Bitcoin Forum

For those who are unfamiliar with SecondLife (SL), here's a brief history run-down:
1) LindenLabs launches SecondLife, a completely open world with it's own currency tied to production (you spend money to "create" an object that you can build stuff out of)
2) LindenLabs unchains the currency from production, letting it float. Some minor trade begins
3) A currency exchange market is established, allowing people to earn money within SecondLife and withdraw their earnings to USD, or other players to convert USD to $L to buy in-game items
4) SecondLife economy EXPLODES, quickly progressing through the historical economic stages in just two to three years, those being:

• self-production (blacksmiths, farmers, in SL's case coders, 3D builders)
• assembly-line (small companies form to split up work, and create lots of generic duplicates for sale)
• and finally service economy (rent, land maintenance, and even escorts and gambling services)

5) Financial services just start to get a foothold within SL economy. These include banking, stock exchange, and yes, even HYIPs
6) LindenLabs hints at banning all gambling activities due to legal issues within the US. Casino owners run to withdraw their funds on the news
7) The largest bank in SL, Ginko Bank, collapses from a bank run, and in part from likely being a ponzi. Other banks follow. SL stock exchange crashes, due to a lot of the businesses listed being involved in banking and casino services.
8) After numerous complaints, LindenLabs passes new financial regulations, banning all gambling, and all interest-bearing accounts. Casinos, game places, and financial services close. Loaning freezes. Economy comes to a standstill, and many businesses and merchants abandon SL. Things are never really the same since.

In Bitcoinland, we have just passed through stage 7 (though at a smaller scale, even if the losses, $750k from Ginko, were much smaller compared to BTCS&T's $5mil).

<Atlas-speak>
One of my main reasons for why I got so interested in Bitcoin is because it is really the first true experiment in unregulated, free market capitalism (that I previously believed SL to be). At least in a modern global economy. SecondLife came close, but it was at about this point (stage 7) that LindenLabs stepped in and put in tight financial regulations. I felt as if I was a scientist, closely studying a process, and just as things started to really jump around and get interesting, someone stepped in, put their hand over what I was looking at, and said, "no, you can't see that." Being as curious as I am, I was quite dismayed. Of course, this exact same thing has always happened in the rest of monetary history: things go horribly wrong (ponzi, bank run, etc.), a few people complain, and instead of giving people a chance to see what kind of solutions they can come up with, someone always steps in to claim authority, blocks the solutions from even getting a chance to materialize, and puts tight controls on the currency to protect us from ourselves.
We are now where SecondLife was in 2007 (stage 7), but without Admins stepping in to protect us from ourselves. So, although all the recent scams, thefts, and other depressing issues have been a real drag on everyone recently, there is something to look forward to:
We are about to enter a stage that we were never allowed to see before; a stage we were always prevented from seeing; where, usually, someone would step in and say "I have authority, and no, we won't let you do that any more." A stage where we can finally observe human ingenuity at finding solutions to problems, without giving up our own responsibilities and trust to someone else. A stage where we can see whether we, as a civilized society, are actually even capable of learning how to deal with an uncertain, anonymous, and dangerous world, using our own senses and intuition, instead of blindly following established rules, trusting that whoever established them knows better, and thinking we don't have to worry about or question them.
And it is only thanks to Bitcoin's decentralized and unregulated nature that this will even be possible. I don't know if this will be historic (likely it will be a blip only we care about), but it will definitely be different, and completely new. And I, for one, am very excited to see where we will go from here!
</Atlas-speak>

Interesting comparison of Bitcoin to Second Life.  One of my favorite aspects of Bitcoin is just watching it.  Watching the services pop up, and either dwindle and die, or experience wild success.  Watching what activities people take place in in a truly free economic environment.  It is extremely fascinating to me.

I loved this post, excellent! +1

How much first-hand experience did you have with SL?
I read a little about it because of their currency. I remember the article about the first "virtual millionaire" that made many waves...someone who was buying and selling SL real estate.

It's been many years, but didn't they have a problem with hyperinflation at some point? Can you tell us more about how Linden Labs controlled and changed the money supply in that timeline?
I know that LL sold SL currency directly. Did they allow you to withdraw into USD as well? Did that ever change?

I can't believe SL went that far. They seem pretty laissez-faire with an open exchange policy. I mean, you can get Bitcoins with Lindens.

Well, let's see what happens after this stage in our growth (Ponzis, HYIPs, etc.).

Joined in 2003 during Beta, built, programmed, and sold stuff, worked for some small companies there, was involved in some financial aspects and palled around with finance people, and "invested" in Ginko ($250 invested, $750 withdrawn). Somewhat abandoned it since 2008, only going there maybe once a month, since it's now a resource-heavy chat room that the rest of my friends have mostly abandoned as well.


Anshe Chung. Bought server space (land/islands), designed the land with various themes, resold or rented to others. Not sure if she's even involved any more.


When SL first started, and it cost a few $L to create an object in-world (one you can manipulate and texture to turn into items), everyone in game received a $L250 weekly stipend. This was done to limit the amount of newly created object "spam," since they did now know what their world servers could handle. Once pay-to-create was abolished, everyone still continued to receive a stipend. Eventually, with a whole lot of new accounts and no real way to destroy the money, everyone getting newly printed money every week caused said hyperinflation. Currency stayed somewhat level for a while, but then when it couldn't contain the new inflow of money, I think it went from around $L50 per $1USD to $250 per $1USD within a month or two (I made some money trading on margins during the crash). LindenLabs responded by hiring a full-time economist, and cut all the stipends for free accounts, setting them to $L50 for old accounts, and $L0 for new ones. They are also actively maintaining the exchange rate by destroying excess $L bought at their exchange.


Since LindenLabs had a dream of creating something like the virtual world in SnowCrash, they initially did not want any restrictions (this only changed when enough people whined about it). As such, they were completely for unregulated exchanges. They had no problems with people trading $L back and forth, or with competing exchanges, and helped the process along by setting up the first exchange themselves. They also saw it as a source of revenue, charging a percentage on exchanges same as MtGox does (though way higher fees). As far as I know, that policy has not changed.

Thanks for the insight. I always thought it was a very interesting project,especially as a Stephenson fan. I have been frustrated every time I tried to get simple answers to tb one questions...glad I finally ran into someone with firsthand experience.

In Bitcoin, there's no linden labs to step in and say for example "no gambling"

Great post, thanks.

People still play SecondLife?

Hah, I did the whole "buy and resell real estate" thing.  I'd look for the cheapest large plots I could find, then subdivide them into the smallest plots possible and sell them just below the going market rate, ensuring a quick sale.  I'd just about double-up every time I did this.  Unfortunately, they changed the sorting on the real estate listings when they introduced leasing (or renting?), which meant that those leased properties always showed up as the lowest price/square meter compared to everything else, making it impossible to find good deals on real estate actually for sale.  It was fun while it lasted, and I made $75 for doing almost nothing.  I wanted to invest in an island and do the same, but it was too large a chunk of money for me to risk at the time.

Same question i have...

Anyway we are post stage 7? Then 8 will come: After numerous complaints, Bitcoin passes new financial regulations, banning all gambling, and all interest-bearing accounts. Casinos, game places, and financial services close. Loaning freezes. Economy comes to a standstill, and many businesses and merchants abandon BTC. Things are never really the same since.

No wait, no one can "force" anything.

Exactly.  There may be regulations put in place on 3rd party companies that process transactions (exchanges, payment processors, etc), but that won't stop people from transacting directly with each other, just like people still transact directly with each other with cash.

time to integrate bitcoin into a virtual world as its main currency

I wonder if it would be possible to integrate it directly into Second Life using SL's API?

Very inspirational. Thank you.
I have to add, we all must work to keep Bitcoin going.

Don't get too excited. Gavin has already promised a September surprise that is supposed to "create stability" in the bitcoin economy. We may yet be under the control of some authority to prevent this exploration. It's really sad to see him keep this secret from everyone and just spring it on us the way he plans on doing.

without a complete redesign of the currency i don't see how it could be centrally controlled.

and if that happens, we fork to xxcoin

I don't think you should be going around hinting at this.  I doubt Gavin would push such a thing onto Bitcoin, it would undermine the original goal of the project and many of the users would abandon it for another cryptocurrency that didn't make terrible decisions.

Check out Open Simulator, OSGrid and so on.

Basically, virtual worlds compatible with Second Life (you can use a Second Life client to visit them) are now free open source software.

If you try to build large grids, the grid servers of course become the centralisation spot of vulnerability, the place to close down to try to shut it all down.

But everyone can run as their own entire grid if they wish, and there is a hypergrid system allowing people (avatars) to move from grid to grid.

So radical decentralisation is ready to deploy.

Personally I find the whole three dimensional graphics thing far too much computing resources to have to deal with just to do simple things I can do more of better with less resources by avoiding the 3D and avoiding even the (also bloated and resource-hungry) browser and going back to good old text mode.

But there is no reason why the things nerds prefer to do in text mode cannot be done in three dimensional virtual worlds by those who are willing to load down their machines with all the overhead involved in displaying such worlds.

It might take the flocks of sheep a while to adapt to radical decentralisation if their flocking is not based on real connectedness among them; many of them might not actually have hundreds of friends, depending on mass-meeting spots/mechanisms to find a flock at any given moment instead of having a rich personal connections network that keeps them in touch with their flock regardless of which universe they feel like playing in.

We have the technology. Second Life is not dead, it has simply priced and regulated itself out of the market...

-MarkM-

of course, the saint satoshi...  ;D

https://i.imgur.com/oi11z.jpg

Couple observations:

Linden Lab is the central bank that issues $L. Bitcoin has no CB. Ergo, no step 8 is possible.

Linden Lab finanaces itself mostly through three routes. The first is in rental of server space or resources, in the form of virtual real estate. The second is in paid premium accounts. The last, and it is not an insignificant one, is in sale of $L for fiat to inworld residents and others. If they switched to BTC, thet would be abandoning this revenue source. IOW, don't expect SL to accept BTC any time soon.

I have done a few BTC transactions inworld. However, these are peeer-to-peer. The SL viewers have built-in support for $L. The friction of using BTC is orders of magnitude higher. Accordingly, it seems unlikely that BTC will ever achieve widespread use in SL.

There are a number of technically-similar virtual worlds. Most of these are open source at their core. These may be ideal for BTC adoption. Personally, I feel that what SL has that these other worlds do not is a real functioning currency. Integrating BTC into OpenLifeGrid may lead to the masses adopting that world in preference to SL.

I hate to say this but this "unveiling of number 8" isn't always a good thing. So far in history there is a reason why the heavy hand of authority comes into play, and unsurprisingly after markets have been deregulated for a time period, and turned into a steaming pile of shit. I personally believe that human nature falls into two social categories - those that take advantage of people and those that are taken advantaged of. There will be other pirateat40's with get rich quick ponzi schemes, there will be other Matt's that make reckless bets and don't pay up, and there will be many other denizens that will be far worse than these two combined; at this point in time, it's a simple race to the bottom really.

So, what happens in a completely unregulated market? Is it all a house of cards and one blow away from oblivion because there is no trust? Do all the weak hands, and/or naive investors all leave? Will people finally wise up after being scammed (maybe numerous times) and understand that this isn't a game? You are right, we are going into an unknown, but no one really knows if this will be the end or beginning.

Free market not only gives freedom to individuals. It also liberates society from burden of the weak members.
The weak must perish, so the strong may flourish.

To a certain degree that could be true, but the world isn't a zero sum game. The majority of the world are the weak, they are the followers that take orders from the strong, but what happens if the weak leave (or are "liberated" as you eloquently put it)? You just end up with an empty sandbox, you end up with BitCoins that no one uses nor will use. There has to be a balance, harmony, somewhere, but a "dog eat dog world" certainly doesn't promote this. Bottom line, a 100% deregulated market is the same coin as a 100% regulated market as both are so far in the extremes they are right next to each other.

I do have a financial stake, as do a vast majority of people on these forums, and I hope it doesn't go down the drain. Looking at what has happened as of late, it doesn't look too good. BitCoin is a test, something that really hasn't been done in the past, but human nature has been put to the test numerous times, and it has almost always ended quite barbarically. If it ends well, we'll all be profit, and we can show the world that we as humans can "contain our animal urges and learn restraint." If it doesn't, it just goes to show that we are just wild (albiet refined) animals and that some regulation is better than no regulation.

At some level, the only practical difference between a 100% regulated society and a 100% deregulated society, is that in the regulated case the big dogs can use the coercive power of the state to justify eating the little dogs.

Oh, I completely agree, it's two sides of the same coin; one ends with us killing each other, the other ends with a bigger entity killing us but either way, it's not a happy ending. What I saying though is that we shouldn't be allergic to any regulation, that rules put in place sometimes can be beneficial. A good example is the simple traffic light where a red light means we stop and a green light means we go. We give up the power to drive however we want, maniacally or safely, for the greater of society. Finding a good balance of regulation is important, but BitCoin lacks this safety net so the only choice we have is to hope to whatever deity we pray to that we stay on track and never fall in the first place. My post was simply for those cheerleaders waving their 100% deregulation pom poms that the grass is not always greener on the other side.

Even if we don't have regulations, we can still have agreements everyone follows. And maybe after a while of some members causing too much havoc, without government regulations we'll simply, as a society, agree on being much more strict about that sort of thing. Maybe eventually it will be considered normal for many people to have some small bounties on them in the black market, and for people to keep track of how much they are pissing someone else off, lest it reaches high enough for someone to offer to work for said bounty. Who knows.
I'm not saying that whatever Bitcoin will have at the next stage will be good, or bad. We don't really have a clear answer to that, since it won't be anything like the typical Stage 8. I am saying that, to me, anyway, the next stage should be very interesting to watch.

As far as i know Second Life doesn't have a real "economy". Yes you can buy linden dollars and give them to other ppl in exchange for something, but this isn't an economy, it's just "buy from linden labs, give to player"

If we consider the MMO world and we want a real Economy, then we must consider EVE Online. It even has scams. And the ingame money has a value because people will give you euro/dollar/bitcoins to get it to build fleets and armies, not just because linden labs says "it is worth xx"

Bad argument is bad.

Second Life and EVE currencies are almost identical, and I'm not sure why you are trying to separate the two.
- Both currencies can be exchanged for real-world fiat.
- Both currencies can be used to buy virtual in-game items.
- Both currencies have (or used to have) investment scams, HYIP's, and all the good stuff that goes along with unregulated monies.
- Both currencies have value.

In Second Life you have fun in the different worlds and...that's all.

In EVE you fight. You fight for resources, for control of systems, for supremacy. You have thousands of players busy in different alliances to produce EVERYTHING they need, from the simplest frigate to the most complex super-capital ship and space stations. You must conquer and hold systems, exploit moons, get hundreds of different resources. And you can't do that alone, this is not World of Warcraft where you must go farm the instances to drop the super sword because it's "bind on pickup" and you can't buy it. Thousands of ppl specialize in different things. If you want a super capital ship you don't have to produce it yourself, you can just buy it. Who produce them don't have to mine the minerals, they just buy them, make the ship and sell it. And so on.

In my opinion this simulate much better the free market than second life. An alliance risk to disappear if the leaders are so fools to lose their money in a ponzi scheme. So not only they lose money but you see other alliances exploiting this to destroy them

Ok, I see what you're saying, and fair enough.  In second life, the activities are limited to only pacifist ones.  Eve gives more freedom and more activities, including those relating to warfare and clanship, which results in a better-simulated economy.  I can agree to that.

Self regulation has just a sordid of history as everything else we've discussed. Without government regulation, there will always be people that say 7% WPR, and there will always be people more than willing to send an anonymous person with "solid forum reputation" their money. While the FCC doesn't have a 100% track record, a lot of these schemes done here are no where on the same level of sophistication as Madoff or Sanford, and would have never, ever pass the smell test. This whole idea of "getting the weak hands out," "the strong survive," and "we'll take care of it ourselves" is simply not good for business. I've read countless people say that what pirateat40 did was good for the BitCoin economy. No, it wasn't. Anytime someone gives up on BitCoins means that person is not going to accept or demand payment in BitCoin, one less person that will spread the word of how useful it is, one less consumer willing to spend with this currency. This is a numbers game, a sad state of mobocracy, but it is what it is; we can be the smartest people in the world with the best idea ever but if no one wants to play with us, we are doomed.

Honestly, at this point, there's not much we can do but hope for the best. We set our path, placed our bets based off of what we thought, and tossed the dice some time ago. However the dice may land, let's just hope we bet right.

good read, if not epic post!

Hmmm. Imagine an open source virtual world protocol with no central authority? I might never leave the computer!

This and similar properties are what make Bitcoin so exciting to me. There are several firsts for humanity to explore: truly deflationary currency, ability to recover money from disaster (backups), non-seizable, money stored in your brain - just to name a few. These things have never been experienced by humanity before and we get to watch it play out for history.

That is what Open Simulator is. You can run it yourself on your own machine, I can run it myself on my own machine, we can visit each other's "worlds". No central authority, if you want me to be able to manipulate your world you can let me, if I want you to be able to manipulate mine I can let you. There is no need to just imagine it, you can run it, visit it, it already exists.

-MarkM-

It is more than that. And sadly, it is also less. OpenSim sims do not have a common currency. Accordingly, no real functioning economy.

The centralized control that LL has over SL allows for common asset servers that let you carry your identity across sim boundaries. This allows for portable assets. This in turn allows for a system of commerce.

Last I looked OSGrid had no expectation of an av carrying their inventory and being able to rez it in any arbitrary region. At least and hope that it is discernible in its true form by others. Is my impression outdated?

Not sure I get the exact point of this thread, but it makes me think of this idea I red once, according to which the Internet itself is a MMORPG.

Adding BTC support integrated into the viewer would be a solid step in the right direction. This would liklely bring a number of new people into the Bitcoin world overnight.

OTOH, there is still the asset server problem. How is a random viewer used by a random av in a random region supposed to know how to render UUID 762354-9834598-8734 without common asset servers?

Since the discussion has moved onto Bitcoin / OpenSim, I thought I'd post an update on the work I've been doing to integrate them.

This is my money server, which just about works, but not yet securely:
https://github.com/edmundedgar/Mod-FreeMoney

I'll post another announcement when it's finished enough for people to install on a non-experimental basis.

It's based on a module originally designed to do PayPal transactions, and I've kept the PayPal functionality in there (you can turn it on or off in config). I'm hoping this will make it more attractive to grid admins who don't know enough about Bitcoin yet to bet the farm on it.

It doesn't handle any of the user's money - it just keeps a list of addresses for avatars, prompts them to pay the appropriate address and delivers their inventory when the payment is complete. It has functionality built in to use www.coinapult.com to pay people who don't have a Bitcoin address registered yet, but that's not currently usable because whoever did Coinapult has dropped off the face of the earth and won't issue an API key.

I think this will be quite useful, but there's still a bit of friction in the payment process - you have to click "Buy" in the viewer, then follow an open URL link, then pay an address either using a bitcoin:// URL or by copy-pasting into your client / e-wallet.

Taking the friction out of the process completely involves hacking the viewer (a bit tricky) then getting everyone to install it (potentially very tricky). But I think this should be the ultimate goal. If anyone can help with this, please let me know.

What I'd like to do for now is to take out _most_ of the friction by making it possible to authorize the money server to tell your wallet to make payments, for a limited time, up to a maximum amount you can specify. My current thinking is to make a hacked version of a client like Electrum and build that feature in. It could also be done with a separate bit of software in the middle to bridge your Bitcoin client and your viewer. Likewise, if anyone can help with this (say hacking Electrum to make an "Electrum OpenSim Wallet" version) please get in touch.

I have taken gear from OSGrid out onto the hypergrid, picked up items out on the hypergrid and brought them "home" in my inventory to OSGrid.

It is apparently true though that Open Simulator deliberately does not force a particular implementation of currency.

I have heard there are various currency modules or plugins but I have not investigated them yet, partly because someone else is already looking into using Open Transactions somehow for that. There is at least one open currency though that supposedly works, is exchangeable and so on, supposedly it is simply up to people who run regions whether to choose to enable it. (Maybe having to go get that module and include it somehow; it does not come with the "standard" mainstream Open Simulator releases.)

-MarkM-

A couple of responses to things people are wondering up-thread:

1) You can now transfer move around between different grids and use the same inventory, if the grid you're on and the grid your inventory is on both allow it. IIUC what's happening under the hood is that the first time you try to rez some inventory that comes from another grid, the grid you're on fetches a copy of the whole thing, including all the textures and sounds.

2) OpenSim doesn't include money handling by default, but it has a lot of hooks to allow people to make modules for it that do. The approaches are:
 a) Internal currency that only works on your grid and may or may not be exchangeable for real money (there's a FOSS module called DTL/NSL, and the other day Dreamland Metaverse announced what sounds like a proprietary one for their own grids.)
 b) Vendor-managed digital currency - Virwox, who also run Bitcoin exchange services, do a currency called OMC which is designed for OpenSim grids. This looks like quite a nice piece of work, but relies on a single, small tech company to be competent and honest, stay in business and not suddenly pivot to a more promising product. So far so good in this case, but it's probably not sensible to build an open commerce infrastructure on a small private company.
 c) Real-world currency, where the grid just brokers addresses and confirms payments (Mod-PayPal for PayPal, or my Mod-FreeMoney for both PayPal and Bitcoin).

Thanks for the post Rassah. It was an enjoyable read. Like many others here, I had only heard miscellaneous stories about SL, and you provided a very interest glimpse into it's life.

Likely something to do with this: https://gist.github.com/2217885

Do we need a grid for Bitcoin?

Edit: Imagine we can meet Gavin and give him back some BTC we received out of his faucet. And maybe Satoshi too!  :)

This is warrantless optimism. I don't see end of this "stage" anywhere in the sight, especially with steady inflow of newbies. People in general are poor with money management even within heavily regulated area of fiat currencies/credit cards. And even if you succeed with some community self-regulation(had that ever succeeded in history?), don't forget there are billions of other people that don't speak english/don't know about bitcointalk/don't trust us/etc.

And where in your model go those who simply want to live and let live?

The part in bold is kind of my point: I'm not sure we really ever had a chance to try to succeed, since every time 7 happened, 8 (laws and regulation) followed. My optimism only extends to being able to see what will happen. Perhaps you are right, and thanks to Bitcoin we will be stuck in stage 7 for ever. Maybe we'll come together to form some sort of ratings body that, while doesn't have any legal force, can use its ratings power to destroy anyone who doesn't conform to accepted practices. Or perhaps the outcome will be something else, and something totally unexpected. I don't know. I believe people in general are good, so perhaps I am a little optimistic.

House of cards, in the sense that there's so much behind the scenes graft and market manipulation that the regulating entity doesn't want revealed that they'd rather start the demise of the entire system then let it be revealed. Bitcoin doesn't have this issue - there's nobody pulling the strings here.