Look Ma, No Dollars!

Some years ago, there was a market. It was called GOM. And they did this funny little thing, where they would exchange your L$ and USD$ outside of LL's money exchanger. They offered some wild and crazy rates (something like L$1000/US$4 and upwards, or something like that) which meant that if you earned a lot inworld, then you could withdraw it for more real life monetary bang. Very useful. You could buy in via LL's exchanger, start a business, and extract L$ from GOM and make a tidy profit.

Then one day, a problem occured. The problem was that Philip had an itch. See, while he thought it all well and good that he controlled a good deal of one side of this operation he wanted more. What if, and this was one big if, what if he controlled all sides? What if, instead of all these third party exchangers, what if he consolidated it all under a single, LL controlled roof? And thus, the Lindex was born. Philip said it was good.

As you can imagine, this led to GOM's inevitable downfall, because the simple truth was that LL could afford to take some initial losses in the short run to cause a run on GOM and destroy it. And that happened. And from then on, we have had only the Lindex and the whims of the Lindens to maintain the exchange between the real bucks and the space bucks. At least, that is the story that is told to Second Life children and is taught in Second Life schools. It may be a tad off from the real truth.

In any event, all we've had, and all I've known since I first rezzed, was that the L$/US$ was controlled by Supply Linden, a federal reserve unto himself.

And now, some three years after monopolizing the exchange markets, the Lindens announce that they are opening up foreign exchange rates, for those of us trading in Euros, Pounds, and Canadian dollars. This is a very good thing, because limiting SL to the US dollar isn't so good when fifty percent of your customers aren't Americans. The thing is that LL is offering this service via numerous third party providers who have given their word to LL to honestly exchange L$/Euros.

Gee, that sounds a lot like GOM. Maybe one day, when Linden Lab gets more resources and decides that these third parties aren't quite as effective... and that they'd make more controlling both sides of the equations...

They say those who fail to learn from the past...