So you are pondering a career as a Linden currency speculator?
by Urizenus Sklar on 25/10/06 at 3:34 pm
Tell me you haven’t fantasized a career as a currency speculator specializing in Linden dollars. Heck, I *know* someone who tried to do it by manipulating the market with those down home SL gangsta tactics. Is it feasible? Enter Forex Forays: Ideas and Insights from the World of Currency Trading, a blog that specializes in currency speculation and related fun pursuits and offers the following downside:
What you can’t get at SL Exchange is the type of leveraged trading account typically offered by forex brokers. So that’s strike one against a career in LindeX trading. Off the top of my head, the other strikes (and there are many) include: a high spread, low liquidity, no interest rates and therefore no carry trade opportunities, no regulatory oversight (actually that’s not so different from forex, is it?), no Fed, complete dependence on the solvency of Linden Lab, and probably about a dozen other things I’d be aware of if I actually spent time playing in Second Life.
But if you *did* trade, what kind of news would you trade on (events would you manipulate)? See below for the 411.
still quoting:
So just to speculate a little bit, what might move this currency dramatically? Are there events comparable to Non-Farm Payroll reports and inflation comments from the Fed Open Market Committee? If I had to guess, I’d say:
Reports on the financial condition of Linden Lab
Rumors of acquisition of Linden Lab
Incidents of hacking or other security breaches
Technical issues like server crashes (though these might shut the market down entirely)
A real estate boom or bust: much of the Second Life economy involves the buying and selling of virtual real estate and so it heavily skews the economy as a whole. (Sound familiar?)
An abrupt spike or drop in population following positive or negative publicity
Dow Jonas
Oct 25th, 2006
If you read my piece below, “The Dog That Didn’t Bark” you’d see that the worst event in SL history — the 9/06/06 hack reported 9/09/06 — barely shook the LinDeX and didn’t at all cause it to fall, contrary to RL experience. It dipped but didn’t suffer because even more people had to log on with new alts and then rush to buy them outfits and homes because they couldn’t log on to their old accounts with the huge queue to the telephone lines. That evidently kept it steady — a synthetic event in a synthetic world.
Other events that affect the LindEx:
1) closures of the Land Store or slacking of the auctions — sometimes the Lindens simply run out of
2) bluffing with big packages of sells numbering in the milions that scare people into reducing their sell orders which are then
3) Anshe Chung’s tier due dates (ouch)
4) Yes, abrupt spike in population or abrupt decline due to poor service
5) Holidays — some work to sink the LindEx because people go outdoors
6) It’s not really boom or bust, but more like controlled situations: “the Lindens decide to finish off the east coast and throw out lots of sims and glut the market” or “Anshe decides to corner the prime waterfront market in order to drive up prices so high people will move to her new batch of islands”.
You may recall that notorious boom and bust on snow that caused a panic and drove prices up so high that the anti-land-baron lobby caused the Lindens to push out bunches more of sims to compensate.
The Lindens artificially keep land at $4-5/meter, and it’s hard to conceive of an authentic land market under these circumstances. That means the Linden value is also artificially controlled.
People played the LindEx quite handily in recent months and fortunes were made, but then the Lindens intervened by putting in something they call “circuit breakers” to slow overheated sales.
And of course they sell money now they themselve print now, something they said they’d never do. That means they can keep it at any rate they like.
Dow Jonas
Oct 25th, 2006
*Lindens run out of hardware and simply can’t keep creating the land to meet the demand.