Bitcoin Forum

There is an exchange rate today between LD & BTC.

Would it make sense for them to switch (gradually, some time in the future) from using LD as an in-game currency into BTC?

Pros

More transparency and security. Today, if there's a bug in their database systems, or hackers break in, the "true balance" of LD can be altered. I imagine they are spending quite a bit of resources protecting and auditing against this.

There would no need to artificially peg LD to anything, so there would be no need to worry about a bubble. Let us assume for a second that the mere act of adopting Bitcoin will increase the market cap of BTC, greatly reducing its volatility.

Cons

They wouldn't be able to print money. They would still be able to earn money by creating in-game items and real-estate.


Thoughts?

Hmm, lemme think... print money... earn money... print.. earn...

If I had a printer this would be a much easier decision. But if we s/print/issue/ then its easy.

Which would you prefer, to continue earning money in your day job or whatever, or print it?

-MarkM-

bug in bitcoin -> hacker can spend other peoples money.

Someone should build an exchange in SL.  Fill it with terminals for virwox and some sort of mt. gox bot.  Could actually give me a reason to login lol.

They moved something like $567million worth in transactions just in 2009, and the price has barely fluctuated in 5 years. Why would they switch to a wild price crashing system monopolized by somebody out of their control that they don't get any fees from.

I still totally don't understand the point of wasting money in SL. Only time I used it was years ago to check out Ft. LongCat the evil krull like inter dimensional castle of memes the admins could never find.

Right now theres ATMs on random street corners and the official virwox exchange building is kind of boring. I want a place that acutally looks like an exchange that has people in it.

New Linden Dollars are distributed to paying subscribers of Second Life.
New bitcoins are distributed to bitcoin miners.
Switcihing from LDs to BTCs would ruin the loyalty scheme for Linden Lab.
Not switching will make Linden Lab look like old farts holding on to their privileges.
Bottom line is: just like bankers, LL would rather pretend bitcoin was never invented.

The Lindens run their own exchange for lindens/dollars and are market makers, maintaining a stable valuation.  This appears to be a valuable profit center for them.  It may be somewhat problematic for them to make a similar market in bitcoins.  It is unclear what effect an unstable game currency value would have on the Second Life economy. 

Some people leave Second Life permanently without exchanging their lindens for cash.  The Lindens ultimately benefit from these unclaimed funds, which would not happen with bitcoins.

The Lindens have been known to seize funds for various reasons, such as violations of Second Life terms of service.   The Lindens recently seized funds owned by "The Rock Trading Company", one of the two SLL/bitcoin exchanges.  Why this was done and whether they will get their funds back is unknown (to me).   

The customer can mitigate this power of seizure of funds by avoiding maintaining large sums of currency in world.  However, it seems unlikely the Lindens would relinquish their control of the currency. 
     

When I first checked out Second Life, the Linden dollar was at about 2 Linden Dollars per USD.

Looking at how the whole thing worked I knew that they would be making their money by devaluing their currency.

It is currently around 250 Lindon Dollars per USD.

Why would they give up all of that free money?

Might as well ask the Federal Reserve to replace the dollar with BTC.

Don't forget as well that in that time frame the number of users also grew a lot, so users go up a lot, value goes down a lot, means they've been running the printing presses in overdrive.

It would be easier to make your own game that uses bitcoins.

The answer is not integrating of the bitcoin into the fiat economy.  The answer is complete separation.

I don't understand why you think that others need to benefit from unspent game currency.  People leaving game currency in their account likely don't have enough to splash in the market anyway.

Secondly, why would swithcing to bitcoins make the game currency more volatile?  The prices are likely pegged to USD anyway, so when price of Lindens to USD changes, price in Lindens change, yes?

So people would just be posting ever changing prices in BTC... same thing.

Thirdly, someone mentioned Linden Lab can't charge fees.... how about they set up a bitcoin exchange?  Then they could charge fees just like gox.

I'm guessing it is best to think of ways to have both currencies exist and make things grow naturally.

No one is up for mass change for the sake of change.

1)  It is probably true that people leaving game currency in their accounts don't have much.  However, I've witnessed many people abandoning land to Linden Labs that is worth quite a bit of game currency.  It seems unlikely they would also abandon significant sums of game currency, but it's possible.  Linden Labs sometimes cancel accounts that violate the Second Life Terms of Service, and confiscates their assets.  Abandoned assets enhance Linden Lab revenue, but it is not known to what degree. 

2)  Linden Labs makes a market in lindens/USD on their exchange and maintain a very steady exchange rate.  That is why there is a big difference in volatility between the lindens/USD value as compared with bitcoin/USD.   As a long time Second Life resident, I've been able to keep Linden currency in my account without experiencing any significant change in value (as measured in USD) over a period of years.

3)  Yes, I would think LL would be likely to run a btc/USD exchange if Second Life were to switch to bitcoin.    However, in the face of competition from lower fee exchanges, it seems unlikely it would be as profitable as their current exchange;  and making a market, which is simple for them now (and apparently quite profitable), would become more complex and riskier. 

Personally, I wouldn't mind if Linden Labs did switch to bitcoins or added bitcoins as an option.  Considering the software changes involved, potential reduction of exchange revenue, and possible disruption to the Second Life economy, I doubt they will consider making the switch unless someone can come up with some offsetting benefits.     

I'd don't think Linden Lab would be interested in BitCoin for the reasons people give up-thread. A more interesting question is whether we can get OpenSim grids using BitCoin.

For people who aren't familiar with it, OpenSim provides a Free Software drop-in replacement for the Linden Lab server-side service that can be used with the Second Life client. It allows us to build a virtual world based on a decentralized model more like the conventional web, where instead of one company hosting everyone's virtual spaces, lots of different people can run them, and avatars can jump between them.

Right now the main option for OpenSim grids that want to support a currency is Open Metaverse Currency, which is controlled by VirWox, who we also know and love for their BitCoin exchange services. They're a good company, but it would be nice to have a decentralized setup rather than entrusting our money to a single organization. Obviously a decentralized grid is a much better fit for a decentralized currency than Linden Lab's centralized one.

There are some technical and practical difficulties here - not least how to make transactions work with a smooth UI without making everyone run a special version of the client - but I think there's a fair chance that if we did a decent job of building it, people would use it.

I have some thoughts about how it should be done, if anyone is interested in building it or funding me to do it...

If second life switched to BTC I would use their system XD.