Second Life's Michael Milken

Second Life's virtual economy has seen the addition of high-yielding bonds, thanks to an adventurous venture capitalist who expects bigger opportunities to come shortly.

David Chan, whose in-world avatar Kavai Onizuka operates the Kavai Conglomerate Group, was first introduced to the virtual world in 2004. Second Life, the 3-D online world created by San Francisco-based Linden Lab, already has its own currency, the Linden, but Chan has introduced the first virtual corporate bonds. Chan says he sold 250,000 Linden, or nearly $1,000, in bonds last week.

"I began to look into the possibility of either establishing a bank, go public or issue bonds," Chan says. "The first two choices were deemed too complex, and I went with issuing bonds to enable my company to expand further."

Soon after Chan drew up his first virtual creation (a coffee table), the Macau, China-based entrepreneur opened a construction business in Second Life. Within two years, Chan's company branched from construction to real estate, consulting and research and development, without the requirement of any personal investments.

"Over time, I generated a bit of proceeds," Chan says. "My entrepreneurial side quickly started to identify various business opportunities in other aspects. I never invested a single dollar in Second Life in terms of business."

However, Chan saw that major companies began putting large amounts of money in Second Life, including Dell(DELL), Toyota(TM) and Cisco(CSCO). In his opinion, the introduction of big name real-world entities meant that it would be only a matter of time before the virtual financial markets matured into something that could support more advanced financial services.