Second Life Market Update

Three different stories are emerging right now in the Second Life financial markets. Ronisu Rotaru proposal for restructuring SLC has passed. In addition, the VSTEX index has broken 1000, and Second Life Investors Bank has a new set of problems. Each of these require a little exploration.

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Following our bliss

Last week, I receive an email with the question, “Christian asks: Has anybody seen my bliss? I was following it but I think I fell too far behind.” Christian has a good job. He’s published a book. He’s newly married. I would have expected him, of all people, to be keeping up with his bliss. Perhaps it is endemic of how hard it is to follow your bliss these days. Perhaps some of it is that people aren’t even sure what their bliss looks like anymore.

Being the geek, I thought I would check out Here’s what I found: Links to Teen Magazines, Bliss Magazines, Matchmaker sites, Free Chat sites, Horoscopes, Wedding Dresses, and Teen Fashion. It that what bliss looks like?

I’ve used the excuse of following my bliss to try and explain my current situation. Consulting to political campaigns and non-profits just isn’t on the same pay scale as working on Wall Street. The other day, I received a job offer from a non-profit I really like. It was less than 10% of what I used to make on Wall Street. It was less than what it takes to support my family, and instead of being insulted or disappointed, I tried to find ways to make it work.

I’ve thought about the fancy dinners that I used to have when I worked on Wall Street, yet they pale in comparison to the wonderful dinners my wife prepares, especially for those special times when the whole family is together. I’ve thought of all the trips I used to take to Europe. Most of the time was spent in conference rooms and it isn’t as romantic as it seems, but it is probably the travel that I miss most.

So, I sit, I write, and I hope that somehow, I’m having a positive affect on the lives of those around me. Sure, I’m not getting anything fancy or expensive for my family and friends for Christmas this year, but hopefully, I can find something more meaningful to give them. Yeah, there are times that I have my doubts; too many times like that, but still, it’s life’s illusions I recall.

So, I’m not sure where Christian’s bliss has gone. Perhaps it is walking down the street, talking with my bliss, stopping to befriend a homeless man, spending a little time helping a teenager find her voice, and doing a little social networking to help other people find bliss that is more meaningful than talking about fashion, horoscopes and the desire to find Mr. Right in an Internet chat room.

Further explorations into Second Life Trading Strategies

Back in September, I got into a discussion with John Raymaker of Second Life Trading Strategies. At the time, he had been doing a lot of buy and hold type trading, and I was doing a lot of day trading. Since then, I’ve been busy with other things and the markets have tightened enough so that risk of a market move became greater than the expected profits between the bid and ask spread. So, I set aside my day trading for a while as I worked on other projects.

However, recent events caused me to step into the day trading markets again. There is an old saying, “Buy the rumor, sell the news” which fits well with trading in Second Life. On November 19th, Lindsay Druart announced that All Bank Activity Halted Until Further Notice. Others were quick offer their opinions, and Maelstrom Baphomet issued a STRONG SELL which sent share prices tumbling.

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Ron Paul von Hindenburg

As I searched random blogs on a sunny but chilly Sunday afternoon, I stumbled across an interesting website, Ron Paul Blimp.

The site starts off,

Imagine.. the mainstream media is mesmerized as the image of the Ron Paul blimp is shown to tens of millions of Americans throughout the day (and throughout the month). Wolf Blizter, stunned and as if in a trance, repeats the words "Amazing, Amazing".

It has various pictures of blimps with Ron Paul’s name emblazoned on it. It is a very cool idea. I have mixed feelings about Ron Paul. On some issues I like him, on others I don’t, but I do really like what his supporters are doing.

That said, the first picture on the website produced a reaction that was initially negative. The first picture of the proposed blimp made both my wife and I think of the famous Hindenburg blimp.

I looked through images online, try to find a good image to use as a contrast. As I was searching, I stumbled across a picture of Paul von Hindenburg. This led me to the title of my blog post, Ron Paul von Hindenburg and to investigations into exactly who Paul von Hindenburg was.

Wikipedia describes Paul von Hindenburg as follows:

Though 84 years old and in poor health, Hindenburg was obliged to run for re-election in 1932 as the only candidate who could defeat Adolf Hitler, which he did in a runoff. In his second term as President, he did what he could to oppose the Nazi Party's rise to power, but was eventually obliged to appoint Hitler as Chancellor in January 1933. In March he signed the Enabling Act of 1933 which gave special powers to Hitler's government. Hindenburg died the next year, after which Hitler declared the office of President vacant and made himself the "Führer", or the combination of the president and chancellor.

The famed zeppelin Hindenburg that was destroyed by fire in 1937 had been named in his honour.

Do I want a Presidential advertisement that reminds me of the great disaster that happened to the Hindenburg blimp? Do I want a Presidential candidate to remind me of the last political stand against Hitler? Some of my more conspiracy minded friends might think this is apt. I hope it is not.

Commodity Trading, Coming to Second Life

Back in October, I wrote an entry about Ginko Financial Selling land to Quanta Torok. Ginko Financial was the bank in Second Life that collapses and had its deposits turned into bonds on the World Stock Exchange, only to see those bonds become worthless.

Quanta was planning to set up a bank in Second Life where the deposits where backed by gold bullion at The Bullion Vault in Zurich. I’ve been interested in watching commodity trading coming into Second Life. I had a great discussion about this with Quanta when he first bought the land and I’ve been waiting for the next developments.

Today, IntLibber Brautigan announced that BNT has signed a contract with Andalusia Reserve & Exchange to ‘develop his bank software and create a unique inworld precious metals exchange upon which investors can speculate on RL precious metals movements as well as hedge their investments’

Over on SL Reports, one person questioned the wisdom and legality of such investments. Wouldn’t this run into issues with the Patriot Act in the United States, and particularly with anti-money laundering provisions? Also, why buy and sell commodities in Second Life when it is easy enough to do in Real Life? Why not simply go to the Bullion Vault and buy gold directly there?

A reason to buy and sell commodities in Second Life as opposed to in traditional exchanges is that you could, if people set up the precious metals exchanges well, trade in much smaller blocks. I don’t know what the smallest trade you can do on the Bullion Exchange is, but I believe it may be a gram. Currently, a gram of gold costs around U.S.$ 26. In Linden dollars, that is close to L$ 7000. A lot of people may not feel experimenting in and learning from the commodity markets if the smallest unit of trade is that large. However, if the exchanges offer milligrams of gold around L$ 7, it could be a wonderful experience for people to buy a few milligrams of gold here and there. At this level, it might also stay below the radar on issues of money laundering.

As I’ve noted elsewhere, trading in milligrams of gold could also have benefits for transferring currency from one virtual world to another. Likewise, it would be great to buy a milligram of silver or a milliliter of crude oil.

More importantly, another person asks, “Is trading in RL commodities futures ‘crossing the line’?” Perhaps it is, and perhaps that is a good thing. We need to move away from this idea that Second Life is just a game with no real world financial implications. RL banks and other corporations are operating in Second Life and I believe we will see more and more of this. It will raise interesting legal issues as Linden Lab and various countries deal with the implications of a vibrant microcurrency. Undoubtedly, it will bring new regulations into Second Life, yet if this is approached wisely, it could be a great benefit for financial markets, both in and beyond Second Life. It could be a great benefit to the folks and Linden lab, and an even greater boon to those who attempt to establish legitimate financial markets in Second Life.

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