Second Life Economy

What Is the Second Life Economy?

The Second Life Economy is an in-game marketplace where virtual goods and services are bought and sold in the vivid gaming world called Second Life. The Second Life Economy mimics a free market economy where players can buy and sell virtual goods with virtual money known as Linden Dollars, named after the game's maker.

Users of Second Life, known as "residents", can pay real money (e.g., in U.S. dollars) to get Linden dollars. Linden dollars (L$) can be utilized to buy, sell, rent, or trade virtual land, digital goods, and online services. Linden dollars can likewise be exchanged for U.S. dollars in light of a floating rate. Be that as it may, Linden Labs stop short of permitting this currency to be an undeniable fiat currency or even cryptocurrency.

Seeing Second Life Economy

Second Life is a virtual digital world made by Linden Labs and sent off in 2003 that is still in presence. The game reproduces the real world in that users (known as residents) can roam the world freely, meet and associate with different residents, participate in shared activities, build residential and commercial properties, own lands, and conduct transactions in virtual goods and services utilizing real or virtual currency.

Virtual goods traded in the economy range from art pieces and attire to houses and cars. A few individuals and businesses flourish in the economy, while others battle and might be forced into bankruptcy just like the real economy. It is estimated that Second Life has around 1 million active users each month. In 2015, the GDP of Second Life economy was estimated to be around $500 million dollars with its gross resident earnings averaging $60 million.

Goods in Second Life's marketplace are bought and sold with a centralized virtual currency called Linden Dollars(L$.) To get Linden Dollars, residents convert their real money, for example euros, into Linden Money at the game's official currency exchange site known as LindeX. Like a traditional exchange platform, market and limit buy and sell orders are conducted among the residents.

Linden Dollars are themselves worthless, and their value is possibly subject to currency manipulation or different adjustments to monetary policy by the engineers at Linden Labs, who issue the currency. All things considered, the floating exchange rate among Linden$ and USD has remained fairly stable all through Second Life, and has generally drifted around US $300-400/1L$ for the past couple of years.

The Linden dollar is a shut circle virtual token for utilize just inside the Second Life platform.

Linden Dollars as Virtual Currency

Since Linden dollars has a definite value in the real market, the Financial Crimes Enforcement Network (FinCen), a bureau of the United States Department of the Treasury, recognized Linden Money as a convertible centralized virtual currency in 2013. This means that there are tax suggestions for any transaction including Linden Dollars.

Virtual currency isn't seen as real money, yet as property for tax purposes. Property tax laws, in this manner, apply to Linden Dollar transactions. A taxpayer is required to incorporate the fair market value of any Linden money got while computing his gross income. Assuming that the taxpayer utilized the virtual currency rigorously for investment gains, any capital gains or losses from the investments made are taxed properly.

Virtual goods in the economy can likewise be purchased utilizing legal tender like US dollars. A resident who needs to build a home or business needs to purchase land from Linden Labs. For instance, a 65,356m² of land in the economy costs $1,675 in US dollars. A resident who has different lands might be charged a month to month fee by Linden Labs for utilization of the virtual land. This fee is utilized to pay for renting space on the game's server and increments as more land is purchased by the resident.

The organization's terms of service state that players have no financial or legal claim to their L$, which are classified as a consumable diversion product that can be revoked or erased whenever without reason or warning.

Gambling Inside Second Life

Second Life Economy is a centralized marketplace. This means that Linden Labs, the economy's administrator, holds the power to issue a greater amount of its currency, pull out its currency from circulation, keep a ledger of transactions made by residents, and change the dynamics of the game. In 2007, following a FBI investigation into gambling rehearses in Second Life Economy, Linden Labs changed its game dynamics by forbidding all forms of gambling in its marketplace.

This move prompted casino owners dropping their virtual land use agreements for the utilization and operation of casinos, which contributed a critical amount to the GDP of the economy and gigantic revenue in month to month fees to Linden Labs. Even virtual banks inside the Second Life Economy were impacted as some of them had a ton of "ATMs" situated in the major online casinos. This prompted $L bank reserves being exhausted, bringing about insolvency as the number of withdrawal demands mounted and prompted virtual bank runs.

Real-World Wealth

Individual Second Life users have been reported to have accumulated immense fortunes by operating in the Second Life economy. One pitched model is that of Anshe Chung, a Second Life symbol of a real-life individual who, by means of the Anshe Chung symbol, had laid out a roaring virtual real estate business inside Second Life. Beginning by selling virtual furniture, fashion, and property plans, Chung reinvested her profits into buying up virtual property, and eventually become a virtual real estate financier with $L worth more than US $1 million.

The model illustrates the manners by which the Second Life economy reflects the activities of an economy trading in fiat currency. Today the individual behind Anshe Chung is a web personality and influence who utilizes many virtual planners and programmers to support their Second Life activities.

Moreover, real-world companies are known to enjoy taken benefit of the three-layered virtual market accessible in Second Life. A few companies operate in the virtual economy to advance charitable causes, others use it as an enrollment platform, nevertheless, others use it to market their brand.

Kraft exhibited its new products through its virtual supermarket in Second Life. IBM and Intel conducted virtual meetings. Calvin Klein's new scent release was advanced through the platform. Companies and schools utilize the market as a training device for their employees and understudies in their virtual reality world.

Features

• The Second Life Economy depicts the ability to buy, sell, rent, and trade virtual goods and properties inside the vivid multi-client game, Second Life.
• Second Life was developed by Linden Lab and was sent off in June of 2003. Residents of the program interface with others through symbols.
• Linden Dollars ($L) is the currency utilized inside Second Life.