I think I’ve told my tale a billion times, but, for my rezday, I’ll tell it once again. My roomie and I were far away from home on exile. We had been tracked via the Internet by some rough guys who applied extortion to us; we had to leave and let the police take care of them (yes, they have completely vanished and eluded the justice after we filed our complaint). I shut down most of my Internet presences by then, just leaving the company email active, as well as my 17-year-old personal email. I stopped participating on forums, on ICQ, MSN, and whatever sites I had been registered with; Facebook didn’t exist yet, but there were others.
In 2013, WordPress celebrated its 10th birthday, and so did Google AdSense. You surely knew that, right? After all, almost one fifth of all websites in the world run WordPress; and AdSense is used by 14.9% of all websites and in the subject of market share, it represents 75.6% — earning Google some whopping US$9.71 billion in 2011.
No wonder everybody in the world has heard about Google AdSense. On the other hand, even though WordPress, after a decade, is still misrepresented as a “blogging platform”, most people will have an idea of what it is being used for. Well, perhaps not “most”. But a few hundred of millions certainly will.
No need to comment; maybe, if we go viral with this, the media wakes up after 6 years of slumber and goes “wow! how could we have missed this massive growth?”
I was doing some slight corrections on a post announcing my company’s participation in a public exhibit at Portugal’s National Museum of Ancient Art, with an OpenSim-based reconstruction of Lisbon before the 1755 earthquake, when all of a sudden Damien Fate plurked that Linden Lab has just announced their Linden Dollar Authorized Reseller Program, both on the community blog as well as on the SL Wiki, with a link to the relevant legalese.
And yes, five resellers are already listed — among them, VirWox and AnsheX. Only ZoHa Islands seem to have announced that they’re back in business.
Now, before you start jumping and screaming “Hoorah for Linden Lab!”, it pays off to read the small print. This is a reseller programme, not an “authorisation” to allow running one’s own exchange. What this means is that the “authorised resellers” will be allowed to buy and sell L$ on the LindeX (presumably at lower fees than the common residents) and offer them for sale on their own exchanges. They do not allow them to directly buy and sell L$ to residents. So all transactions have to go through the LindeX.
At a stroke, LL solves two issues.
First, of course, the legal one. By ensuring that all transactions go through the LindeX, this means that they can track them down efficiently according to the FinCEN’s guidelines. The conditions and terms specify very clearly that the third-party exchanges have very strict rules on how they operate: they need to have a special avatar for these transactions and no other way to buy or sell L$, as well as forfeiting the right to get L$ from any other source but the LindeX. That’s the only way Linden Lab has to guarantee that these “resellers” are fully validated and that LL has a degree of control over what they’re doing. In effect, I guess that LL can somehow claim that these “resellers” are just like “normal avatars” — and fully tracked that way, fully identified, without any question of doubt about who they are and what they’re doing. And — most interestingly! — Linden Lab demands that “authorised resellers” are fully insured and make proof of having the required insurance.
This allegedly seems to be enough to placate the Feds. But it also means even more credibility of these exchanges in the eyes of the residents.
But obviously Linden Lab also makes sure that they get the extra money from the third-party exchanges — since now they will have to go through the LindeX, and, even if the fees that LL charges the third-party resellers is very low, it’s still a bit more than receiving nothing at all. It’s a win-win situation for LL: instead of getting zilch from the exchanges, now they get a few dollars as revenue.
LL also promises, on their blog post, to look into alternative payment gateways beyond PayPal and credit cards. Well, we’ll see about that; as said on my previous article, they have promising that since 2005 and done nothing about it. Still, this means that all residents who are unable to use PayPal or a credit card to buy L$ have, as of today, five official sources to get them, thus easing the pressure, stress, and anxiety of all those residents with tier to pay (and clothes to buy!) and no way to get L$ for their real money.
Of course, there is a catch.
None of these exchanges are allowed to pay residents anything in exchange for L$.
What this effectively means is that you can buy L$ from the resellers, but you cannot convert L$ back to US$ or any other currency using their services (see point 9. of their services). They apparently cannot even give back their users any “valuable” thing in return for their L$. Bummer!
It will be interesting to see how VirWox will handle this. One of their interesting features was for users to be able to buy L$ and exchange them for, say, OC$ to use on OpenSim grids using OC$. Or, well, exchanging L$ for Bitcoin (and vice-versa). Will the new terms mean that VirWox is forbidden to exchange L$ for anything else? There is enough ambiguity in the usage of the word “value”. VirWox also runs its own partner programme (i.e. VirWox resellers) which has to be terminated, under this agreement, at least for L$ transactions.
Still, I guess that VirWox might be more interested in keeping itself in the business of selling L$ to prospective customers who are not allowed to use credit cards and/or PayPal, than to provide a “cash-out” facility for L$.
And finally I’m also looking forward to see if LL is going to announce the end of “cashing-out” at the LindeX as well…
So is the crisis over? I think there is still a lot open to discuss. What do you think?
[Update 2013/05/07 6 PM GMT — Linden Lab has just announced the launch of the Linden Dollar (L$) Authorized Reseller Program]
Software features turn into products
Nine years ago, Linden Lab revealed a series of new features for Second Life® which would dramatically change the way we think and interact with this virtual world. One was user-generated animations — before that, we were all stuck with a handful of ugly or hilarious Linden animations and couldn’t change them (but there were some creative attempts to mix and match them with some entertaining results).
Another was XML-RPC. This was the first “instantaneous” way of communicating with external Web servers from an in-world object, and getting a response almost immediately (previously, you could only communicate via email). Although this was a very geeky piece of technology, it meant that suddenly you could interface Second Life to pretty much anything out there which could run on a Web server.
Two applications became grid-wide famous. The first was the Gaming Open Market: it was the first currency exchange for Second Life (and several other popular virtual worlds and games). The idea was simple: people having L$ in excess could place them for sale on GOM, and whoever was interested in getting those L$, would announce a price in US$ for those L$. Of course everything was anonymous; GOM would just act as an electronic mediator, exchanging L$ between seller and buyer inside Second Life, and exchanging US$ between buyer and seller outside of it.
When we think about “currency exchanges” — and certainly this is the idea often conveyed publicly — it looks like somehow L$ are transformed into US$ or vice-versa. Even to someone who is much more familiar with how exchanges work, there is this idea that somehow, physically, L$ cross the wire and are turned into US$ and vice-versa.
But a currency exchange is much simpler. What happens is simply that a seller of L$ can say to a friend: “I’ll pay your avatar L$ 1000 if you give me a US$5 bill”. This kind of thing can happen all the time. You don’t need any technology for that, just someone willing to send L$ to another avatar and happy to accept some US dollars (or Euros…) in exchange. The L$ never “leave” the virtual world. They don’t “exist” beyond it.
What GOM did was just to automate the process. Instead of avatars running around in Second Life looking for people willing to give them real US dollars in order to send someone else’s avatar a few L$, the whole process was much more easily accomplished, by transferring the money to a central authority (a master avatar for GOM), and announcing — anonymously — the offer on a website. Interested parties would nly need to log in, see what was being offered, and pay US$ to the system. It would automatically handle the L$ transfer to the buying party.
As you can see from the 2004 article by Daniel Terdiman, who used to be a very prolific writer about Second Life, Linden Lab was drooling with the idea. Shortly thereafter, the very same process of communicating with Second Life prompted Apotheus Silverman to launch something very similar. If people were willing to go to a website and pay for L$ to transfer hands, would they do the same for content to change hands? That was the basis of SLExchange, which in turn became XStreetSL, and was finally absorved by Linden Lab, who turned it into the SL Marketplace we all know. But the original name — SLExchange — points to the original intent: it was also going to work as a currency exchange and compete with GOM. In fact, they did, for a while, do exactly that.
Then GOM was crashed by LL, after years of successful business, and LL had very quickly to come up with the LindeX instead. At the same time, many others started their own exchanges, as well as web-based virtual goods marketplaces. Casinos, gambling, banking and investment funds came very shortly thereafter; all relied on very similar principles, at least from the technical point of view.
The first financial crisis: shutting down gambling, casinos, financial investments
Within time, Linden Lab starting shooting their own foot. I can only attribute that to paranoia, because that’s the kind of irrational behaviour driven by fear. They “feared” that they would be liable for people losing money invested on all those third-party services, even though Linden Lab had nothing to do with them. Remember that the L$ never leaves the virtual world. It doesn’t exist outside of it. All that happens on these external websites is that you get to remotely control to whom the L$ are being transferred to — from a bank’s avatar account to a customer, for instance.
But LL feared this liability so much (perhaps scared by their own incompetent lawyers, or the dangers of microgaming for free) that first they shut down casinos and gambling, and shortly thereafter, re-classified banks and investment funds as “gambling” (which is ironical — I also agree that they are “legalized gambling” in most countries, but Linden Lab had at least the courage to label it that way and shut them down!), and closed them down as well.
All of a sudden, over 15% of the virtual economy simply disappeared overnight. It was a serious blow, which took years and years to recover. The rate of economic growth never became as steep as it was before the gambling/banking shutdown. And, in fact, although the economy did eventually recover, it was a bit too late: the landmass already started to shrink very slightly.
Day-trading is part of the economic life. Depending on your political views, you might dislike others to get rich through their skills and perception at cleverly manipulating the exchange rates, but it’s hard work nevertheless, and high risk — which sometimes pays off. It’s “legalized gambling” again, and, as such, it also gives an adrenaline kick which the day-traders obviously enjoy. But nobody would have heard about Bitcoin if the day-traders hadn’t been wildly speculating on the Bitcoin exchanges.
Bitcoin: a speculator’s dream come true
Let’s be honest. When was the last time you bought something with Bitcoin? Seriously. Unless you’re an open source ultrageek or a right-wing libertarian, it’s very unlikely you have ever heard about Bitcoin outside the drama on the news — while probably logging in to Second Life every other day to buy a few new outfits for your avatar and pay the rent of your parcel, and never came across the word “micropayment” or “virtual currency” before.
If you do a search for “Bitcoin” on Google, most of the websites out there will be exchanges — not companies providing services that you can buy with Bitcoin. Why? Well, the biggest interest in Bitcoin is, indeed, speculation. As this Forbes journalist found out, it’s not very easy to live a whole week only spending Bitcoin, but it would have been much harder (if not impossible) one year ago.
Why is Bitcoin so popular among traders? It’s not only the issue about the media hype. There is a psychological thing running in the back of their minds: Bitcoin have a sense of value beyond the exchanges, because you require a huge amount of CPU to generate new Bitcoin. So, in a sense, CPU power is a limited resource, and the available CPU power for generating Bitcoin gives it some value. It makes sense.
Remember that the problem with virtual currencies is… who backs them up? Who vouches for them? If you want to step outside governments and established banking institutions — which pretty much all of them want to do — the question is always, “who vouches for the currency?” Bitcoin’s success comes probably from the ideia that there is no organisation behind it, but that Bitcoin have value because they represent CPU power.
Other companies, fully knowing that they would have to face the problem of respectability and credibility, tried to base their virtual currencies on gold (or similar valuable assets). The idea would be that, if anything went wrong, at least you could always sell the gold. This is pretty much the model envisaged by Neal Stephenson in his romance Cyptonomicon — digital currency based on gold using cryptography. Unfortunately, all these companies were closed down due to some sort of fraud or criminal activity (including murder!).
What else is left?
A microcurrency for the mainstream
If a company like eBay, Amazon.com, Apple, IBM, Microsoft, Google, Samsung, Oracle, etc. would launch their virtual currency tomorrow, we would certainly accept it — specially in the cases of eBay and Amazon.com (and, to a degree, Apple and Google), because we know they have lots of users already in a marketplace buying and selling goods (physical in the case of Amazon and eBay — although they also sell digital goods, of course — and digital in the case of Google and Apple). So, very similar to what countries base their value on, this would be a currency based on the solidity of a market: the amount of transactions, of buyers and sellers, and so forth. It would be a huge success.
Sadly, however, none of these companies are interested in developing that.
But here we have Second Life. A marketplace for digital goods with a decade of existence, with 34 million registered users, a million of which engage actively in buying and selling digital goods — and using a virtual currency for that. It’s worth a bit over half a billion US$ annually — not something to disregard. Even though the currency exchange is relatively free, Linden Lab has some interesting way of controlling it: they buy and sell L$ as well to keep the exchange fluctuating widely — a plague that haunts Bitcoin. Not so with the L$: it’s quite stable, and has been so for a relatively long time.
The beauty of the L$ is that you don’t need to “trust” Linden Lab to keep it valuable. All you need is to have a whole huge marketplace with over 6 billion goods and services, and consumers willing to buy them. That’s what gives value to the L$ — and not Linden Lab, not even how much Linden Lab makes with Second Life (which is far less than what the virtual economy is worth).
Now if I had all this in my hands, what would I do?
Expand. To the whole world beyond the boundaries of a puny grid and a limited user base.
When Philip Rosedale announced that Coffee & Power was to accept payments in L$, this seemed to be the first sign towards the right direction: turning the Linden dollar into an ubiquitous means of payment for services bought and sold over the net. Philip still maintains good relationships with eBay, Amazon.com and PayPal, and, if Coffee & Power became a success, we might have seen the Linden dollar making an appearance over there. Imagine what that would mean — e-commerce is worth thousands of billions every year, and a fair slice of that comes out of Amazon.com and eBay. It’s clear that the Linden dollar would get a huge boost in importance.
But even if it grew modestly, it would still become a serious “competitor” as a virtual currency. And who would be the first ones to benefit? Why, OpenSim users, of course. One of the reasons VirWox was so successful at the beginning is that they allowed L$ to be exchanged for currencies on affiliate grids (another reason, as we will shortly see, was the ability to accept lots of different ways to transfer money, as well as charging lower fees than the LindeX). But of course not all grids are “affiliated” with VirWox; most prefer to create their own currencies instead (just for greed — as if they had any chance of succeeding with that closed-minded approach…). Still, if Linden Lab exposed an API allowing L$ transactions, I’m sure that most grids would accept the L$ as well.
The current crisis: too many residents cannot use PayPal
So what would the next step for Linden Lab be? Well, of course, the first thing is to start accepting more ways of converting real currency into L$ and vice-versa, beyond credit cards and PayPal. I believe the only reason why they don’t do more — they have been delaying that for a decade — is that day traders, who move a lot of money through the LindeX, probably don’t care much more about other ways of payment. And LL, to accept more forms of payment, would need to establish more contracts with payment gateways, and probably have to set up a different fee system do deal with those payments. It might simply not be worth all the trouble. If 95% of all LindeX orders (which, of course, pay fees to LL) come from customers perfectly happy with PayPal and credit cards, why should Linden Lab bother?
Hint: VirWox makes half a million US$ in transaction fees from people who are not able to use credit cards and/or PayPal and/or are unwilling to go through the LindeX. But mostly from residents who have no other choices, because LL doesn’t give them those choices. So how many are there?
Wolf Baginski, commenting on Inara Pey’s Living in the Modem World, says:
“The turnover for Virwox is pretty big. Their trading volume for 2012 was 9.6 billion L$, which is roughly 38 million USD, and their spread is about 1.6%. That’s half a million dollars that LL doesn’t see. Sounds a lot, but compared to the annual total for tier it’s not so much. Still, it’s a motive.”
Half a million doesn’t sound like much, but Inara Pey points out that this extra money would go a long way to close the gap from losses due to decreasing tier. So Linden Lab is missing an opportunity.
Once this issue is resolved, and LL starts accepting more sources, then, well, the next step is to become a fully regulated virtual currency operator. They are almost one.
Now I don’t even pretend to understand how the applicable legislation works, much less how it applies globally. There is a good reason why money transfer operators (like PayPal) have to open delegations in several different countries, to be able to transfer money around the world: as legislation changes from country to country, to be able to deal with them all, it requires fully licensed organisations in each country where they operate from.
Personally, I think this is absolutely insane, but more on that later. Money printing is a business. It’s obvious that “those in power” want to control who is allowed to print money. It’s unavoidable. But they want also to protect consumers from fraud.
Becoming a MSB
So at this point Linden Lab has basically two choices. First is to grab the opportunity: they have a very rare virtual currency, one that is backed by a thriving economy worth half a billion US$ annually, and which already has millions of users. They have far, far more than PayPal had, when PayPal went international — and PayPal doesn’t even offer a virtual currency, just an easy way to send money around the world.
But this allegedly requires a lot of bureaucracy. Because of the paranoia of money laundering, the burden is apparently placed on money sending institutions to spy upon their customers, see what they are doing, and report everything — and allegedly this cannot be even automated easily, but really requires humans typing on Excel spreadsheets. That is costly. In fact, too costly for Linden Lab — assuming, of course, all this is “true”.
Of course, as we should easily predict, Linden Lab is just doing precisely the opposite: shutting everything down.
Inara Pey reasons that “something serious has happened”. Even though for about a month or so, she had already noted that the changing legislation in the US has made the strange wording in LL’s ToS pretty much irrelevant — virtual currencies are currencies if they are used as such; it matters little what the currency provider calls them. What this means is that LL cannot “hide” behind their own legal mumbo-jumbo, calling L$ “tokens” and repeatedly claiming in the ToS that they are “worthless” — when they operate a L$-to-US exchange and get an income from it. While I might disagree with the views of the US legislator, I think that at least they’re forcing companies like LL to be honest, disallowing them to hide behind silly wording on a ToS. The new legislation allegedly just looks at the use that is made with virtual currency, not the legal framework (i.e. the ToS) under which the virtual currency is licensed for use. The old adage — “if it walks like a duck and quacks like a duck, it’s a duck” — seems to apply to every virtual currency from now on, no matter what they’re called. Honestly, it makes sense. But from a business perspective, it means that Linden Lab is now a target.
Did they receive a warning from the appropriate authorities or not? It’s impossible to say; LL will definitely never tell us. Hamlet Au, reporting on New World Notes, quotes Vaki Zenovka who claims that LL’s move is to comply with existing legislation. But we can only speculate.
What certainly is the case is that the way they allowed third-party operators to assess risk in transactions with SL residents (via the Risk API) extended LL’s own risk towards companies over which they have no control; most are not even located under the same jurisdiction. So, consistent with LL’s paranoid approach, they shut the Risk API down — and allegedly sent the third-party exchanges emails to tell them to shut their ATMs down, effectively violating their own ToS (which states they have to give, at least, a 30-day warning). The fact is, as Maria Korolov has been telling us on a running report on Hypergrid Business, third-party L$ currency exchanges have been all shutting down in the past few days.
Most did shut down, some ignored it, and apparently two are working with Linden Lab to remain open. An interesting thought, vented by Johnmacloud Jun, CEO from MBKash — who optimistically awaits a reply from LL who allegedly promised a solution — is that Linden Lab might buy some of the now-defunct currency exchanges, effectively “GOMing” them, as they used to do in the past. More on that later.
Not all were closed
Beyond the most publicly known currency exchanges, I also found two interesting cases who not only completely ignored LL’s requests and warnings, but even started to send customers nice reminders that they are still in operation. Both are Portuguese.
One is Portugal’s ATM network, Multibanco. Don’t take the horrible site as a measure of their importance; Multibanco is a network of ATMs run by the twenty-five largest banks in Portugal, and billions are transferred through their network; in fact, they are so hugely successful, that they absorbed very early in the 1980s all smaller competitors, and are a huge giant in electronic money transfers. Everything that involves digital money transfer in Portugal is processes through Multibanco: from money transfer orders, money communications between individual banks, and the payment of pretty much all services and goods — from terminal payments in shops and restaurants, to toll payments, to parking, but including obviously paying for the utilities, for recurring payments, and taxes and fees — all goes through them. It’s a tentacular monster which has creeped and absorbed anything digital — even Visa, Mastercard, and American Express had to give up their own networks in Portugal and just licensed their operations to SIBS, Multibanco’s parent company.
And since 2007, they also have a Euro-to-L$ gateway, operated by a third party (not affiliated with them, but they started with a special relationship back then — who knows how the situation is today…) Again, don’t be put off by the amateurish website; you’re getting in touch, through a third party, with a payment gateway operated by a company that easily has an EBIDTA of €15 million and a cash value of €100 million. And, contrary to Linden Lab, they have all permissions and authorizations to transfer money in all possible ways, and naturally have an international branch, again fully licensed to operate with currencies beyond the Euro if needed. For them, transacting in L$ is “just another service” in the huge network they operate (until recently, they were also the largest private Internet operator in Portugal, since all their 14.000 ATMs and portable terminals started to use TCP/IP connections). I did cover their services a few years ago (unfortunately only in Portuguese). Their system is very simple: it has a ‘bot logged in to SL. You IM the ‘bot, and it will reply with a reference code, which you can use to pay on any ATM or homebanking system in Portugal. As soon as the transation is cleared (which usually just takes a few seconds), you get the L$ delivered to your account. You don’t need either SL-based ATMs, nor registrations on fancy websites, nothing. There is also a certain amount of privacy: the gateway system knows your avatar name, but all it generates is a payment reference, which is not tied to any account, card, bank, or has a person’s name or ID anywhere on it. It’s just a sequence of numbers and an amount. On Multibanco’s site, they will obviously know what card and bank account is used to pay the reference, but they have no clue what the reference is for — they will most certainly have no idea what avatar will receive the L$. It’s a blind system.
There is a competing payment service in Portugal, which runs independently from the financial institutions: it’s the National Postal System, which obviously also shuffles a lot of money around. They have their own network for service payments, called Payshop. Instead of ATMs, they have opted to partner with thousands of independent small businesses around the country, giving them a small terminal that connects to their services. To get L$ transferred to one’s account, all we need to do is just to go to one of the thousands of agents, and ask them to buy some L$. They will accept our payment in cash, and emit a ticket with a sequence of letters and numbers. Back at home, there is another ‘bot just for this service (again, using the same third party who also operates the gateway with Multibanco), which we IM with this sequence, and we’ll get our L$ in a few seconds. So it’s even more anonymous. The agent at the shop never knows who we are: we just hand them over a cash payment, and obviously we don’t need to give our names, addresses, ID card, whatever. We’re just an anonymous customer. The Payshop network has no clue who we are; they have absolutely no information on us. For statistical purposes, they can certainly have an idea about which agents have been emitting sequences for L$ money orders, but they have no idea if the same person is buying L$ or if it’s a different person. It’s totally untraceable. And, in-world, the service handing out L$ also have no idea who we are or which agent we visited to buy the ticket with the sequence of numbers. They just redeem the code, clear the transaction, and you get your L$ — you can even use whatever avatar you wish. Let me repeat again: nobody has the slightest clue about who is buying L$ for which avatar.
Granted, both these systems are only one-way, and they are not a “currency exchange” with buyers, sellers, day-traders, or anything fancy which allows day-trading and speculation. LL cannot ask them to remove their in-world ATMs, because there are no ATMs to remove. There are not even any humans involved in this process. And obviously LL could ask those people to remove their ‘bots, but the truth is, the ‘bots only exist in order to make the process run 24h/7 without human intervention. These systems are so simple that if LL forbade them to run ‘bots, they could also work with avatars with humans behind them: they would just need to wear a scripted attachment to handle payments. And if LL would also forbid avatars to attach scripted devices to them, well, this could still work manually: the human operator would just need to have access to a website and see who they have to send L$ manually. LL can’t stop people from sending L$ to others!
You see the point I’m making here. We like to think of “currency exchanges” as very complex software which handles authentication, user validation, credit card management, and so forth, and where money is shifted between people according to a price which is fixed by demand and supply. When seen that way, I can understand that it can be viewed as “evil money-laundering schemes” by FinCEN or whatever authorities might be snooping around.
What about the LindeX?
One thing is fearing that third-party L$ exchanges, not being under the control of Linden Lab, may be violating FinCEN by doing fraudulent transactions — and that LL may be implied, for the reason they have created the L$ itself (and now cannot avoid mumbo-jumbo legalese to escape being regulated). In that case, it makes sense for LL to shut them down, as a safety precaution.
But what about the LindeX? Even if it’s the only “legal” L$ exchange, it is still subject to regulation as well. What this means is that LL needs now to employ a vast staff of specialist professionals to do all the required bookkeeping, accounting, and reporting that FinCEN requires — which, allegedly, is insanely hard to do and quite expensive. Does LL has a margin on the commissions they charge that allows them to be fully compliant with the current legislation? Again, we can only speculate. I would guess “no” — unless it means firing developers and hiring accountants and lawyers, and, even so, it would mean operating the LindeX at a loss (or they will have to raise the commissions and fees…).
So there is here an unknown variable in the equation. What will Linden Lab do next, once the third-party exchanges are over and FinCEN agents start knocking at LL’s door? Shut down the LindeX as well?
Hamlet Au did a very simple (and highly inaccurate) survey and announced that 28% of his readers report a moderate-to-high impact in their SL usage. Even if that survey has serious problems, it shows that a rather large fraction of the SL user population might indeed be affected — namely, all those hundreds of thousands of residents who are unable/unwilling to get an international credit card and/or PayPal. So imagine that this means 28% of the landmass, the population, and the economy shrinking. That on top of the 10%-12% of shrinkage that will happen anyway. Suddenly, LL’s execs will need to explain to their Board why they shrunk 40% in a single year — thanks to a badly handled situation.
But imagine that LL has to go “all the way” — namely, shut down the LindeX as well. As some residents have correctly pointed out, the SL Marketplace already allows you to pay either in US$ (via a credit card or PayPal) or L$. Linden Lab might simply stop offering the L$ choice, and pay merchants directly in US$ (minus fees) — which would be similar to, say, DAZ, which operates a marketplace for 3D content without a virtual world.
How much would that impact the whole economy?
Well, for starters, all content creators who are unable to use PayPal would be left out. 28% is a lot of them. Sure, the content creation market is saturated, with little margin for growth, and established content creators would sigh with relief at the loss of a substantial part of their competition. But on the other hand, it would also mean a much smaller market with less buyers.
It gets even worse. Many content creators, in spite of being able to accept PayPal payments, might be unwilling to reveal their real names when doing transactions with residents. LL could act as a middle-man, anonymising transactions, but that would probably mean more fees. But the biggest problem is that this would also have a serious impact on in-world business: most shops would have to change their vendors to directly accept PayPal payments. This is easy to do — there are even a few vendors already working like that — but it would require lots of more steps, and, of course, make content creators more liable to pay taxes in their own countries of origin. The current model of using the L$ is much better: you can pay all your rent, tier, and expenses in L$, and only pay taxes on the remaining L$ that get converted to real currency via the LindeX. Again, such a measure would mean even less content creators willing to offer things for sale in SL.
And because the “PayPal vendor” requires so many more steps, it’s much easier just to deal with the SL Marketplace — thus pushing more content creators to abandon their shops, reduce their land, and shrink the landmass more and more, depriving Linden Lab of even more revenues.
Putting it all in perspective, what this means is that it looks that, no matter what Linden Lab does to remain FinCEN-compliant, they will lose hundreds of thousands of customers (they may remain as residents, of course, but not as economical agents — they will pay LL nothing, and contribute nothing to the economy) and, consequently, reduce LL’s overall income for 2013.
It’s not a pretty sight. What can Linden Lab do?
(Second) Life without the Linden Dollar
The first option is the more obvious one: start immediately accepting new forms of payment. Note that this has been in discussion, to the best of my knowledge, since 2005. Every other year or so, LL actually gets a team to investigate payment gateways, but they tend to abandon the idea. I imagine that they have consistently misrepresented the impact of the third-party exchanges, which have always accepted several different types of payments. Truly, they have no excuse — not even the excuse of “high fees”: at the levels that LL transacts currency, they can do far better deals with payment gateways than any of the third-party currency exchanges, which are already able to accept multiple payment systems and operate charging lower fees than LL. Linden Lab certainly has more than enough developers to integrate those payment gateway systems with their own software!
The only reason for not accepting other payment forms is because LL is stubborn (and, incidentally, because they are probably not aware, or couldn’t care, that everybody who cannot use PayPal and who is happily exchanging L$ for real-world currency have always done so at a third-party currency exchange). Maybe hard facts and reality will make LL finally change their minds about those additional payment methods. This would go a long way to prevent non-credit-card-users to remain in-world, even though it would mean that the third-party exchanges would all be out of business… that is, if FinCEN allows the LindeX to continue to exist.
An interesting suggestion is that apparently you’re not subject to regulation if you do not convert virtual currency into real-world currency. I have no way to validate that statement, but it means that there would be an easy way out: Linden Lab could just operate the LindeX with… Bitcoin 🙂 (Sure, they would still have to shut down the third-party exchanges first). That way, you’re just trading a virtual currency for another virtual currency, and that is not (yet) subject to legislation. And, of course, there are gazillions of Bitcoin exchanges out there — most of which beyond the reach of the FinCEN, and accepting all sorts of payments. In fact, the current L$ virtual exchanges would only need to switch to become Bitcoin exchanges instead and continue to do business as usual (since they already have customers!). The disadvantage? Both the Linden dollar and the US dollar (or the Euro, the British Pound, the Swiss Franc, the Canadian and Australian Dollars…) are stable currencies. Bitcoin is not. It fluctuates wildly. While LL could certainly keep the L$ from fluctuating — like they have so successfully done so far — they would have no way to control the Bitcoin fluctuations. On the other hand, non-US Bitcoin exchanges interested in continuing to have customers could offer a fixed Bitcoin-to-whatever-currency rate — becoming much less a speculating market than a convenient service for customers. In fact, to be honest, I understand little of this virtual currency business, but it looks to me as if there is a good market for a Bitcoin exchange that does not fluctuate wildly but simply that offers a sensible fixed rate… it wouldn’t appeal to speculators, but certainly appeal to people just wishing to convert currencies.
There is a third option, which should have been obvious (it was immediately obvious to Moon Adamant, my clever roomie, who always grasps these things immediately). Linden Lab could just buy a third-party exchange — one not located on US soil, of course.
This seems not to be so far-fetched as it sounds. After all, as mentioned, MBKash’s CEO fears exactly that LL might be thinking of buying VirWox. Why VirWox and not of the others?
VirWox has one interesting advantage: while many of the third-party exchanges are also based outside of the US, VirWox (an Austrian company) has worked in partnership with the University of Vienna to develop the integration with OpenSimulator. In fact, much — not all — of the work to make OpenSimulator support currency transactions, compatible with the SL Viewer, comes from development by academic researchers at U. Vienna. When I first applied to test out their software with our grid, I was actually curious that I got in touch not with a VirWox representative, but with U. Vienna directly, who worked out with me to help me up set up the test enviroment. This is an excellent example of close university/corporate cooperation, and it would certainly appeal to Linden Lab, now that they are apparently interested in attracting the attention of the academic world again (we all know it’s too late for that — they have almost all moved out to OpenSim already — but it’s still a good sign that LL is not “hating” academics, as they did during M Linden’s time). It also lends some extra credibility to VirWox.
And, of course, it’s also a positive story to present to the media. If someone picks up on the L$ story — “it’s as bad as Bitcoin! People are selling drugs and laundering money in SL!” — LL could simply point out that they don’t run their own exchange, but instead partnered with a serious and respectable European university to run a L$ exchange as an academic project. It is already a subject of several academic papers published by reputable scientific journals.
Surprised? You shouldn’t be. We all know that the hype has left Second Life years ago. However, serious economists aren’t dazzled by hype; they continue to do research in spite of that. But perhaps more surprising than all that is that it’s not just academics in their ivory towers that are doing the research. In fact, the allegedly richest bank of the world (in terms of assets) — nothing less than the European Central Bank (€3 trillion in assets) — has published a detailed report on virtual currencies covering Bitcoin and the Linden Dollar as case studies. While they certainly mention World of Warcraft and Facebook Credits, these concern them little, since these are not “true” currencies in the usual sense of the word (i.e. you can buy them, but not convert them back — legally, at least).
Bitcoin, because it allows buying “real” products, is especially interesting for the ECB. Not because they “fear” the currency, or because it can be used for money laundering or similar illegal activity. The main reason for the whole report to exist is to know how European citizens can protect themselves from fraud, and what recourses they have when things start to go wrong. With Bitcoin, of course, no centralised authority exists, so there is nobody to complain to. They also warn that a total lack of deregulation of the Bitcoin valuation means that users have no way of knowing (or of predicting) how much their Bitcoin are worth one day or the next. Here is a typical quote:
“Chart 6 shows the evolution of Bitcoin’s exchange rate on the Mt.Gox exchange platform during the hours of the incident, and is also the expression of how an immature and illiquid currency can almost completely disappear within minutes, causing panic to thousands of users.” (emphasis mine)
“All these issues raise serious concerns regarding the legal status and security of the system, as well as the finality and irrevocability of the transactions, in a system which is not subject to any kind of public oversight. In June 2011 two US senators, Charles Schumer and Joe Manchin, wrote to the Attorney General and to the Administrator of the Drug Enforcement Administration expressing their worries about Bitcoin and its use for illegal purposes. Mr Andresen was also asked to give a presentation to the CIA about this virtual currency scheme. Further action from other authorities can reasonably be expected in the near future.” (emphasis mine)
How true! We should all have seen this coming (the ECB report is from October 2012). One of the things that the ECB is worried is about the impact in the real economy of the use of Bitcoin.
By contrast, this is what the ECB has to say about the Linden Dollar (regarding the way LL regulates the money supply and the impact that this mechanism has):
“This money creation process, which artificially inflates the money supply, could be creating a boom within Second Life’s economy that could lead to a recession if Linden Lab is forced to tighten its money supply. In this situation, a loss of confi dence and a sudden deprecation of the Linden Dollar would be expected, causing all users that are involved in the virtual community to suffer some losses. In any case, it is important to highlight that this would only have a negative impact within the virtual community and for its users. Its effects would not spread to the real economy.” (emphasis mine)
Note that the artificial inflation by “printing money” which Linden Lab used to do is referred to a published academic article in 2007; LL, since then, has claimed that they don’t really need to “print money”, they can just use a reserve which they sell to the market when needed. The ECB has also considered this mechanism:
“As can be seen in Chart 8, the exchange rate has been quite stable, at around L$ 260 = USD 1. This is because Linden Lab tries to keep volatility low by injecting new Linden Dollars as demand increases. Therefore, it can be said that the Linden Dollar is, to some extent, pegged to the US dollar. […]”
But of course the ECB also warns against fraud. It criticizes the way Linden Lab can constantly force users to accept the ToS, and, while it arguably has a DRM system in place, often ignores complaints by users. In fact the ECB figures out that LL might care too little about their customers, and give them no options to significantly claim their rights. The good side of all this is that Linden Lab is subject to consumer regulation, and, as such:
“Second Life is focused on the virtual world, but this does not mean that everything is virtual in this community. There are real economic transactions behind Second Life and there are also real issues and problems that arise. Within Second Life, Linden Lab is the only authority and regulator. To some extent they also oversee the system, but without the involvement of any public authority. It is not even clear if any authority even needs to be involved. In fact, in the current situation, any potential issue within this virtual marketplace can perhaps be regarded in the context of consumer protection rights.” (emphasis mine)
Why is this important? Remember, the whole point of the ECB’s report is to analyse the situation of virtual currencies, and suggest the role of central banks and legislation in order to protect consumers’ rights. That this is significant even for SL residents can be seen in the history of GOM: allegedly, it was claimed that GOM’s owner has approached LL to help them deal with the issues of fraud. Whatever the reason, it certainly showed that LL did view fraud as a main concern, and, as such, created the Risk API, which all “official” third-party L$ exchanges had to deal with — the idea being that LL was in a much better position to detect fraudulent L$ transactions than the third-party L$ exchanges.
Fraud in Bitcoin is complex to deal with. Yes, of course you can track all the people that have handled a specific Bitcoin — something impossible with real paper/coin money (including the L$). But on the other hand there is nobody to complain to if you are a victim of fraud. Or, rather, you will need to engage in a complex court case just to figure out whom to sue, which might be hard outside the jurisdiction you live in.
By contrast, fraud in L$ transactions is easy to deal with: you just complain to Linden Lab. If LL does nothing, they are liable to all sorts of consumer protection organisations, starting with Better Business Bureaus, and going all the way to suing LL — a well-known company in a well-known jurisdiction. It might be expensive to get justice done, but you know with whom you’re dealing with.
Why is the ECB, all of a sudden, so concerned about this? It’s not only them, of course. At least in Europe, central banks are also usually the last resort for consumers to complain about anything related to frauds with financial transactions. So if they simply ignore the existence of virtual currencies, citizens might hold them responsible for not doing anything about it. And, in a sense, they are right: ultimately, at least in those countries where central banks also protect consumers’ rights, they are forced to do something about it, legally speaking. So it’s important that they at least analyze virtual currencies and make recommendations. The ECB certainly has made a lot of recommendations in October 2012 which are quite similar to what the FinCEN has announced in March 2013 (obviously, they talk to each other!). This is a typical warning by the ECB:
“Virtual currency schemes seem to work like retail payment systems within the virtual community they operate. However, in contrast to traditional payment systems, they are not regulated or closely overseen by any public authority. Participation in these schemes exposes their users to credit, liquidity, operational and legal risks within the virtual communities; no systemic risk outside these communities can be expected to materialise in the current situation.”
Interestingly enough, the ECB puts down any fear that virtual currencies might be outlawed:
“Virtual currency schemes visibly lack a proper legal framework, as well as a clear definition of rights and obligations for the different parties. Key payment system concepts such as the finality of the settlement do not seem to be clearly specified. (this refers to the issue that your amount of L$ can be removed by LL at any time, and you have no safeguards in place — either you were lucky to cash out your L$ in time, or you’re at the mercy of LL’s whims). […] Furthermore, the global scope that most of these virtual communities enjoy not only hinders the identification of the jurisdiction under which the system’s rules and procedures should eventually be interpreted, it also means the location of the participants and the scheme owner are hard to establish. As a consequence, governments and central banks would face serious difficulties if they tried to control or ban any virtual currency scheme, and it is not even clear to what extent they are permitted to obtain information from them.” (emphasis mine)
Now, since October, half a year has passed, and obviously I haven’t been following financial legislation on either side of the Atlantic since then. What I also found fascinating is the different focus, or emphasis, on American texts on the subject versus European ones. The American texts — at least from the perspective of an European reader! — seem mostly concerned about illegitimate uses of money and how to prevent people from committing crimes. This reflects much more the focus on “do whatever you wish, so long as it’s not illegal”, which is typical of common law systems. The European texts are mostly concerned about consumer protection: if something goes wrong with your virtual currency, where can the consumer complain about the transaction? Thus the need of a framework that protects those consumers’ rights — while leaving criminal activity for the judiciary branches to sort out. This, of course, is not to say that Americans have little consumer protection, rather the contrary; I would even dare to say that the BBBs are one of many examples on how self-regulation actually protects consumers’ rights far better than complex legal European frameworks. “The client is always right” is an Americanism which was just belatedly adopted in Europe; we’re more fond of applying the maxim “The client always has rights” (in the sense of having legal rights to protect them).
So if Linden Lab is truly planning to acquire an European currency exchange to avoid scrutiny by the FinCEN, they will have to take that into account. On one hand, they might worry little about preemptively prevent crime: that’s not their role as a commercial company, they just have to be prepared to help the police with their inquiries (as the British are so fond of saying!) if a crime is being investigated. The measures they already have in place are more than adequate for that. On the other hand, they have to worry much more about consumers’ rights. And this means no more changes to the ToS. It means no more seizing an avatar’s assets (without a court order!). It means following-up DMCA claims instead of ignoring them. It means no more sudden changes without warning. It means no more pretending the residents don’t exist and don’t have opinions so they can be ignored. It means no more excluding certain residents from participating in the economy (because they are unable to use PayPal/credit cards). Fundamentally it means no more ToS which removes customers’ rights (which LL is so fond of doing!).
Putting all that in perspective, I seriously doubt LL’s ability to comply with all that — it goes against their corporate culture! In fact, they’re much better off complying with the FinCEN’s recommendations and hiring a whole staff of specialized accountants and lawyers to do all the bureaucracy demanded by FinCEN to keep the LindeX operational.
Of course, there is a last possibility, which is to close the LindeX and not buy VirWox, but just let people know that they are allowed to do transactions with them — even though they’re not “sanctioned” by Linden Lab. This would place the burden of respecting consumer rights on VirWox (as an European company, they are probably better adapted to do that anyway) while still avoiding the FinCEN, by very rightfully explaining to them that they do not operate an exchange in US soil, nor do they own a subsidiary outside the US. But if they follow that route, there is no point in blocking access to any non-US third-party exchanges — they could all continue to exist without endangering LL’s legal position in California.
It would probably be the best choice.
Whatever the reason, Linden Lab is certainly fond of creating its own financial crisis. It’s enlightening to see what Philip Rosedale did think about all this, back in 2005:
“We do NOT have any intentions of restricting other sites or residents from selling currency – we think that a competitive market for currency sales totally makes sense.”
— Philip “Linden” Rosedale, Town Hall Meeting, August 30, 2005
I wrote recently about my experiences in trying to fit a whole Web environment running WordPress into a tiny virtual private server. Well, from my notes, I sort of wrote a long-ish tutorial about it — who knows, it might be useful, if you’re considering leasing a virtual private server for your own websites. These days, virtual private servers are incredibly cheap — you can get them for a few dollars per month.
The trick is how to get adequate performance out of it.
WPMU.org kindly published the whole tutorial: http://wpmu.org/wordpress-multisite-wordpress-nginx/
It’s not light reading and definitely not for the faint of heart, but if you just need that extra bit of control over your environment, are tired of those cheapo hosting services which will never configure things as you like, and if you’re not afraid of rolling up your sleeves and dig deep into Unix configuration files, you might find some useful tips there 🙂
P. S. The only thing about SL in that tutorial is the banner image, reproduced above. Well, actually, it’s from an OpenSim project I’m involved with, which you can visit on Kitely. And I did replicate the very same tutorial to install the web environment for our private virtual world grid. Why? Because OpenSim consumes so many resources that I wanted to keep the web bits wasting as little memory and CPU as possible. And yes, I use a lot of external web services there — from Groups, Offline IMs, Profiles, to a front-end which allows the few users to change their passwords, and, of course, a relatively useless WP-based blog just for that grid 🙂
Aria has interviewed old residents of Second Life® who have given up on the virtual world. She asked them about their engagement — what they mostly did, why they remained for so long, and, naturally, why they left.
The two first interviews show an interesting trend. Both are from former content creators, who had a “vision” about what to do and how to do it, and the desire to meet others with the same ideas. This didn’t work out precisely as they intended.
Why? Both give the same reason: drama. Or, to be more precise, sex. It’s also interesting how for those two people, drama means emotional frustration from power-struggles and manipulation in relationships of a sexual nature.
If you begin reading those interviews, they both make the same assumption: “Second Life is a GAME“. But, at the same time, they explain that neither of them was into role-playing; instead, they “used their ‘real me’ avatars”. They didn’t “pretend” to be anybody else. They weren’t into escapism, nor even fantasy. They took everything seriously. Well… seriously… but not by considering SL “serious” — after all, it’s “just a game”.
As they describe their experiences over the years, two or three things pop up in their stories. First, they had to struggle with addiction. But it’s not quite clear what they found so addictive about SL, just that — after the fact — they looked back at their experience as an addiction, and they left SL with the sense of breaking up their addiction, like an alcoholic looking back at their drunken times with disgust, from a distance.
Addictions have many causes, most being psychological, although many naturally have physical causes (i.e. drug addiction). Pleasure is also addictive — and so is lust, passion, and a lot of strong emotions. Adrenaline is addictive. And so is power, wealth, and the ability to control and manipulate others. So we’re not sure what exactly made SL so addictive for them, but one thing is clear: whatever they found in SL that is so addictive, they don’t experience “in the real world”. And they warn future users not to join SL, “because it’s so addictive” — but they don’t say why.
Now we could wildly conjecture about reasons for SL being addictive. For instance, since both interviews mention sex, one might think that sex, and the complex inter-relationships (pleasure, power, control) that come from sex, are addictive. But the interviewers are quite adamant on all that: they were not after extra-marital relationships, even though they admit that “their families were neglected” (one has to assume that merely staying in-world for hours and hours caused this “neglection”). More interestingly, it’s clear that they don’t see other avatars as real.
Here is the interesting ambiguity. Both seem to repeat the same mantra, “it’s not real it’s not real SL is a game SL is a game” in order to protect themselves and their own feelings of getting involved with other human beings. By doing so, they objectify other people. They don’t “see” a real, breathing, warm-blooded human being behind someone’s avatar. Instead, they have a very solipsistic attitude towards the virtual world: “everything (and everyone) is fake, SL is just a game, everybody is playing a game, except me, I‘m real, I’m not pretending, I’m not role-playing”.
Consider that thought carefully. Probably as a form of defense — “I don’t want to deal with what I feel about other people [in SL], because I will get hurt” — they created this vision that there are no “real humans” in SL, except for themselves. By doing that, they see SL as merely a fantasy role-playing environment, and, escaping from that, what do they do?
They go to chat on Facebook with utter strangers. Because, well, these strangers are real and are not pretending.
Now, please understand that I’m not criticizing the amount of suffering that these two people have gone through. It’s clear that their emotions were utterly wrecked by their experience with SL. They hint, more then affirm, that power-struggles among sexual relationships between business associates, partners, and friends, have led them to experience the suffering from jealousy, bad temper, deception, manipulation, and power struggles. This suffering went for a long time, and crushed them emotionally, and made their lives a mess while they were active SL residents. All that suffering was certainly real, and quite worthy of deep compassion.
But maybe none of them had ever experienced these kinds of feelings in the real world, and, because of that, they were utterly unprepared to deal with them once they were triggered by situations experienced while logged in to SL. It depends so much on what kind of business you work for, what neighbourhood you live, and so forth; you might have been shielded from all that. Giving my personal example: while going through most of my professional life, I was mostly unaware of the sexual innuendos in the background, and while once or twice it was clear to everybody else that I was being manipulated, I was way to naïve to be aware of that. It was just years afterwards that I agreed that possibly there was a bit more to the nice smiles and apparently innocuous invitations…
So if I had that kind of naïve experience, and got landed in the middle of the complex sexual struggles in SL, I might have developed the same attitude that these two. I might have gotten scared about how sex completely dominates the minds and actions of everybody around me; and I might have given up on SL, shocked that nobody there is interested in anything else besides sex. And — reluctantly I agree that this could be a possibility — I might even believe that Facebook users are not interested in dating but in having meaningful conversations about high-brow subjects…
Well, think again. We all know that Zuckerberg’s original idea was to create a dating site, and as a dating site, that’s what Facebook is really good at — specially because people are so stupid to tell everybody what they’re doing, so, if you have a manipulative mind, you can even spy upon your sexual partners to see if they’re being faithful and honest or not.
I might look around most of my friends who are also on Facebook and say, “nooo, they’re not all here because of sex!” But then I would have to remind myself that my cousin just registered to Facebook to get a husband; once she married, she never used Facebook again. And a good friend of mine collects sexual partners through Facebook, and discards them as soon as she figures out that they’re not worth spending time with them. Ok, so, these are exceptions — that’s what I tell myself. So, in a sense, I’m using the same barriers to protect myself as these two guys did with SL: I tell myself lies, because the truth is too scary to accept. I cannot accept that most of my friends are on Facebook just to get a date. There is nothing wrong with that — but life is so much more than the next hot date 🙂 — but it simply scratches the nice, naïve bubble which I have built for myself. I like to think, “nooo, my friends and I are special, we think differently” when this is clearly not the case. And, of course, that doesn’t turn my friends and family into monsters, just because they enjoy online flirting and arranging for dates. They’re doing just what most humans do. Why do you think that Facebook is such a huge success? 🙂
By “falling back to real life”, these two people have shut off a bad experience that they had, when they finally saw people as they are — and not as they pretend to be. This is precisely the reverse of what they claim that happens in SL!
Let me try to explain again. A large proportion of the sentient beings in this planet are, indeed, manipulative, control-freaks, jealous, fond of gossip, and love power struggles, of a sexual nature or not. But due to societal constraints, they “pretend” not to be anything like that, and “behave” for “fear” of displaying inappropriate behaviour [I’m quoting Kohlberg, btw]. This “fear” is not necessarily visceral fear; it can be pragmatic, like “I won’t make a fool out of myself at work, or else I might lose my job”. So one refrains from engaging in certain behaviours, because they have consequences that might not be pleasant. This is rather reasonable. Not everybody keeps themselves that much in check, however, and that’s why we point fingers at them and shake our heads — they’re a “bad example” that we don’t want anyone to follow, much less ourselves. Think Bill Clinton and Monica Lewinsky!
But in SL — unlike what those two have claimed — many residents feel that those constrains are looser. They can, for a while at least, display their real motivations and intentions, because there is little fear of discovery, and few or no incentives for maintaining a certain amount of respectability. After all, “everybody is doing the same” — which means that in the society of SL, those displays of emotion are tolerated, even if they’re not that actively promoted. But contrast that to “real life” where they are suppressed. It’s a world of difference!
So the irony is that, on one hand, we might be wearing nice avatars as masks. But on the behavioural side of things, we drop all masks and pretenses, and display our inner feelings — feelings of desire, of lust, of power, of greed, of jealousy, of control and manipulation. Because we know that if all goes wrong we can always start with a new avatar. Nobody will know. There is no responsibility — and the lack of accounting means a rather more liberal attitude towards displaying strong emotions. You can always turn SL off if you have gone too far.
What shocked these two persons in the interviews was not that “everybody is pretending, everybody is fake, everybody is not real, this is just a game”. No, what shocked them was that they got a glimpse on how people really are beneath their mask of smiles and pleasantries — what happens when all social norms are discarded, just because there is no point in keeping them around. SL is much more than merely “a fantasy” — it’s a way to unclench our deepest feelings, which have to be kept at bay in “real life”, but we can be exactly what we wish to be — and behave, act, and say exactly what we wish to say — inside the virtual world.
This creates a reality fracture in those who believed naïvely in a nice world where all people are perfect, loving, compassionate humans. Because it’s too horrible to contemplate the idea that people are not like that, they turn the table and pervert the whole classifications. People displaying their true selves are labeled as “role-players”. Situations which these people create, to give vent to their desires of pleasure, control and manipulation, are turned into “fantasies”, “gossip”, and, of course, “drama”. And, seen from that perspective, it looks like “in SL, everything is about sex”. No: it’s in the real world that everything is about sex. Only that in SL we are not constrained to pretend otherwise!
Of course this is a very dark view of Second Life and its inhabitants, and of the whole world in general. In fact, I’m quite sure that it’s not all about sex and relationships for all people. A few among us are a bit above animal lust and evolution’s drive to procreate — there is more to life than that. And those kinds of people are also in Second Life. They might be overwhelmed by a vast majority who does not think beyond the next relationship, the next hot date, or the next manipulative power struggle, but that doesn’t mean these people don’t exist at all. Thankfully for Humankind, there are plenty of those around.
Aria commented on my own comments:
If you think about it in RL when we are “dating” it tends to be more activity related. We can actually spend a great deal of time with people without ever really communicating effectively. In RL you have all kinds of situations where people get together and it does not work out because it turns out one or both partners were not at all who they seemed to be. We don’t focus so much on that because it is RL … but when it happens in here, and happens much quicker than RL because we are pretty much dependent on communication, we suddenly are talking about SL as being the “cause.”
She hits on a quite interesting point, one that wouldn’t ever be obvious for me, because I cannot envision a relationship without constant communication 🙂 and where the only “activity” which matters is, well, communicating 🙂 But I realise this is my own very narrow view of the world; and, seen through my pink glasses, my partners and best friends have always been the kind of people who couldn’t stop talking for a single instant; any “activity” we would engage in would merely be a pretext for more talking.
But Aria might be right — for the vast majority of people out there, it’s all about “activity” and “feeling” (in the sense of tasting feelings and emotions about doing things with their partners). There is no communication — except in the sense that enticing feelings is a form of communication. But, as Aria points out so correctly, this gives you the completely wrong idea about who the other person in the relationship is.
In Second Life, there is a lot more communication. Oh, sure, people can spend endless hours clicking on pose balls, but, even in spite of that, there is far more communication going around. In fact, as many sexual workers in SL have reported, it’s not about the way you look (because everybody can look sexy in SL), but the way you talk — or write. Not surprisingly, sex workers in SL are prolific writers, tend to have awesomely well-written blogs, and, when they do “serious” discussion events in SL, they’re among the most interesting and well attended. This is a very unique characteristic of virtual worlds, as well as of online communities who use mostly text (and perhaps a few images) to communicate: “sexy” people are the ones who know how to best write erotically. And that’s hard to do. Specially because in the real world we don’t tend to have much “training” in that — but, of course, dating sites like Facebook (or IRC in the 1990s) are changing all that: we pick partners for the interesting things they say.
Still, if you’re not used to that — and if, for you, a “relationship” is merely “doing things together” — then coming into SL can be a huge shock. For some, the complete inversion in values is too drastic to grasp, and they might leave in shock; for others it might become “addictive”, in the sense that if you’re not gorgeous-looking in RL, and have few interests in “going out and do things”, but are a good writer, you’re suddenly a SL sex symbol. That can be very addictive for sure.
It’s a strange world. But perhaps not so strange. However, this “excuse” of labeling “SL is a game” in order to protect oneself and objectify everybody else, thus detaching completely from the strong and intense emotional mess one has gone through — well, that’s simply denial. But a very persuasive form of denial. Everybody — specially our friends, relatives, acquaintances — will silently nod agreement, if we tell them that “SL is a game, everybody is pretending, so it’s stupid to establish meaningful relationships there” — because that’s what people’s expectations are: virtual worlds are fantasy, escapism, and places where morons or mentally disturbed people go to have some fun.
On the other hand, it’s ridiculous to claim “Facebook is real, nobody is pretending there, so I’m going to establish meaningful relationships there”. Open your eyes, learn your lesson from SL: these are the very same people, with exactly the same motivations, hidden behind a picture (which might be fake anyway) and just idly chatting in other to persuade you to have sex with them. The only difference is that they don’t have pose balls in Facebook.
It’s not merely a question; it has been turned into a meme. Even though I’m usually against memes, who would I be if I didn’t question my own dogmas? 🙂
So, as suggested by Strawberry Singh, and inspired by Inara Pey who took Strawberry’s challenge, here are my own answers. Be sure to get back to Strawberry’s post to check on the comments on her original post to read plenty of other people’s answers 🙂
Unlike Strawberry or Inara, I don’t blog only on/about Second Life®, and this is not my only blog. So my answers were often a bit harder to give!
- How long have you been blogging? About Second Life, since July 2004. About other things, well, half a decade before the word “blog” was coined.
- Why did you start blogging? There was just a handful of blogs about Second Life back then. I thought it would be a nice idea to organise a blog with tutorials and tips for newcomers — everything looked so incredibly hard for me on the few days in Second Life, that once I figured out something, I thought it would be a great idea to share it with others! To this day, people still visit my old “Beginner’s Guide to Second Life”, written in 2004, and utterly outdated, but apparently some people still find it useful. On the other hand, the explosion of the SLogosphere meant that far better people started to write about the same things, so I focused on my pseudo-intellectual essays instead 🙂
- How many times a week do you post an entry? I wish it were “many times a week”. These days, it’s about “a few times a month” 😛 On the good old days when nobody was constantly pestering me to, well, work (yuck!), I used to post 3-4 times a week.
- How many different blogs do you read on a regular basis? I actually read very, very, very few on a regular basis. To be honest (sorry, guys!), I just read Inara Pey regularly. If she links to someone else, I know it’s worth reading, so I will read it too. When Inara doesn’t post anything (which is rare) I might feel tempted to read the New World Notes, Tateru Nino’s Dwell on It, or Prokofy Neva’s Second Thoughts. And that’s it, really.
- Do you comment on other people’s blogs? Oh yes! These days, I do comment more than write new blog posts. Why? I have no idea!
- Do you keep track of how many visitors you have? Yes, mostly via Google Analytics and WordPress Stats (even though SiteMeter and others also keep track of my visitors — different systems give different results). My readership is like Second Life’s landmass: always shrinking 🙂
- Did you ever regret a post that you wrote? Sure, many times. Except for one (which was blatantly incorrect), I still keep them around, to remember me to smile about my stupidity 🙂
- Do you think your readers have a true sense of who you are based on your blog? A difficult question. I don’t have a true sense of who I am! All that my readers are able to get is a perception of who they think I am, but that perception is clouded by their own ideas and thoughts, just like my own perception of myself. Confused? You should read my series on the self 🙂 (you’ll become even more confused, don’t worry!)
- Do you blog under your real name? I only blog about Second Life (and OpenSimulator) under my Second Life name, which is also a registered pseudonym and a trademark 😉 Actually, that’s not true, I think I wrote two articles about SL under my real name… that was a long time ago, to be honest.
- Are there topics that you would never blog about? A good question. I would certainly never write anything inciting illegal activities, violence, hate speech, terrorism, illicit or immoral practices, and so forth. And I tend to write about things in a positive way; even when being strongly against something, I refrain from crossing the line and actually be rude. Of course, I’m fond of sarcasm and irony, which sometimes can hurt even more… On the other hand, I sometimes write on opinions contrary to my own, or allow people on my blog to present opinions which I do not share. Extropia DaSilva, for instance, before she had her own blog, used to publish her essays here. This made many people think that I actually supported transhumanism or the extropian views; I don’t (I’m a Buddhist, we don’t need artificial technology to transcend our selves 😉 ), I just happen to like Extropia, who is a good friend, but that doesn’t mean I agree with her views. Nevertheless, I have no problems in publishing any ideas that are contrary to mine (so long as they remain ethical…). To be honest, I contradict myself often, and I have no absolutely fixed opinions — over time, I’m fond of defending the opposite of what I said in the past 🙂
- What is the theme/topic of your blog? While this particular blog started mostly as an assortment of tutorials and guides to Second Life, over time it evolved into a collection of socio-economic essays about this virtual world. While I’m not a sociologist, nor a psychologist, and much less an anthropologist, I find that all these areas are immensely fascinating in the context of what a virtual world means, and they’re little explored (that doesn’t mean they’re not explored — see Tom Boellstorff’s Coming of Age in Second Life). I just wish I had a good background to do the same kind of writing about fashion and art, two subjects that also fascinate me in SL…
- Do you have more than one blog? If so, why? Yes, I have more than one blog. The “why” requires a bit of an explanation. Fernando Pessoa, the most prolific and renown 20th-century Portuguese poet, used to publish under several heteronyms — distinct persona, with their own biographies and writing styles (even languages — Pessoa was fluent in English and French as well). Why did he write under different personas? A good question, but the best explanation seems to me that he just liked the idea to explore things from completely different viewpoints — so different, in fact, that writing under just “one person” wasn’t good enough for him. Well, of course I’m not so arrogant as to claim the same, but I feel there is a good reason for keeping completely different styles, topics, and themes under different pseudonyms. My real self is the one who writes least (but has written for a longer time!) 🙂 As Gwyn, I also used to keep a (much neglected) business blog about Second Life, and sometimes I contribute, in Portuguese, to a collaborative blog with a tiny reader base.
- What have you found to be the benefits of blogging? To be honest, none whatsoever 🙂 At the beginning, I had this illusion of being helpful to others, and that certainly encouraged me to continue. These days I’m not so arrogant 🙂 With millions of excellent writers out there, I’m just a boring pseudo-intellectual with high-brow opinions (specially about myself). Perhaps the only good thing about blogging was to learn a lot about myself: for instance, about how high I held myself in my own regard, but that was just a paper tiger.
- So, why do you continue to blog? I’m a rebel 🙂 The more work I have to do, and the more people pester me to focus on my work, the more likely I’m going to waste some precious time in blogging, just because I can 🙂 Then I know I will have to handle all the complaining that I’m not focusing, not setting my priorities right, and so forth. Dealing with that is my way of saying: “You still don’t control me fully.” Sadly, as the rate of new blog articles has declined over years, I’m losing the battle, but I haven’t given up the fight yet…
Once more I go deep down troubled waters and remain a bit away from everything interesting…
Well, at least the interesting things about Second Life® and OpenSimulator, of course 🙂
In fact, in my spare time — which is pretty much the little time I can afford to spend away from my academic research — I had to deal with the infamous WordPress Distributed-Denial-of-Service (DDoS). You might think it’s over, but no. Just yesterday, a newly-installed WP blog which was moved from a different server got hit with a gazillion requests, in a brute-force attempt to get the ‘admin’ password. All of them failed, and the WP backend didn’t even register much traffic, but the huge spike on traffic got the security team insanely worried about WordPress — since it was the only WordPress-enabled website on a rather large server. Read More
What’s up with Linden Lab?
For years we have been complaining that they don’t fix things quickly enough; or, when they do, we complain that they aren’t adding anything exciting to Second Life. When they actually come up with something new, we complain they’re not “working with the community”, or ignoring the residents, or, worse, reinventing the wheel when TPV developers have already done something for ages.
And, of course, we can always complain about tier.
Well, except for tier — and there are even some interesting news about that — it seems we have a completely new management style at the ‘Lab.
So Linden Lab is patiently trying to squeeze some needed cash by placing ads on their websites. Ciaran Laval seemed to have been the first to notice that Google Ads now appear on many of LL’s websites, and Hamlet Au picked up the story, quickly followed by many others. At least two forum threads on the official SL forums are discussing this.
And guess what? Residents, as expected, are not happy. But for all the wrong reasons. Read More
As some of you know, I have been busy helping to prepare the launch of the Lisbon 1755 project on Kitely. I’m not a modeller, nor a historian, so my work for this project is reduced to shifting content from one grid to the other (my own scripting contributions are still a year away, at best 😉 ). No, the little I was expected to help with was to try to get the project a bit more promoted.
Promotion, as everyone knows, is hard work. Academic projects have completely different goals than what the majority of virtual world users like to do, and don’t necessarily live up to people’s expectations. For instance, in this case, I had to patiently explain to some people who complained that there are far better things done in Second Life that the purpose was not to get people immersed in a Triple-A-quality environment, like it’s possible to do in SL these days. Instead, what mattered was historical accuracy with factual documentation. Many things simply cannot be recreated more accurately than what is shown on existing paintings, engravings, and so forth. In SL, one has creative freedom to do environments “inspired” by heritage sites, and these can be modelled to look as intricate as possible. On academic projects, this simply might be not only impossible, but undesirable — how can other historians validate the claims on historical accuracy, if the modeller just says, “I did it like this because it looks cooler that way”?