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Virtual Stupidity

August 11th, 2007 at 08:50 am

Apparently the biggest "bank" in Second Life has frozen withdrawals and converted deposits into perpetual bonds that are trading at a steep discount to face value. The thought that avatars might be throwing themselves off virtual sky-scrapers in financial ruin would be funny, except that I'm sure that many people have spent lots of real hours accumulated Linden dollars with the expectation to eventually convert them into real USD. Where they ran into trouble was investing the Linden dollars with a virtual bank that was offering an interest rate equivalent to 44%pa. With the Linden:USD exchange rate fixed this was never going to be sustainable in the long term, and the recent "run" on the virtual bank was inevitable.

Copyright Enough Wealth 2007

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