Archive for the 'Virtual Economy' Category

Latest Second Life Financial News

December 19th, 2007 | Category: LindeX, Second Life Money, Stock Exchanges, Virtual Economy

From: Second Life Blog Economic Key Metrics for October and November 2007 Quote from the site - Key takeaways: In November, we had another slight reduction in overall Logged In User Hours (our first drop was back in August) that is related to the Unplanned service outages. Overall economic metrics continue to trend slowly upward, including the Lindex exchange figures and resident-to-resident transactions.

From: Second Life Blog Financial Statements For Everyone! Quote from the site - Many Residents use Second Life in a professional capacity. As such, being able to both keep and present detailed records of financial transactions is vitally important. To help you with this, we’ve added a new page to the “Your Account” section of the website: Account Statements.

From: Second Life Herald Op/Ed: Financial Myth Busting Edition Quote from the site - When Ted Castronova wanted to study a virtual economy, he decided against using Second Life. A number of people thought that was foolish because SL already has an economy. But SL is not like other MMO economies for two reasons; the LindeX makes asset prediction impossible and residents do not make predictable economic choices.

From: The Dewey Blog Second Life Quote from the site - A recent blog entry on foreign exchange rates elicited the comment/question, “Where would you class the Linden dollar?” The answer is that the Linden dollar is classed in 332.4 Money, given its including note for “other mediums of exchange.”

From: Wayne Porter Ebay powers Second Life and Live Gamer and Twitter Blackjack Quote from the site - Mashable reports on a new service that finally gives gamers what they want- a free economy of sorts. Backed with $24 million in VC from Charles River Ventures, Kodiak Venture Partners, and Pequot Ventures, LiveGamer went live targeting MMOGs with a platform to trade virtual goods. Andrew Schneider and Mitch Davis, (ad startup Massive sold to Microsoft) Live Gamer brings a sense of respecatbility to trading virtual goods. Suddenly that +3 Vorpal Blade of Troll Slaying takes on new and potent economic meaning.

From: SL Capital Exchange SL Capital Exchange to replace SkyRanger Hammerer Quote from the site - It is with some regret that I report to you that SkyRanger Hammerer has been relieved of his duties as SL CapEx Compliance Officer and is no longer an employee of the SL Capital Exchange or its parent JT Financial.

To be very frank, the MAJORITY of companies now listed are out-of-compliance in some manner or other - either via Errors and Ommissions in the requisite monthly Financial Reports (at MINIMUM an Income Statement AND Balance Sheet) in a GAAP-compliant format submitted no later than 10 days following the last day of each month, or in the mandatory WEEKLY UPDATES CEO’s are expected to file.

From: SL Reports Press Release: Goldflake comments on WSE notecards Quote from the site - The World Stock Exchange (WSE) has been distributing a notecard to the users registered at their website. While we commend the intention to inform and educate the users, we strongly disagree with section 3 (Banks and Exchanges) in the aforementioned notecard.

First off, the WSE claim to hold a 95% market quota is a joke at the best and we refer you to this post written by an independent and unbiased observer .

From: Orient Lodge Analysis of Second Life Exchanges Quote from the site - People have questioned how this 95% market share is calculated, and I must admit, I have no idea. So, I thought I would do a little digging into data available from the different exchanges. The International Stock Exchange (ISE) appears to provide the most detailed data, which can be aggregated.

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Second Life Financial News

November 26th, 2007 | Category: Banking, Second Life Money, Stock Exchanges, Taxes, Virtual Economy

From: Your 2nd Place Taxes……does that mean refunds? Quote from the site - You know I was sitting in the Emergency Room with my mom at hmmmm 3a.m. this morning….reading an August edition of Time magazine. Flipping through the pages I see, oh what do you know?….an article about Second Life….Second life and taxes…..I do not recall (famous last words) the dollar amount they say people made in Second Life……and if the government should tax those monies….well I for one hope they do!

From: Second Life Herald Midas Bank Insolvent - Trouble On The WSE Quote from the site - While there have been some concern about Midas Bank’s financials, no public signs of trouble occurred until November 2nd. Midas Commons released a notecard stating that an interest payment that was due on Hope Capital Bonds (HCB) was not paid. Midas reported having L$3.5 million invested in HCB. The Second Life Exchange Commission reports that L$650,000 was owed to Midas Bank as the interest payment on their HCB holdings.

From: Orient Lodge Commodity Trading, Coming to Second Life Quote from the site - Quanta was planning to set up a bank in Second Life where the deposits where backed by gold bullion at The Bullion Vault in Zurich. I’ve been interested in watching commodity trading coming into Second Life. I had a great discussion about this with Quanta when he first bought the land and I’ve been waiting for the next developments.

From: SLOz World Stock Exchange facing legal problems? Quote from the site - The Second Life Herald are running a story on the Midas Bank saga, alleging that Midas have done some legal investigations around their issues with the World Stock Exchange, run by Australian Luke Connell (LukeConnell Vandeverre).

From: Looker Lumet New Second Life “SLURRENCY EXCHANGE” to offer best rates, preferred programs. Quote from the site - Virtual world developer Simuality.com announced their new ventureinto the world of Second Life currency exchanges, with the openingof the SLURRENCY EXCHANGE,whose main office is located on theSimuality island

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Another WSE Scandal?

It looks like the WSE is in the spotlight again, and not in a good way, again. From the sounds of it, the WSE has defaulted on a scheduled payment of the Hope Capital Bond (WSE: HCB), this payment was worth about L$650,000 of income and Midas Bank had upwards of L$3.5 million invested in the HCB, and relies on the bond payment to fund the depositor’s reserve.

Ancapistan Capital Exchange (AnCapEx) Chairman IntLibber Brautigan agreed with a statement by Midas Commons in which a boycott of the WSE was proposed until it made good on its bond payment.

“LukeConell is not a fraud or theft master,” said Smithers Daviau, a representative of the WSE present at today’s gathering. Aside from statements and excuses from Smithers and one other WSE employee, however, regard for Second Life’s oldest and arguably most opaque securities exchange was not so positive.

Commons further reported that the bank currently had around L$8 million on deposit, and a total loss of value in its HCB holdings would represent a loss of about L$5 million – and unavoidable bankruptcy for the financial institution. Source: Updated: Midas Bank in limbo; Commons and Brautigan call for boycott of WSE

From a statement on the WSE website, they say they are not responsible for the financial decisions of the Midas Bank and that the management team if fully responsible. They have delisted the following Midas Group of companies to ensure that shareholders will have the best possible chance to earn a return on their investments through capital growth and dividends using the WSE Traders Fund.

Midas Commons, CEO of Midas Bank yesterday informed the World Stock Exchange that the Midas Group of Companies are bankrupt.

The WSE accounts controlled by Midas Commons were locked while we reviewed the situation.

The cause of this bankruptcy is not our concern as the WSE is not responsible for the decisions and actions of Midas Group and its management. Midas Group and its management team are responsible for all the financial and operational decisions.

The WSE has believes that the Midas Group of Companies were Over-Leveraged and did not hold sufficient cash reserves to allow for the potential risks and impact of increased customer withdrawals, lower than expected earnings from investments along with regulatory and economic challenges. Source: Bankruptcy of Midas Group

I agree completely with Lowell Cremorne of SLOz and have asked the same question myself during the Ginko Financials fiasco.

What this latest drama reinforces is the fundamental problem with the unregulated financial system in SL - why would any serious investor look at a system where there’s no regulation and multiple stock exchanges that publicly criticize each other’s viability? One of the main value propositions of Second Life is its freedom, but this is one area where too much freedom may be one of the virtual world’s major pitfalls. Source: World Stock Exchange - the latest controversy

More coverage:

WSE announces Midas Group are bankrupt The full statement (below the fold) makes interesting reading in one paragraph saying “the reasons are not our concern” and in the next explaining why they think the bank went under. Nothing to do with late payments from their own bonds of course. The value of the various Midas Group bonds have been transferred to the WTF rescue scheme, straining it yet further.

Midas Bank the next… Looks like it is 5 to 12 to get all funds out of SL. There is no more trust left in any bank or investment….sadly I think it would be better if one starts to legally track down these individuals in RL and get that continued fraud resolved once and forever.

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OnRez Browser and It’s Affect on the SL Economy

October 19th, 2007 | Category: Business, Doing Business in SL, Tier Fees, Virtual Economy

By Stone Culdesac

In a recent post on theGridLive, Prokofy, from the Second Thoughts blog, chastised me for not asking any questions about the new OnRez browser the Electric Sheep Company is creating, because she says they are going to change search for everyone who uses it. I didn’t really get what she was so upset about until her most recent post in which she says the search function in the OnRez browser will be the same as searching from the ALL tab in the Second Life client, which, as we all know, sucks. If there is no way to narrow it down to people, places, events, etc, then it will always suck and new residents will get tired of it and move on like they do now with the regular client. And if the shopping search is like the shop.onrez.com site, then people won’t be happy with it either, as they haven’t figured out what most online merchants already know, you show each item and allow them to pick a color on the item page, instead, they list each color in the search so you end up with results that are all identical except for the color, and that is not very useful at all to anyone that I know. If they want a real shopping destination, then they need to use their own site and figure out what is wrong with it.

But I guess the main thing with this new browser will be how it actually handles search, if it is as Prokofy says, then it will suck for the new users to search for anything in Second Life even worse than it does now with the regular client. As one merchant in the comments said, about two thirds of their traffic comes from search, most of the rest is word of mouth with some classified ads and other listings sending very few visitors. This could be big for Second Life merchants and it will be one of the first things many of us will be looking at when the browser is available, I will show some side by side comparisons and talk to some merchants to see if they see any increases in traffic on the 24th and thereafter.

Check out Prokofy’s post, What’s Wrong with the Sheep Search and the Killing of the Inworld Economy, as she goes really deep into the reasoning on why Linden Labs would allow ESC to do what they are doing, and some of the happenings behind the scenes. One of her more interesting points is the fact that prices on some things have increased 10 fold, but the value of the linden has remained the same and does not gravitate to it’s natual value, she says, “That most of these people then are facing depressed wages and an economic slump and a world awash with freebies and tombstone objects from oldbies, and frustrated in entering the market, and then leave and never make the middle class, is a subject Lindens or corporations or their metaversals never contemplate.”

She has several related articles, this one, Do You Need Real Estate to Make a World? talks about how open sourcing the server code will devalue the land, and a couple more on the Electric Sheep company and the search function in the OnRez browser, Don’t Buy Classifieds or Search Ads This Week! and Greed Shepherd’s Big Fleece: The Sheep Grab the Search.

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