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Banking chaos hits Second Life
Last week the Ginko "bank" collapsed due to insolvency: as account holders demanded their money, the bank would have been forced to sell off assets at a loss, forcing it into bankruptcy.
The bank had lowered daily withdrawal limits to avert this scenario, but those measures couldn't prevent Second Life from catching an economic virus that is so common for highly instable economies.
The rush on the bank's deposits was allegedly caused by a gambling ban, which supposedly prompted users to take their money outside the game. Others claim that it was merely an old-fashioned banking collapse due to incompetence or criminal behavior (pyramid scheme, anyone?).
Whatever remains of the bank's $800,000 in deposits will now be transformed into bonds with another Second Life bank. Account holders will be able to trade those bonds, but will likely have to take a loss if they do.
The banking drama surfaces a major Second Life flaw: it's economy is essentially a mono culture.
Secondly, private islands, virtual clothing and accessories, virtual sex and gambling are all subject to economic bubbles. Contrary to a regular economy, Second Life economy also doesn't redistribute economic wealth. Money travels in an out of the game like Irish immigrants. Users who get bored (which is inevitable after the recent media hype) will simply stop playing the game, taking their assets out of the economy.
We're witnessing that right now, and should get ready for more.
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