Philip Rosedale on Virtual Economies
From B2.0s December cover story, a few words from Philip on the virtual economy of Second Life:
"I have been in meetings with VCs who said, ‘I cannot buy into the idea that people will pay for virtual items.’ And they are wearing a Movado watch. I ask them, ‘Why did you pay $900 for something you can pay $9?’
The ground rules for creating an online economy is that somebody has got to be able to make money. You need to be able to make money if you want to. If you want to get big you have to be able to turn that money into real currency. We have more than one million residents spending more than $500,000 a day in Second Life. Our GDP and per-capita-GDP is growing at a staggering rate of 200% per month. The exchange rate is 270 Linden Dollars to one U.S. dollar. When you buy currency you are buying it from the market. We literally have to manufacture dollars and sell them into the economy. We inject new money into the economy. We act like the Fed."
"I have been in meetings with VCs who said, ‘I cannot buy into the idea that people will pay for virtual items.’ And they are wearing a Movado watch. I ask them, ‘Why did you pay $900 for something you can pay $9?’
The ground rules for creating an online economy is that somebody has got to be able to make money. You need to be able to make money if you want to. If you want to get big you have to be able to turn that money into real currency. We have more than one million residents spending more than $500,000 a day in Second Life. Our GDP and per-capita-GDP is growing at a staggering rate of 200% per month. The exchange rate is 270 Linden Dollars to one U.S. dollar. When you buy currency you are buying it from the market. We literally have to manufacture dollars and sell them into the economy. We inject new money into the economy. We act like the Fed."
Labels: Second Life, Virtual Currency
posted by daniel davenport at 9:00 AM
2 Comments:
So, when you think of it as a real economy, then the obvious question is: how long is it left in a free market state?
Because even free markets have regulations, monetary policies and governing organisations to ensure proper control over the money supply. For example, who steps in (and how) when the L$ exchange rate grows in strength against the USD?
Excellent points nic. I think Philip would contend that LL is the Fed and they will regulate all monetary policy.
I do think someone will step in and the "how" will be the interesting part.
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