By Xavier Mohr
SLReports.net

Rumor after rumor has been floating around about particular events that could have caused the Linden's out-of-nowhere ban on in-world banking.

I was not at all surprised today when I found out that, as usual, Second Life's ivy-leaguers have rushed to the front of the line to pass out credit for exactly what happened.

I was a bit shocked, though, to see an inference on Benjamin Duranske's "Virtually Blind" blog today that it was actually an article at Technology Review entitled "The Fleecing of the Avatars" that was the culprit behind the latest and greatest policy shift from Linden Lab.

"I think the timing may well have been due to [that] story," Duranske said according to a quotation published at Technology Review.

I should probably at this point explain what exactly "Technology Review" is. An independent media company owned by the Massachusetts Institute of Technology (MIT), Technology Review is oldest technology magazine in the world (est. 1899), and aims to promote the understanding of emerging technologies.

Though highly credible given the big name of MIT which backs the publication, in general Technology Review has a relatively small following of devoted tech nuts. Its website, located at technologyreview.com, only receives about a quarter of the traffic of InformationWeek... its larger, tech trend competitor... both of which receive roughly one twentieth to one thirtieth the traffic of larger sites such as CNN.com.

To believe that such a dated article could impact the decision-making of a large, multinational corporation is not only implausible, but ludicrous. Ginko Financial (the subject of the Technology Review article), has actually been covered by larger media outlets including ABC News, Wired Magazine, and Economist.com... and in general was almost a dead subject at the time of its Technology Review appearance.

Furthermore, as we have seen with these exposé-style articles in the past, corporate policy impact is rarely achieved without a massive reaction from the media outlet's readership.

To ascertain that a dated article in a publication which a massive and damning percentage of the SL community has never heard of had this form of policy impact on Linden Lab is – again – just not believable.

Did it play a role? Maybe, but probably not if you want my own personal opinion.

There are other factors which – beyond Ginko Financial's downfall in late July – no doubt contributed to the decision to ban in-world banking.

First, The Bank. Jasper Tizzy blatantly quit Second Life in August, leaving thousands of depositors high and dry as he defended his quitting of SL publicly... almost tauntingly... right here in the comments of SLReports.net and at Strange's Second Life Blog. Reports of losses in this scandal are debatable, though most cite the figure as being somewhere between L$10 million and L$20 million.

Investor Allen, following the sale of the AVIX stock exchange to Arbitrage Wise, declared his AllenVest Financial Bank insolvent in September. While refunds continue to be made via Allen's former AVIX portfolio (now under control of Bogart Beck and SL Capital Exchange), estimates of losses in this matter are agreed to be well over L$5 million.

The list goes on and on, with banks such as Midas, SmartVest, and Banc d'Italia all having been declared insolvent or having disappeared. Losses in Second Life banking, totally aside from the Ginko disaster, have equated to hundreds of thousands of U.S. Dollars.

Let's also not forget that a theft/hack by avatar Hamid Jewell forced Linden Lab to return approximately L$1.2 million to Lindsay Druart of L&L Bank and Trust on November 25th of last year.

The inference that an out-of-date article in a cult favorite tech rag could have solely been responsible for this policy is insane, as it diminishes the importance of all the other bank-related events which occurred between August and December of this year.

Not too long ago, I spoke with an InformationWeek blogger about Second Life coverage in general. I mentioned a frustration of mine about how it seemed contemporary, big-name (at least according to themselves) Second Life writers continually missed the boat in their posts... covering in-world businesses that nobody has ever heard of, covering only the RL/SL events of their advertisers, or citing "expert sources" whose names can be found nowhere on the web in relation to the Second Life platform.

I see this inference as a testament to that. Time and again, ivy-league bloggers and writers look to each other for answers, when they should be looking to the people that use the Second Life grid every day. They tout each other's blah accomplishments as the amazing exploits of the average Second Life college kid or stay-at-home mom go unnoticed.

Mark my words, and even come back and call me on this if you like: six months from now, there will be a half dozen books about the Second Life financial sector... all written by individuals that nobody in the Second Life finance community has ever even heard of, citing sources that exchange managers and former bank employees never knew existed.

In short, be careful what you read. Get your news from more than one source, and always look at the history of a matter when you're trying to determine the cause of something.

I actually like reading Benjamin Duranske most of the time, and feel he is one of the most realistic, down-to-earth writers out there. His opinions are stunning and well-thought-out. I just can't believe that anyone would actually adopt such a narrow view that gives exclusive credit to a media source with such little reach. 

In my opinion, no work of fancruft caused the banking ban... an endless line of scammers inside Second Life did. While the timing may be odd, I think the issues around Second Life banking were far too deep for Linden Lab to even consider the long line of individual stories that have been written on the subject.

If I am wrong on this, and the banking ban was sparked solely by this one article, all of this is a moot point as it would appear Linden Lab is too inept to handle it own public relations in any effective manner... which would lead one to question its effectiveness in other, more important areas of operation and governance.

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SLReports.net User   | 2008-01-11 21:40:17 Good policy, bad implementation. I agree with you on the books, though -- LOL -- betcha $50 bucks the bestseller is going to be written by someone that never even used sl. Quote 0   0

Prokofy Neva     | 2008-01-11 23:20:42 Oh, I am so glad to find someone else saying this, too. Benjamin Duranske isn't an Ivy-Leaguer though. He lives in his own private Idaho -- literally. He went to law school in California, where they don't accredit the law schools. He worked as an attorney for 4 years in two different law firms, then quit to write a book. This book morphed into a book about virtual worlds being published by...the ABA, not a real publishing company. He's now parlayed his virtuality into a slot as a co-chair of a sub-committee of the ABA's technology committee, and all you have to understand what that's about is to page through the ABA and see its gadzillion committees. I call Benjamin "Sycophanske" because one of his techniques as an Idahoan is to suck up to the bi-coastals and gush about how wonderful the California geeks or the East Coast scholars are at MIT so that he can bask in their reflected glow. Technology Review was barely heard of by most people before they began to write about SL. I am SO glad you have put this in to perspective also as to where it fits in the big mainstream media picture. The goal of an extremist extroprian like Duranske is to get himself blog visibility in Google, then get picked up by tech online media, specialized media, and then be asked to pontificate by papers like the Los Angeles Times or the New York Times which then quotes him as an "expert". It's so funny to watch. It's all very self-referential. I know because I'm one of these people quoted there too! And I see how it works! I don't think you can draw a straight line to this policy of LL's from Technology Review or the quoting of Duranske (which is his real point). I asked a senior Linden once what they thought of Duranske's claim that Philip was liable for fraud due to saying something positive about the possiblities of Ginko (which Duranske misquotes). That Linden said: "Who's Benjamin Duranske?" I had to explain... They truly had never heard of him. It's possible that because MIT with all its influential people like Jenkins and Lessig and such represent a little coterie that LL might wish to stay in good with or be admired or taken seriousyl by, any article in there could strike more fear into their hearts. But I ask the larger question on tech review: ok, so that means nonpracticing attorneys like Duranske and an obscure tech magazine get to influence policy in Virtual Worlds? Why? Who says? You are SO write about the books being written. I see them all on amazon.com People you never heard of writing how-tos and design books and such. Traveloques. To be sure, some do know what they are talking about, but some you will definitely not have heard of, and their books are facile and stupid. I totally agree with your assessment of the Ivy League and the problem of their hold on the world, without demonstrable talent or ability often. And the hold that various fake experts can gain. The solution is to keep posting, writing, reporting, and trying to set the record straight. I stayed up all night writing my banking story because I wanted to try to cut the spin that I knew that mainstream media and cynical tech media would give to it -- they would say it was merely Ponzis and not grasp the complexities. And that's all we can do, is keep writing and trying to get cited ourselves, and spend our energies on trying to draft material for real life media. I totally disagree with your claim that Duranske is realistic and down to earth, however. He isn't. He's just a phony, using tough talking. He's all hat and no cattle. Listen to how much he reverses himself and stumbles in that SLCN broadcast, it's funny. The others are all over him like white on rice. What he suffers from is the problem others like Ashcroft Burnham suffer from in trying to push "law" on virtual worlds. They have no breadth and depth of real-life experience APPLYING law. Law is law; but it remains abstract. It must be APPLIED. In real lawsuits. In real investigations. With real due process and real procedures. Not just blather on a blog. You can't just say you think something is unlawful and is therefore liable to prosecution. You have to make the case. People like Duranske who haven't spent years as actual trial attorneys tend to see these things as very black and white. They imagine there is a "precedent" in something like Stroker's case, which is merely a *settlement* -- Duranske really messed up badly there, and talked himself into a total corner -- he was dead wrong, and tried to talk himself around it in hilarious ways. He was called on being wrong by real lawyers on a number of other blogs. The Duranske problem goes deeper that you seem to realize. I've been debating him and exposing what he's been doing for months, and as a result, he's become a shrill and hysterical critic of me, posting a denunciation page of me and blathering utter nonsense, it's amazing how scared something like that gets, and vengeful, when you call their bluff. Is $4 million US, let's say, enough to get somebody's attention? Well, maybe not, if that $4 million was lost on online gambling, land flipping, and prostitution. That's one of the problems in trying to make a case. I have more articles on this on my blog. Quote 0   0

SLReports.net User   | 2008-01-12 01:39:42 Yes the Prok, the wicked wiki of SL. S/he is the fountain of all that is goodly and right. **shakes head** Read Benjamin and figure that it is 95% right and on the point. Read what Prokofy Neva goes on about and assume that it is 95% wrong and 100% motivated to make a personal attack. Many do not realize that Philip is no longer the man and no longer controls the company. The Tao of Linden is no more. Boston is where the edicts come from not California. In that LL is looking to MIT and Boston to take over the running of SL a report in one of the MIT publications is likely to be seen by the board and probably going to effect their actions. Quote 0   0

SLReports.net User   | 2008-01-12 04:20:28 Um, Untitled (Nolan), if you feel that preposterous rumour is true, than you should stand behind it with at least a Second Life name. All you have to do to see Duranske's motivations is to read his silly blog denunciations of me lol. People who really have something to say and are in fact secure in what they're saying don't need to publish that sort of page denouncing another person, dragging in their RL name, and printing falsehoods about them. I don't cross the street to do stuff like that until enough harassment of me occurs, then I fight back. But to sit around deliberately printing up pages of falsehoods is sick. The Boston office was begun by Pathfinder Linden who used to work at Johns Hopkins. Pathfinder was always a very culty believer in Second Life taking over, and very determined. But he's cunning, not super intelligent, in my view. He rarely has written anything of any profound interest. I find it hard that the Boston office of LL could be running SL. I think the Californians are still in charge from everything I can see. I also don't think they've thrown Philip overboard. I do think they care about what MIT thinks because they all golf together or lunch together or watch Star Trek reruns together or whatever it is tekkie old boy networks do with each other. I'd really shudder if MIT were to "take over the running of SL," which I suppose is a feverish Apocolyptic vision that comes out of the ARPAnet ideas and the origins of the Internet. Something like this cannot be allowed to be run by elitist geeks. What I do think is very possible for LL to do is to sheer off or spin off some kind of "edu grid" that they let elites license and use and goof around with, that they will run as heavily gated as a college intranet, and keep blingtards and bloggers and curious reporters very far away. Quote 0   0

SLReports.net User   | 2008-01-12 13:59:44 Track the money. Who has the power and where is it? A linden?? Oh nooo. California?? Oh no. Do you even think Pathfinder knew what was up? Oh No. What lindens are left? Do the old guard know what happens in the board room? Didn't one of the geekie types just leave? Oh yes the CTO. Now if you were the money behind this would you let a bunch of laid back followers of the "Tao of linden" carry on? Now where is that money again? MIT take over the running. Oh come on like they want to mess around with something so boreing. Provide research on useage and the like. Provide a new CTO and maybe a few employees? Run by elitist geeks? Ah yes those nasty geekie types that provide opensource that power the net. Now is the time of marketing and finance. It will be the bankers with lots of charts that run SL in the end. Looking for every angle to increase profits. Smart people read all that there is on a subject. MIT's Technology Review is an authority. Just as the Economist is but who has the brains to read that? The ones who make money. Hummmmm Just call me John. :-) Quote 0   0

SLReports.net User   | 2008-01-12 17:50:32 One of the biggest canards that extremist geeks tell you is that "open source powers the net". Open source was indeed used to create the Internet and has its role. But commerce on proprietary sites like amazon and ebay with closed technology are the real power of the net. There you have it -- the inability of geeks to understand basic economics, so hobbled are they ideologically. Yes, nasty geeks, who are blinkered about reality, untethered, inexperienced, imagining that because everything is digital, and they can code, that therefore they understand everything that was digitalized. It's like kids playing with alphabet cereal. MIT take over SL? No, that's silly. They might get their own special grid on a license, however, that I could see happening -- or it may have happened already, as Lindens have bragged that they have Second Life in a box that they can just hand people, on one of those gigabyte things you put around your neck. I find that the people who read the Economist aren't the ones who make money; they are people who follow politics. Different. Bankers have a very long way to go before they can make SL profitable. It's um...like the Internet. With all those dumb geeks working open source and thinking the whole thing was powered with Coke and Ring-Dings and their disposable time and knowledge. Until ebay and amazon came along, and then they managed to get the thing profitable, not without a lot of losses on the way. This isn't an interesting discussion with naive, young, and anonymous asstards who can't even use their SL names. Quote 0   0

SLReports.net User     | 2008-01-12 18:33:24 Hey Xavier. Read your post and accidentally read part of Prokofy's comment before I realized it was her. Wow. I almost forgot why I don't read her. She's trashing Berkeley law school and the ABA's publishing wing now? Wow. Just... wow. For what it's worth, the comment I made to Daniel Talbot (in what I somewhat niavely assumed was a private email responding to a note he sent about the original article, acutually) just points out that the timing of the move may have been sparked by that piece, not the policy itself. I figure they've had it in the percolator for a while, and when the article hit, renewing interst in Ginko and putting some human faces on the problem, they may have decided to move. A big debate over whether the timing of the release was accellerated by the article or not strikes me as bit of a tempest in a teapot. It was a good move by LL IMO, either way. Best regards, Benjamin Duranske ('Benjamin Noble' in SL) Quote 0   0

Xavier Mohr   | 2008-01-12 19:23:40 Ben, Thanks for the comment. I think that a policy with regard to in-world banking was a long time coming, certainly. The Technology Review article, however, must surely be a coincidence. I think if Linden Lab were going to act based on negative Ginko publicity, they would have done so when all the bigger, mainstream names were covering this. As an insider looking out, I can name at least three "Red Alert" banking incidents in November and December alone which in and of themselves could have sparked this policy... unfortunately, yet another dated Ginko story is not one of them. In short, I believe that the SL financial community had one final chance to prove it could regulate itself after Ginko... obviously we failed. Note: Edited Quote 0   0

James   | 2008-01-12 20:00:14 Benjamin Duranske wrote: A big debate over whether the timing of the release was accellerated by the article or not strikes me as bit of a tempest in a teapot. Mr. Duranske: I am very sorry but I respectfully disagree with you on this. If Linden Lab reacted to this elitist publication's article then it shows where Second Life is caving more and more to real-life interests and has little regard with the things actually being experienced by users of the grid. If this was a just coincidence then it may show that Linden Lab does indeed pay closer attention to governance issues than people give them credit for. I wont even get in to implementation of this policy which by most standards is a total disaster in the making Quote 0   0

Benjamin Duranske     | 2008-01-12 22:28:15 You know... I never mind admitting I am wrong, and the more I think about it the more I think you are completely right here. In any case, timing aside, I completely agree with you that this was a self inflicted wound. The story here is that I was shooting an email back to the reporter on the fly when I said the timing may have been related, and I really hadn't put much thought into the analysis. I should have, as it does reflect on LL's decision making, which is an important part of this story, and because I ought to know by know that everything is on the record with a reporter. Ken Linden, the guy who posted and is likely the architect of the policy, is a lawyer, and lawyers tend to move pretty ponderously and not be overly influenced by the press, mainstream or otherwise. I suspect I was wrong to attribute the timing to that article to any significant degree, and I probably could have stood being a bit more ponderous myself here. Quote 0   0

SLReports.net User   | 2008-01-13 03:52:53 Timeing is everything. Yes there is coincidence. WSE puts their market on hold, MIT folk put out a paper and now we hear about IRS wanting LL-PayPal transactions. Strange that. One also wonders if there is some commercial venture about to be announced. A Real bank providing Linden/US$ banking with ATM/Credit Cards as was desired. So many pieces to the puzzle. Linden to US$ remains at 260-280 no matter what. Cash-outs are always half of what was put in. Wonder if the SEC will take a gander at the fixed and manipulated market of the Linden? Geeks and nerds are good and creative people on a whole who care about their fellow human more than most. Decent hard working people who should have bought stock in Coke and Ring-Dings. Those who have fallen to the Dark Side work for M$, Big Business or some ilegal venture. The rest build the cool things and hand it out because they care. Amazon use loads of OpenSource which they augment with their own software. Bet you they don't use Windows for their servers. No geeks and nerds and you would be still useing Telegraphs and Telex's and paying out huge ammounts to the Bell Siblings. Would the price of Long Distance gone down if it had not been for skype and VOIP? Corporations only like devlopment on their terms and grounds. Would we have the web as we know it today if there hadn't been OpenSource? Not a Chance. Cost of SUN OS any other OS that was capable of being a server made it so that only the financed could serve. Linux was one of the greatest gifts to the world. Vista is an example of what your big company churns out. Stuff that the the user doesn't need or want, that doesn't work and costs more money. Look at beloved SL. 2 Years of stagnation. Same old issues, same old problems. With a stock trade or what ever bling can be added. Windlight, voice. Same as MicroSoft. Merge other peoples ideas and patch them in. Does it make for a product that the users need and want? No. It makes for a product that the Board, Finance and Marketing departments want. Where are the AOL users now? OpenSource is here to stay and praise be for it. The users get better representation and tools with which to work. All is there for all to see. No hidden code that is sending to some marketing company your links, surfing or habits. No hidden back door for some authority to come poking through. Opensource, OpenSimulator is almost to a workable stage. Now we see devlopment of ideas beyond what Lindens are looking at or considering. A growing devloper community is a frightning thing to a corporate entity. No way to keep up. The nightmare for those who profit off of SecondLife is how to profit when there are those that give, provide for free. Sims can be had for 10-50$ a month rather than 300$. Owners can own. See who is there at an IP level. No more sneaking about with alts. Set up your own conditions for entry, script useage, Voice and the like. The wonders of opensource. Quote 0   0

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