Brady Forrest's take on Linden dollars as a micropayment device.

At the current "exchange rate" of L$265 to the dollar, extremely small fractions of a dollar can be exchanged in game, without any transaction fee. Compare that to the paypal $0.05 minimum transaction fee, or typical credit card minimums on the order of a dollar. The same reason the Kwikie Mart doesn't accept cards for transactions smaller than $5 is the same reason it's impossible at the moment to charge a reasonable sub dollar or sub cent fee for online content.

See also time Murtaugh's discussion on the topic:
http://o2b.net/archives/second-l...

Submitted by jason - 2007-07-25 21:20:50
Channels - general online metaverse
Tags - secondlife micropayment linden

Comment on this post

A pretty interesting economic look at the Linden dollar and Second Life economy. Where is the money coming from? Who is it distributed to? How does it resemble, or not resemble, a Ponzi scheme.

Here's my own takeaway. Most other games cost money to purchase or play. People understand that they are purchasing a product for entertainment. In the case of Second Life, the possibility exists that one can make money, in world, by exercising their creative abilities. Furthermore, Second Life is often promoted as "not a game" but a "virtual world," so there is sort of this presumption that everyone will be able to build wealth.

It's that "everyone building wealth" point that the article's author is really calling into question. With Linden Labs exchanging L$ for US$ -- money that was contributed by game players -- it's obvious that not everyone can cash out.

Submitted by jason - 2007-07-25 21:13:37
Channels - general metaverse
Tags - money secondlife economy linden ponzi capitalism

Comment on this post

Total volume of Linden dollars: 2,608,448,990
At the current exchange rate of L$265 to $1, this is roughly $9.8 million.

Cash flow:
Last month, there were 42,597 avatars with an increasing balance. 132 of them were earning over $5000 a month. The graph is very bottom heavy, with most users making less than $10. No mention is made of users with a negative cash flow.

Transaction size:
Most transactions are for small amounts under L$500 ($1.88). I'd venture to guess most of these are texture uploads that cost L$10 ($0.038) or small L$2 camping transactions ($0.008). There were 856 transactions over L$1,000,000 ($3,773).

Submitted by jason - 2007-07-25 20:04:09
Channels - metaverse
Tags - virtual money secondlife economy micropayment linden

Comment on this post