L$ Exchange Panic – Spacebux Value Slides!!!
by Pixeleen Mistral on 17/06/10 at 11:28 am
On the Lindex currency exchange, the value of the L$ fell sharply yesterday as the average L$ per $1.00 USD rose to 279.76 – well above the recent average of around L$ 262. With price levels not seen in over 4 years, the market panic led to a statement from M Linden – "recent weeks have seen some reduction in economic activity compared to the record activity of the first quarter, as well as some uncertainty in the wake of recent corporate anouncements".
fire sale on L$s – but not enough buyers
A master of understatement, M Linden also pointed out, "uncertainty related to the corporate restructuring announced last week by Linden Lab, contributed to an imbalance between supply and demand on the LindeX today".
With volatility not seen in over 4 years and weak demand for L$ spacebux, it is unclear what today’s trading will bring. Land owners who must pay tier fees to Linden Lab with real dollars have little choice but to sell L$s, but as the market digests the implications of last week’s sudden 30% cut in Lab staffing levels, it may be difficult to find enough buyers to maintain the L$ spacebux value against real world currencies. A round of L$ price inflation seems likely if the slide in value continues. Mudflation anyone?
Pepper
Jun 17th, 2010
One hopes that the outworlds are not tying their currencies too closely to the LLD. Wakie, wakie!
IntLibber Brautigan
Jun 17th, 2010
i.e. M Linden really said, “We are broke, Supply Linden could not buy back all the eBux people were dumping on the market, you are all shit outta luck.”
alternate interpretation, “We are sick of subsidizing the exchange rate for all you easily panicked pussies, and unlike all of our other policy changes that have trended toward Big Brotherism, we’re deciding to let the exchange float more free-market like to see how you like them apples.”
Little Lost Linden
Jun 17th, 2010
Rodney Dangerfield in CaddyShack said:
“They’re all selling? Then Buy! Buy! Buy!”
“They’re all buying? Then Sell! Sell! Sell!”
General Drama
Jun 17th, 2010
You are going to see sudden hyperinflation in rental prices to make up for the uncertainty in the market, which will drive more landowners out of the business and more customers will simply stop owning land, or, estate owners will start adopting web based rent payment systems that only accept real world denominations, so the landlords can achieve greater revenue stability, and the inworld economy will shrink by 20-30% again.
Jane
Jun 17th, 2010
Linden Lab does not buy Linden Dollars, the buyers on LindenX are other residents. While the SL economy was growing, Linden Lab increased the total amount of Linden Dollars by creating them out of thin air and selling them on LindenX, making a lot of real (US$) money. Now that the SL economy is shrinking, the total amount of Linden Dollars needs to decrease or there will be inflation. Since Linden Lab doesn’t buy Linden Dollars themselves and there are not enough sinks and not nearly enough demand from new residents, there is nothing that could stop inflation. Some people seem to think that Linden Lab could actually somehow fix or control the exchange rate, but this is not possible without the Lab buying Linden Dollars. If they fix the exchange rate on LindenX or impose limits on how much the rate can change, the trading will simply go somewhere else. This is basic economy, every currency and country in the world has to deal with it. When the economy is shrinking, the central bank can buy back its own currency or there’s an inflation. There’s absolutely nothing you can do about it, and it’s not something created by some greedy people trying to manipulate the exchange rate, the inflation is the result of the current state of SL’s economy.
According to Grid Survey, there currently are about 7.7B Linden Dollars, at an exchange rate of 262 that’s about 30M US$, all of them held by people other than Linden Lab. Most of these people will eventually want to sell their Linden Dollars, but who shall buy them? From a fairness point of view, Linden Lab should buy them as they created and sold each and every one of these Linden Dollars and then made a fortune on LindenX when people traded them. But as said before, the Lab doesn’t buy back Linden Dollars and it is not likely that they will start doing it now considering the recent restructuring. This means that in the end, the 30M US$ will have to be covered by the residents, they’ll simply lose them. By trading at ever higher exchange rates, the loss will be distributed to more people than those currently owening the Linden Dollars, but unless Linden Lab starts buying back Linden Dollars, 100 percent of the loss will be covered by residents in the end.
Ramiz
Jun 17th, 2010
Buy, buy, buy and say bye bye to your money.
ra ra rasputin
Jun 17th, 2010
ha ha ha, my saying is once again prooven,
You MUST not work in SL.
Its just Monopoly, a simulation of an economy, without the brains(aka people that know how stuff works) behind it.
i am happy with my stipendium, lindens get their monthy blowjob through premiums, and i for myself a cozy lil parcel on the mainland of my choice (whithout the flying monkeys even notice me)
hobo kelly
Jun 17th, 2010
Wellsum I reckon that this means iffnya have them thar Spacebux right now is the time to SELL SELL SELL b’fer thems be worth even less tomorrow. That thar means you too Pappy ya ole warbucks millionaire. I bees bein thinkin you must have a pretty good pile stashed ’round that squat somewheres. Time ta Grab that cash wif both hands and make a dash…
Urizenus
Jun 17th, 2010
What Jane said.
I would add though, that I doubt LL figured in the Lindex effect that making the 30% staff cuts would have. The Lab doesn’t seem to realize that confidence in the SL economy is crucial to their success and perhaps even survival. Things could unravel very quickly if there was a panic over the value of the Linden dollar. Just the sort of thing that could be caused by a draconian cut in staff.
It's Unfixable
Jun 17th, 2010
Once again, actual news. Go figure. Where’s the bashing and whining? Oh, wait, Intlibber chipped in there. I’m good.
It's Unfixable
Jun 17th, 2010
But otherwise, yeah, what Jane and Urizenus said. There’s always been this disconnect between LL and its customers, and every year they work hard to widen that gap for some reason. This ivory tower mentality will probably be what does them in in the end.
Rinald Debevec
Jun 17th, 2010
The crash in L$ is serious business, there are at least two options available to Linden Labs to stop the bleeding. One option is for Linden Labs to buy up as many L$ as necessary to bring the exchange rate back up. Another option would be a cut in tier costs, which would offset the pain felt by landowners who rent to others, and reduce expenses for everyone who pays tier. And they better act quickly!
I wonder … are the people who managed the money supply in Lindex stil at LL? Maybe they were laid off too, so there is no one to server a central banker for the Lindens!
Rinald Debevec
Jun 17th, 2010
FYI: by my calculation, as of the current time (7:00 AM 17-Jun-2010) the current sell orders at rate greater than L$262 per USD is approximately equivalent to USD 385,000 …. that’s what it would take to mop up the excess L$ for sale now, I hope that Lindens take action on this ASAP !!!
…. or have they already been buying L$ ??? and still we have a 385k overhang ??
Mrs. Wiggles
Jun 17th, 2010
I don’t know if it’s correct to say that LL doesn’t buy L$. I have a store in-world, on a region I “bought” directly from LL as a new region… so my only tier payment is to LL in US$. To get those US$ out-world I sell my L$ to LL on the exchange. If the limit order market is offering a better price, I’ll sell to that, but usually I just sell straight to LL at the default price to keep it quick and simple. I pay my tier with US$. I’m actually kind of glad now that I’m not paying my region fees in L$.
Jane
Jun 17th, 2010
Mrs. Wiggles, you cannot sell L$ to Linden Lab. If you chose ‘Market Sell’ on LindenX, it just matches your sell order with the best available buy order, but the person actually buying and paying for your L$ is another resident not Linden Lab.
I do not understand why you prefer paying tier in US$. It means that you will have to earn much more L$ inworld to pay your tier fees when the L$ loses its value as it is doing now. This inflation is dramatic for all inworld businesses as it means that their income decreases along with the value of the L$ while they have to pay the same amount for tier in US$. In other words, the inflation only affects the income of residents but not the income of LL. Since most inworld businesses are already making little or no money at all, this means that inworld L$ prices have to increase to keep things going. If you could pay tier with L$, the inflation would not affect you until you cash out.
ɀ
Jun 17th, 2010
@Jane
“Linden Lab does not buy Linden Dollars”
Wrong. Supply Linden has always purchased back Linden dollars at a loss to curb massive inflation.
hobo kelly
Jun 17th, 2010
Wellsum I reckon that thar Supply Linden must be a workin overtime rights about now. Youall can almost hear that thar rush o’ money aflowin’ outta the world.
Persephone Bolero
Jun 17th, 2010
@Jane “I do not understand why you prefer paying tier in US$.”
Linden Labs does not accept region tier payments in L$. It’s not a matter of preference for us private region owners. So, we have to convert our L$ into USD before we can pay LL.
This will filter down to parcel renters and owners as well, who often pay their tier in L$. Because the L$ is falling in value, sim owners will be forced to raise their tier rates to compensate for those losses.
Or maybe more of them will start accepting paypal payments in USD.
Ramiz
Jun 17th, 2010
@Jane “I do not understand why you prefer paying tier in US$.”
Maybe they didn’t trust their own currency. Time for users to save their money. A little loss can be a profit in such a situation.
We
Jun 17th, 2010
Might be an interesting idea to buy a bunch of L$ while it’s cheap, then sell it again after the L$ recovers. Could make a bit of money for nothing.
Pappy Enoch
Jun 17th, 2010
Stop fussin’ n’ worryin’ y’all.
I gots a bail-out plan: First Bank o’ Enoch Holler.
Details a-comin’ rite soon.
Rinaldo Debevec
Jun 17th, 2010
That would be an incredibly BRAVE thing to do “We”… with the 3% commission charged by LL, you can’t win playing a game like that!
Rinaldo Debevec
Jun 17th, 2010
While pondering all this, I just thought of another option for Linden Labs to quell this onslaught of sell orders, and (more importantly) restore some confidence in SL’s economic future. They could establish a fixed exchange rate of L$262 per USD and keep it there until the dust settles (or permanently if required). I know this is contrary to the free-market concepts on which SL is based, but we are in a crisis and this would not detract from the virtual world concept.
Rinaldo Debevec
Jun 17th, 2010
To be more specific: I’m saying a SELL rate of L$262 (same as it was before the meltdown) and a corresponding BUY rate which would be different due to the commission charged on transactions.
Mrs. Wiggles
Jun 17th, 2010
Yes, the only way to pay direct region tier to LL – as of yet, at least – is with hard currency. It would be interesting if in-world L$ payments could pay for regions. It’s not clear what the wider effects of that might be, though, to the in-world economy. At least not to me.
In-world purchases going through Paypal or in hard currency as a general vendor payment option – sort of like on Xstreet, with the US$ option for payment – are an interesting idea. That might even work from LL’s business perspective. They might not care how we’re paying for our content in-world, as long as hard currency region fees keep coming in steadily to them.
It's Unfixable
Jun 17th, 2010
@Rinaldo – “We” may be onto something there. The spike is greater than the 3% surcharge right now, so there might be a bit of money to be made.
Darien Caldwell
Jun 17th, 2010
“Wrong. Supply Linden has always purchased back Linden dollars at a loss to curb massive inflation.”
Wrong. Supply Linden only sells, and never buys. The only purchases are from other residents.
Darien Caldwell
Jun 17th, 2010
P.S. great time to buy Lindens.
It's Unfixable
Jun 17th, 2010
That chart DOES show a panic selloff.
IntLibber Brautigan
Jun 17th, 2010
Jane and Uri,
As Uri knows, I have more than a slight amount of experience with exchanges, both in using them and running them. I can categorically, and with a very qualified voice state that you cannot keep an exchange rate stable within a standard deviation of less than 1% for four years unless you are both buying and selling the currency in sufficient amounts that you, the issuer, are the largest single trader, the market maker.
If a supermajority of the traders by asset value are not Lindens, then there should have been a much more significant variation in exchange rates over the years, given the various rather massive shocks that LL has given its economy, what with gambling bans, banking bans, advertising bans, tier hikes, etc. Each one of these events SHOULD have resulted in a significant step change in the exchange rate of the L$ with it settling at a new equilibrium to meet the new economic conditions. That it did not tells me that the Lindex was kept stable by rather huge framing orders on a daily basis by LL itself.
Jane
Jun 17th, 2010
@IntLibber: The economy was never shrinking before so stabilizing the exchange rate was a matter of how much additional L$ Linden could create and sell. Selling brandnew L$ on the LindeX has been a major source of income for LL for a very long time, no cost, pure hard US$ cash. Now that the economy is shrinking, LL needs to buy back L$, but they obviously don’t as everybody can see, and maybe they can’t because it requires real money, and lots of it, and every US$ they spend on buying back L$ is a real dollar missing from the company’s bottom line, 100 percent, just as it was profit when they sold them. I’m pretty sure LL management and the company’s owners have absolutely ***zero*** interest in burning real hard US$ cash at the time being, they just laid off 30% of their workforce!
Ari Blackthorne
Jun 17th, 2010
Happy that I and my business partners had the foresight to purchase two-months worth of tier (L$ cash-out) on the day after the LL Lay-offs. Should have perhaps chased-out more. -shrugs-.
At least we have 5 more weeks of “no worries” regarding tier payments on a few sims to see how well things settle-in. Remember: you don;t lose any money if you don;t sell. So unless it’s imperative you sell your L$ now (Tier is due tomorrow or something) – then don’t sell. Just sit tight.
The fact that so many are panicking and running on the LindeX shows how … okay, I’ll try to be nice here … dumbfuckably-stupid they are.
LOL!
AHEM!
Ummm, sorry. I don’t sugarcoat shit.
Emperor Norton hears a who?
Jun 17th, 2010
Ari,
You clearly aren’t with the program here; in a panic you HAVE to go buy or sell at grossly distorted, manipulated prices. How else do the speculators make any money if EVERYONE doesn’t do their part? Sure you have two months squirreled away but it is HIGH time to shut down your brain, join the crazed, leaderless herd and sell those Lindens for a loss and then buy them back again for an even bigger loss. The economy doesn’t work if we all don’t join in being fleeced on some transparently obvious scam from some wannabe Gordon Geeko.
Virtual currency speculators have their dreams too Ari.
Gaara Sandalwood
Jun 17th, 2010
From the looks of it, it kind of makes me glad that the people I know don’t convert L$ into USD$, but rather pa for the sim right out of the pocket.
Ari Blackthorne
Jun 17th, 2010
@Emporer Norton…
ZOMG! UR RIGHT!
I’ll go right now!
OMG! It’s not loading fast enough!
The page is NOT loading fast enough!
Hey, can I send you all my L$ and you convert it for me? Yeah, yeah, that would be *WAY* smarter than running over there to try to outrun the run on the exchange!
Please!?!?
-makes hush-puppy eyes-
Jayd3n
Jun 17th, 2010
I used to spend 100k a month in Second Life sometimes, I used to be a big buyer of really big Skin Packs, which cost 4-9K per pack, avatars, and such.
Now I dont shot anymore Because of the Copybot Defense System made by Skills Hak, which Falsely made accusations about over 8 different people I know banned for using Emerald, and refuse to appeal any of us. When you get people Controling our grid like this, You ruin the Economy. This goes for the Onyx Project too that failed.
We as a community do not want Bots monitoring our Regions, Using Banlinks. Although some people like CCA, or Modular Systems might support it, and creators, there are more consumers that given the full facts and operations of these systems/bots would not, and so we all avoid shopping now.
If Skills Hak, wants to use these systems on his own Simulator, and give us all a chance to accept a privacy policy or Leave before scanning, I am fine with it. But to ruin our community as a whole, and help bring destruction to our SL Community I wont have a thing to do with it, People will try to deny this as a fact, but I have over 20+ Different people on my friends list who no Longer Shop in Second Life at all, or buy L$ from Linden Lab, which means Loss of money for them, and for the Creator Community. I hope that in the Near Future Creators who are using such systems will see what they are doing.
PN didn’t have to hack/destroy our grid, we are doing this all to ourselves for no reason, because none of it will fully 100% Stop the Copybot.
Brookston
Jun 17th, 2010
Hmmm… So far the average has dropped a bit today, down to 277. That seems like good news. I guess most of the chicken-littles are out of spacebux?
Curious that it took a week from the announcement of the restructuring for the major panic to happen. Almost as if maybe someone took this opportunity to game the Lindex. But who would have a motive???
Days like today make me wish there was some sort of options market on the Linden Dollar.
Orion
Jun 18th, 2010
@Jayd3n – Better face facts. Anyone who ever wanted to do anything serious with the SL technology has either moved to OpenSim or have downright given up altogether.
This started with the developers / techies who realized that Linden had absolutely no ambition to actually fix or improve the technology itself, then the builders and land developers who realized the risks that renting server space from a less then reliable company had posed to their work, and now the same has started with the content developers who for the longest time have been screaming to protect their pixels and prims – but have now been boxed in to a corner now that they’re forbidden to even back up or save their own works.
From the top down, SL has slowly but surely been marginalized to the point where its turned into nothing more then a simulation of a shopping mall. Its lame, its pointless, and frankly – just like the dot com boom of the 90′s, its bubble has just burst.
Given the layoffs and cutbacks – gee whiz, kinda looks to me like LL is preparing to shut down. First they close down their Singapore offices and lay off 10% of their staff, then their grid goes into meltdown when they changed their configuration to run 2 sims per cpu core as opposed to 1 per core, and now they’ve gone ahead and closed their UK operations while laying off another 30% of their staff. In total Linden has shrunk its company by almost half of what it was, probably more if you include any silent layoffs and outright firings. Oh, and by the way last we forget their ambitions to turn their world into yet another Facebook app by embedding it into a web browser.
I hate to be a pessimist, but it sure looks to me like you guys have some pretty big chunks of blue and white stuff falling down from above! Better break out the iron umbrellas if you plan on hanging around!
IntLibber Brautigan
Jun 18th, 2010
Jane,
“The economy was never shrinking before”
This is factually bogus, you evidently were never around during the gambling ban or the banking ban or the advertising ban, or simply were not paying attention.
The volume of Lindex trading after the gambling ban was about half the average daily in the 6 months prior to the ban, and a slide in land prices from an average of 12 L$ per sqm down to about 6. The land prices recovered by about 15% after that, then Jack dumped a whole new continent on the grid. The advertising ban triggered a crash in land prices from an average of 6 L$ per sqm down to the present <1L$/sqm.
At the time that land prices were 6 L$ per sqm, there were some 32,000 sims on the grid, giving us a land market asset value of L$12,480,000,000. There is now what? 35,000 sims on the grid, and, despite there being many more full sims today than there were then, the value of the land is now a paltry L$ 2,275,000,000, a shrinking of about 82% in the size of the land economy.
I could do a similar deconstruction of the content business, but most content makers know that their revenues today are generally about 1/3-1/4 of what they earned three years ago. Prices have deflated, sales numbers have shrunk.
The SL economy has been shrinking since August 2007. Unfortunately too many of you have been doing nothing but drinking the LL kool-aid that entire time and did not notice until the buzz wore off.
Marx Dudek
Jun 18th, 2010
The sky is not falling people.
After the rate rose to $303, it dropped back down to $280 as the supply of L$ being sold at that price were depleted.
I set L$50,000 last night to sell at L$270 as a partial application of sim tier. When I woke up the next morning, the sale order had gone through.
Everyone just chill. Unless you’ve got a kidney transplant scheduled in Cuba or something, keep your L$ where they are. And this is coming from someone who is normally as reactionary as they come.
Marx Dudek
Jun 18th, 2010
PS: I attribute the spike, in part, to former Lindens and soon-to-be-former Lindens cashing out … and perhaps more than a few selling off at a deliberate loss as a final middle-finger-in-the-air on their way out. I won’t be surprised at all if it happens again.
IntLibber Brautigan
Jun 18th, 2010
I wouldn’t be so sure, Marx. Yesterday wasn’t much different. Volume was down a bit to 80 million, but the average rate remained high with a very high minimum. For the events of the 16th to have been the work of one or two people, they had to have been cashing out in excess of 30 million L$, over $100,000 USD. However the largest sale was 3.5 million, which means at a minimum at least 9 major sales orders.
If that was the extent of it, prices should have returned to normal yesterday, but they remained high. This means there remains significant outstanding orders in the pipeline at high prices. It will be interesting to see what happens tomorrow.
Jane
Jun 18th, 2010
@IntLibber Brautigan: Yes, I’ve been in SL since before the gambling, banking and (abusive) advertising ban. But through all this, the economy didn’t shrink. The size of the economy is not the value of land or a certain product, it’s the total of goods and services traded. Residents lowered prices and worked even harder to keep things going and the SL economy as a whole kept growing. A very good indicator of the size of the economy is the total supply of L$ and the exchange rate. The exchange rate has been stable for a long time, and the total L$ supply has increased steadily since 2006 with only a short tiny decrease in the second half of 2008. Since there are a number of L$ sinks that constantly ‘destroy’ L$, Supply Linden had to constantly create L$ over all these years. Some of the created L$ are dividends, but most are sold on the LindeX. Before 2010 there NEVER was a need to buy back L$. The fact that there is now is a solid indicator that the SL economy is now actually shrinking. In a shrinking economy, either the currency supply needs to go down or the exchange rate needs to go up. IMHO, both are happening right now. LL is doing everything they can think of to destroy L$, including charging for the new voice morph feature in L$! At the same time, the exchange rate is going up. I expect the total L$ supply to decrease from now on, something that has never happened before in SL. One of the most entertaining reads of the coming months will be the LL report on the economy for Q2. How to put a positive spin on all this? Some creative writing needed there!
Father Jones
Jun 18th, 2010
First signs of a company going down the drain. They were able to compensate/recover on the gambling ban by still allowing bingo games that are wide spread over SL. Bingo games that are… a game of chance, pure gambling ! They earn millions of dollars on those Zyngo-games (and clones) + all other games of chance that exist under a ‘game of skill’-cover. Nobody here wants to believe us when we say this because nobody seems to have looked around on that part of SL. We are proceeding in having them finally do what they say in their TOS: to BAN ALL GAMBLING. On that day the L$ will be worth horseshit and party will be over for everyone. All thanks to the crooks at management and the fools keeping their mouth shut at the G-team.
Wordfromthe Wise
Jun 18th, 2010
@Orion .. You are right ! .. Good Observation/Conclusion .. I personally do not yet believe the “preparing to shut down ” would be too drastic but your Shopping Mall argument is 100% true ..
Even if i do not care so much about this, as i spent most of my time in OSGRID. The L$ i have in SL stay there unused, as i can not buy anything to use it somewhere else cause of the TPVP .. not even FullPerm Sculpts .. grrr*
hobo kelly
Jun 18th, 2010
Wellsum there Father Jones, I reckon I wish youall gud luck what wif your work to shut down that thar fake world gamblin’. Youall can sure see the beginnin’ of the end fer that fake world plain as day. Its a comin’
I bees bein copyin’ my all my scripts and I bees bein copyin’ all my textures and I bees bein copyin’ everythin’ I can otta’ my inventory and into my home squat computer fer safe keepin’. One of these here days real soon, the door to that fake world is gonna be locked and everythin’ gone…
IntLibber Brautigan
Jun 18th, 2010
Jane:
“Yes, I’ve been in SL since before the gambling, banking and (abusive) advertising ban. But through all this, the economy didn’t shrink. The size of the economy is not the value of land or a certain product, it’s the total of goods and services traded.”
Oh you ARE a round-eye, aren’t you? Land rentals was the largest service sector of the economy. Really, the only thing besides advertising that a content creator needs to pay for.
And I know both sides of the business so I know that MOST content creators generally pay most of their earnings in rent to their landlord, or to LL directly. So the land business is the largest economic sector, and the value of it is also going to tell you the size of the economy in general.
There was a time that content creators generally only paid maybe 25-50% of their earnings to their landlord.
When demand for land drops, due to content creators cutting expenses, moving out of SL entirely, or just giving up and getting a real life, then that causes land prices to go down.
So firstly, casino owners dumped about 500 sims worth of land on the market when gambling was banned. The cash flow they provided the economy, both in and out, was huge. Casino owners reinvested a lot of money in other enterprises: estates, content businesses, etc. When they went away, a big chunk of the economy went away, an important chunk that supplied a lot of capital to the economy.
Now I’m not surprised you’re one of Prokofy’s idiot drones who bought the claim that 3rd party advertisers were “abusive”. What is truly abusive is someone who attempts to use force to keep someone else from using their own land as they please. You don’t own your view, and you don’t have a right to tell other people what to do on their land. Land fascists like yourself got played by the Lab to support what was really their move to monopolize the advertising market. You got played, and you aren’t even smart enough to notice.
And you really have NO clue what the hell you are talking about wrt to the Lindex and Supply Linden’s trading practices. You have no clue how an exchange really works, but that is part and parcel with your lack of a clue about pretty much anything to do with economics.
Supply Linden has ALWAYS bought and sold L$ at the same time. This is how you stabilize prices: you decide what price range you want to keep exchange running at, and then you place a large number of limit buy and limit sell orders on either side of that range. In this respect, generally Supply Linden would place about 20-30 million L$ in L$ sell orders at about 260-262 L$ and another set of 20-30 million L$ in L$ buy orders at 269-271 L$ per dollar. This ensured that everybody else who actually wanted to buy or sell L$ had to place orders in between these prices.
This is what is called a set of framing orders. It is how a market maker sets the market price. I’ve done it myself on smaller markets a number of times, both on currency exchanges, and on SL stock exchanges. I do it on other fantasy stock market websites, etc. I know how to spot it when it is being done by others.
This is how Supply Linden has operated ever since the L$ price stabilized, and it never would have stabilized if LL had not done this. Real free markets simply DO NOT have the sort of price stability that the Lindex has because real free markets never have anybody that big manipulating prices, UNLESS a government agency is taking an active role in stabilizing their currency or that of another country.
In this case, the government agency is Linden Lab, the de facto government of SL. Only they have had the wealth to keep exchange prices stable for every day of the last four years.
That that stability ended two days ago means either that they’ve stopped stabilizing the price (perhaps temporarily, who knows, maybe they fired the Linden who was responsible for that and they forgot to assign someone else to do their job) intentionally, accidentally, or they simply can no longer afford to do so.
Jane
Jun 18th, 2010
@IntLibber Brautigan: I’m very sorry for making you call me an idiot and fascist by expressing an opinion different from yours. I do fully understand that you had to revert to insults to prove your superiority. I shall not dare to speak again!
It's Unfixable
Jun 18th, 2010
Never mind him, Jane, he pretends to be this big business guy, but through his own ego and self indulgence, he drove his own business into the ground at near light speed. I wouldn’t put too much stock in anything he has to say.
Get it, IntLibber? “Stock”? Like the fake stocks you used to buy and sell?
It's Unfixable
Jun 18th, 2010
BTW, if you bought Lindens on last week’s spike, don’t sell them just yet. The value of the Linden against the dollar has recovered about 50% of what it lost over the last week, but it hasn’t fully recovered. I’d wait about another week. If it does what I think it’ll do, I’ll clear over a thousand dollars in profit.