JZ: It’s a limited license right to certain features of Second Life. But the average transaction size is quite small, and you couldn’t use credit cards because the fees are too high. In July, for example, there were about 12 and a half million transactions that made up the economy in the world.
John Zdanowski: To give people the incentive to create things in world, we implemented the Linden dollar and the Linden-dollar economy in order to facilitate a market for these virtual goods.
Technology Review: What is the reason for having a virtual economy in Second Life, complete with its own currency? Technology Review checked in with Zdanowski on the workings of the Second Life economy and how it has been affected by recent happenings “in world.” Virtual banker: John Zdanowski (avatar shown here) is the CFO of Linden Lab, the company that runs the popular virtual world Second Life. dollars on an exchange called the Lindex, at a rate of about US$1 to L$270. And the Linden dollars aren’t mere Monopoly money: they can be traded for U.S. Residents of Second Life can make clothing and build other virtual objects, buying and selling products using Linden dollars.
(See “ Money Trouble in Second Life.”) So Technology Review asked Linden Lab CFO John Zdanowski, who is responsible for managing the economy of the virtual world, to explain how the virtual economy operates–and the meaning of Linden dollars. Last week there were reports of financial woes, including a bank run, in Second Life, the online world that had more than 1.6 million residents active within the past 60 days.
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