans individuals and organisations from running finance operations that offer “unsustainable interest”:

“Usually, we don’t step in the middle of Resident-to-Resident conduct – letting Residents decide how to act, live, or play in Second Life.

But these “banks” have brought unique and substantial risks to Second Life, and we feel it’s our duty to step in. Offering unsustainably high interest rates, they are in most cases doomed to collapse – leaving upset “depositors” with nothing to show for their investments. As these activities grow, they become more likely to lead to destabilization of the virtual economy.”

This move is doubtless triggered by the final collapse of SL Ponzi scheme bank Ginko Financial – though the threat of lawsuits from people who lose significant amounts of real-world money probably has a part to play as well.

Economist Robert Bloomfield is a little disappointed, as he saw the SL economy as an experimental control group for learning how real-world markets operate, and he wonders whether some of the stock exchanges will continue to operate – if the Linden Lab rules provide sufficient loopholes for them to do so.

Meanwhile, Ian Betteridge wonders if we’ll see real banks stepping into the breach. [Image by ChikaWatanabe]

[tags]metaverse, Second Life, banking, economics[/tags]

3 thoughts on “The banks are shutting down!”

  1. I talked with Intlibber this morning about the issue.

    I wonder, how difficult can it be for Intlibber to register as some sort of bank, produce a lawyer’s or accountant’s statement making very plausible that he is indeed ligitimate. I truly believe this is an opportunity
    for him, rather than a death blow. If he succeeds in presenting his business as falsifiably trutsworthy and competent enough to return a profit as well as being as safe as a real world bank, he’ll be able to achieve a brand name familiarity, as well as attract a lot of real world publicity.

    Linden Labs has been noticed makes sweeping, callous moves in their bans – These tantrums will amount to very little other than stifling evolution. I can instantly dream up a dozen ways that bypass the strict legalese of gambling or banking bans. I can envision tupperware-style investment groups in SL – Linden
    Labs will be wholly incapable of banning those anywhen. There will always be marks for cons as well as sensible centerpreneurs seeking to invest.

    On the other hand – I can also see very well the loss in business, especially from noobs, who are taken advantage off once. Is Linden Labs protecting it’s little
    potato patch from vermin, right?

    Wrong – this is a medium that needs to evolve to survive. I see a worrying trend in frantic paranoia
    in Linden Labs. Their development style, even with all their rhetoric about open source servers and multiverse, strikes me as increasingly cramped and defensive. They to afraid to experiment.

    If I were Linden Labs, I would have create an anarchic zone. Teleporting in the anarchic zone – you get to agree with a disclaimer. In that zone, there are banks, investment schemes, anything. You are on your own. Someone dupes you there, it’s your own responsibility. Then go and disallow anything shady in the non-anarchic zones. You then could easily go and
    classify areas for specific types of conduct – as long as LL makes sure these wildlands don’t turn into nonviable ghettos.

    The time comes when one of these spastic decisions will bite LL in the hand, probably after someone sues them for a big pile of money – or forces LL to turn back some kind of aspergic, fantasy-less dictate. If I were Intlibber I’d be studying the TOS real good and talk to a lawyer. At some stage LL can’t just go and dictate merrily it wants all roofs pink – this place is not their property philosophically; it’s ours, the owners, the residents, and LL is slowly moving from being a cost to being a paid curator. A janitor.

    Janitors should know their place.

    Unthinkable though it may be, it’s about time regular SL users unionize and lay down some serious demands.

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