Monitoring the Linden Supply

The quantity of currency in the virtual economy is on the rise, and it could lead to big problems for the Second Life economy.

Second Life, the massive multiplayer online world, allows anyone to log on through the Internet at any time and create 3-D computer-generated identities. These avatars are then free to explore the world that San Francisco-based Linden Lab has synthetically created.

While many are using Second Life (SL) as a social tool or as a means of communication, others sell virtual items or services for a profit. Members can enter their real-world credit-card information and get a number of Linden dollars, the main currency in SL, for every U.S. dollar.

Purchases can be made using the Linden currency for virtual land space to build on, different clothing for their avatars, or even adult-related content. As of 9 a.m. EST, nearly $600,000 (real U.S. dollars, not Linden) had changed hands among 1.2 million users over the previous 24 hours.

Linden also can be exchanged for U.S. dollars and other foreign currencies through SL's own LindeX currency exchange. Linden Lab offers market data and history on the Second Life Web site, enabling users to monitor changes in the exchange.

During October, users saw daily volume on the LindeX surpass 20 million Linden for the first time, which figures to roughly $73,000. The LindeX reached the 20 million mark a total of eight times over the course of the month.

Wagner James Au, who has covered Second Life since its infancy as an embedded journalist on his blog New World Notes, said that October was one of the biggest months in SL history. "Beginning of September, Second Life had around 600,000 total accounts. Within a few weeks, hundreds of thousands of new accounts were created, and from the period between mid-September and mid-October, Second Life had added over 500,000 accounts, exceeding a million."