Making money from nothing?

I was just listening to the keynote speech a few minutes ago, when they announced the new “Linden Prize.” The actual prize being, $10,000 USD.. paid in Linden dollars.

When I heard the beginning of the announcement, my first thought was, ‘Is Linden Labs so well off, that they can afford to pay out such a huge cash amount?’ But when it was followed up that it would be paid in Linden dollars, it got me to thinking.. what an interesting way for them to pull something like that off, possibly at NO cost to the company.

So my question is this.. where will all those lindens come from? Will it be pulled from the Second Life economy. Or, will someone at Linden Labs simply key in the linden dollar amount into the account of the winner? Because if that was the case.. I’m wondering what stops someone from doing that to create actual monetary value from a virtual currancy. It seems like it would somehow be all too easy to credit an account with millions of Linden dollars, which could then be turned around and cashed out into US currency.

Or am I missing something, here? I have a feeling I probably am.. because if it was THAT easy, the scam probably would have been happening for years, and a lot of people would be a whole lot richer.

 Another thought I’m having is this.. lets say the Linden dollars do come from within the existing economy, so LL is legally in the clear. I’m wondering what will happen when the winner (or winners) try to cash out so much money into US dollars. I wonder if this will cause some sort of law to be passed that would prevent virtual money from being converted into real money. From what I understand, the Terms of Service states that the Linden dollar has no actual value. Yet we are allowed to cash it out into our paypal accounts. I wonder if something like this will cause the government to look more closely at how virtual money is being generated and circulated, and if new laws will clamp down on that sort of thing happening. If thats the case, its going to hurt a lot of virtual business owners who do rely on income they make in Second Life and other online worlds.

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~ by Nika Dreamscape on July 7, 2008.

4 Responses to “Making money from nothing?”

  1. The government prints money to please the masses. Bad choice, if you look at History.

  2. IRL, money cannot simply be printed to meet demand.. Look what happened to Italy’s Lira when they tried it. There has to be something to limit the amount in circulation (the US has the Federal Reserve).

    This is a very interesting point Nika, but I don’t have the answer I’m afraid!

  3. Yeah, Dakota.. I was wondering about that. Does Linden Labs have a limit in place as to how many Linden Dollars can be circulated in the economy, or is it an endless amount? If it IS endless, and they can simply add more as needed and for whatever reason they see fit, then I can see that causing a lot of problems, in the future.

  4. […] Excerpted from:Making money from nothing? […]

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