Linden Lab to Sell Tilia

 

In a press release on Tuesday April 23, Thunes announced it was buying the Tilia virtual currency exchange service from Linden Lab. 

To accelerate its growth in the United States and its presence in the fast-expanding online gaming market, Thunes, a global cross-border payments company, is proud to announce that it signed a definitive agreement to acquire Tilia LLC, an all-in-one payments platform. Tilia is licensed in 48 U.S. states and territories and offers payment solutions (acceptance and pay-outs) for online games, virtual worlds, creator economies, and in-app purchases.

Upon closing of the transaction, which is subject to regulatory approvals, Thunes’ bespoke global network to accept and pay in real-time through four billion bank accounts, three billion digital wallets and 550 Alternative Payment Methods (APMs) will become available to merchants across the United States, including current Tilia customers. Using Tilia’s technology, Thunes will be able to offer Visa, MasterCard, American Express, JCB and UnionPay acceptance to Thunes’ customers.

As part of the transaction, Thunes and Linden Research, Inc. (“Linden Lab”), the current majority owner of Tilia, have agreed to an exclusive five-year partnership in which, post closing, Thunes will provide payment processing and pay-outs to Linden Lab, leveraging Thunes’ global network – allowing gamers to pay, and to receive money real-time, in a more cost-efficient way and with increased transparency.

The press release quoted Thunes' CEO  Flores de Kort, “The acquisition of Tilia demonstrates our ambition in the United States. This investment will enable us to leverage Tilia’s capabilities to provide merchants with direct money movement solutions in and out of the United States. Furthermore, Tilia’s deep expertise in online gaming, virtual worlds and token-based payments will greatly accelerate our growth into that fast-growing, exciting industry.”

Linden Lab's Executive Chairman, Brad Oberwager, was quoted as saying, “Thunes is an exceptional company that directly connects nearly every payment method and market worldwide. The combination of Tilia and Thunes will give Linden Lab’s customers more payment choices, and the ability to receive pay-outs in real time, anywhere, into the wallet or bank account of their choice. It will be business as usual for our people and our customers as we bring Tilia and Thunes together.”

 

Tilia was quietly bought by Linden Lab in 2015, but was quiet about it's purpose until 2019 when it was announced that it would be taking over currency exchanges, and people selling Lindens to buy real-life currency would have to register with it, saying this was necessary due to new Government regulations. It would also be used to buy and sell Sansar currency, which at the time was owned by Linden Lab. Eventually Sansar would be sold, but Tilia would continue to handle it's transactions, and make deals with other virtual platforms such as Upland to handle theirs. When Linden Lab was bought by the Oberwager Group in 2020, it was believed Tilia was part of what attracted them. In 2022, Linden Lab announced JP Morgan was making a "strategic investment" in Tilia. 

There is a thread in the Second Life forums about the sale it Tilia (here). Linden Lab would state, "This is good news for Second Life residents and creators. More options without additional costs. We are having an open meeting on May 20 and can discuss in detail."

 

Hat tip: Daniel Voyager

Bixyl Shuftan

Lab Announces Deal With JP Morgan, "Strategic Investment" On Tilia

 

In the Second Life blog yesterday, Tuesday October 18, Linden Lab announced a business deal concerning JP Morgan. 

We’re excited to share with the Second Life community some news about Tilia LLC, the all-in-one payments platform that powers the metaverse. Tilia  was originally built and continues to support the Second Life economy.

Tilia today announced that it has secured a new strategic investment from J.P. Morgan Payments. In addition to the investment, Tilia is also working with J.P. Morgan Payments to further enhance Tilia’s current capabilities throughout its processing platform including providing increased payment and payout methods, expanding pay-out currencies and support services.
Read the full announcement at Tilia.io

Wikipedia lists JP Morgan as the largest bank in the United States and the largest bank in the world "by market capitalization." 

More on this story later.

Bixyl Shuftan

 

Linden Lab To Change Fees For Buying Linden Dollars, Price Increases For Some

    

For those whom buy Linden dollars in larger amounts, you will soon be paying more. A few days ago, Linden Lab announced that starting Thursday April 22, it will change the way it charges people for buying it's virtual currency for Second Life. Instead of a flat fee for any amount, they'll be charging a percentage with the old fee as the minimum.

Effective April 22, the current flat buy fee rate of $1.49 will be replaced by a 7.5% buy fee (capped at $9.99) applied to the total amount of Linden Dollars purchased in each transaction. The $1.49 minimum still applies. 

So what does this mean? If you buy Linden dollars in amounts of $20 or less, nothing really changes. But buying more than that, you'll be paying more. For instance, someone buying $30 USD worth of Lindens, assuming an exchange rate of 250 Linden dollars for one US dollar, will be charged 7.5% of $30 extra, or $2.25, and so pay a total of $32.25 instead of $31.49. This is an increase of 76 cents. For $50 USD, the fee is $3.75, and paying $53.75, an increase of $2.26.

Linden Lab would explain it was trying to manage having to deal with expenses, such as "Investing in our infrastructure to further improve speed and cadence of update" and "Developing new marketing initiatives and entertainment partnerships to fuel growth,"and wanted to "manage these costs in a way that minimizes the overall burden on our Residents." While it was going ahead and taking some loss, the Lab stated they needed a way to make up part of the expenses.

The fee for buying Lindens last went up in June 2018, from 99 cents. It was the second increase in less than a year, in Novemeber 2017 going up from 60 cents to 99 cents, and in June 2017 going up from 40 cents to 60 cents. Part of the reasons for these increases were the reductions in sim tier charged to residents.

The fee for selling Linden dollars, which is 3.5%, remains unchanged. 

A thread was created in the Second Life forums about the topic, which as of the writing of this article is sixteen pages long. Checking the first few, a few residents complained, "LL are digging their own grave by raising the fee." But most seemed more open to explanations and reserved in their criticism, "It is all a matter of take it or leave it in the end. If you are not satisfied you take your business elsewhere. That is the normal procedure everywhere."
 
Source: Linden blog

Bixyl Shuftan
   

Top Stories of the 2010s, Part Three

The 2010s are over. But as we say goodbye to the decade, there's some looking back at what happened. The Newser has covered much in the past ten years, and we're looking at some of the top stories that made the news and got more attention than most.


Read the third part of the series in Extra.

Tilia Needed For Second Life Accounts Starting August 1

While the Lindens gave some news of their upcoming plans during the "Meet the Lindens" events last week (many of which the Newser was hoping to describe in more detail in the next few days), there was one that wasn't mentioned: Tilia. On the Second Life blog yesterday, the Lab announced it would be part of "Important Changes to your Second Life Account."

Beginning on August 1, 2019, Tilia will take over certain aspects of the Second Life service. Tilia enables Linden Lab to continue the Second Life service in its current form through enhanced regulatory compliance protocols.  To achieve this, Tilia will assume responsibility for managing your USD denominated account, which will be referred to as your "Tilia Account."  After August 1, Tilia will handle process credit requests and payments made from your Tilia Account.

 

Effective August 1, in order to continue using Second Life you will have to agree to Tilia’s Terms of Service and Privacy Policy.  A Tilia Account associated with your Second Life Account will automatically be created for you and you will not need a separate username or password to access your Tilia Account.  

 

In order to stay in compliance with regulatory requirements, if you wish to process a credit, we will need certain personal information to verify your identity, including your name, address, date of birth, and social security number (or government-issued identification if you are not a U.S. Citizen).  You may be required to provide additional information to complete the transaction. Tilia will securely store this information so that you should only need to provide it once.

 

Additionally, please note that customers under 18 years of age will not be able to process credit after August 1, 2019 until they reach the age of 18. 

 

As always, Second Life remains free to access and enjoy!  However, if your Tilia Account is inactive for a period of 12 months we will charge your Tilia Account a fee to the extent permitted by applicable law.  If you have questions about the inactivity fee, please see Tilia’s Terms of Service.

What is Tilia? Linden Lab bought the company in late 2015. The name had been registered in 2002, but the business, whatever it's purpose, had shut down. When Inara Pey asked Linden Lab what it was for, the response by their Director of Global Communications was " a subsidiary of Linden Lab, focused on payments and the compliance work associated with operating virtual economies, and it will provide services for both Second Life and Project Sansar." It's also the genus name of about thirty species of trees that are sometimes called "linden trees," which may be why Linden Lab was interested in the name.

The response by the residents has been more than a little confusion, on both various Discord servers and the Second Life forums. The "Tilia Takes Over" thread has already reached 18 pages as of the writing of this article. There were a number of questions such as would people be hit with bills for not buying or selling Lindens? Was this Age Verification all over again? And there were no shortage of comments such as "Linden Labs, I am very disappointed in you. ... Some have accused you of a bait and switch over the Linden Homes and they were wrong. But inducing people to re-up for another year and then springing a change in the terms of service a week later is a true bait and switch."

While some expressed worry, others such as Becky Nosferatu stated there wasn't much for most residents to worry about. Some however would be paying more.

This took me nearly 20 minutes to figure this out. For those who are in the know, there is a new law and a new ISSUE now, involving the way Linden Lab works with real-world money.

When you buy or sell Lindens, you have a middle ground where the Lindens goes to. So think of that as your virtual wallet. This money just sits there until you cash out (send to Paypal) or your buy in (convert it to Lindens).

Now, what the above means is if you have 0.00 in that "wallet" let's call it, it will do nothing to you. You won't get any fees, you won't be charged, etc.

For people who DO cash out or in, if you have money IN that wallet, and you LEAVE IT THERE FOR A YEAR, they will count that as being inactive and start hitting you with fees. It will take from your "wallet" until you either cash it out or use it, or until your balance reaches 0.00.

Everyone, unless you are under 18, are required to pony up your valuable info IF you want to use the cash out/buy in feature to get Linden dollars. This is EXPECTED of you. As of August 1. this new system will take effect. They're already making a new account for everyone on SL.

What it also means though, if you are over 18 and want to cash out, you must offer up personal info, including your social. A ton of people are not cool with that concept, but trust me, they wouldn't ask for it if they didn't have to.

Why are they doing this? There is a new law in place that affects US and international citizens. This new law means that if you are working with crypto (virtual) currency, you CAN NOT hoard this currency for "better prices" before you cash out, because that is LAUNDERING and that is a big no-no. It's like if you get word fhe stock market is going to crash, you pullout all your funds from said stock and sell it. That, my friends, can net you prison time.

If you don't ever cash out or buy in? You don't have to worry about this at all. You are completely immune and nothing will come of it for you.

If you're like me, however, you are subject to fees when you cash out; Linden Lab's fees, and whatever Tilia's going to charge as well. Nothing we can really do about it.

Becky cited an article in Coindesk.com, referring to a statement from the Financial Crimes Enforcement Network.

There's plenty of information and more than a little legalese to go through. But it seems Tilia being put into action isn't just for the Lab to put up more hoops for residents to jump through and another fee to pay (and maybe higher tier prices from landlords having to pass down feed imposed on them to break even). It appears Linden Lab is doing this due to wanting to avoid legal trouble from the US Government.

As Second Life has adapted technically to change to fit with the times over the past sixteen years, it seems it has to adapt to changes, or at least greater enforcement of, laws dealing with the Internet and commerce as well.

Source: Modem World, Wikipedia, Coindesk.com

Bixyl Shuftan

Linden Lab Raising Fees to Buy Lindens, Maximum Fee to Sell

Second Life is about to get a little more expensive.

In the official Second Life blog on Tuesday, Linden Lab announced there would be an "update" to the fees for Second Life users to use the LindeX to purchase Linden dollars and the "credit processing" fees to sell Linden dollars for real money.

Underlying SL’s successful user-to-user L$ economy and the ability to buy and sell L$’s for real currency is a significant amount of ongoing work to ensure that everything remains compliant with applicable laws and regulations, while also preventing fraud and money laundering.

Investing in improvements to these processes and the ongoing compliance work required comes at a cost to Linden Lab, and we will be making some LindeX fee adjustments in order to share a portion of those costs with Residents active in the SL economy.

To buy Linden dollars, the fee on the LindeX is going from 40 cents per transaction to 60 cents.

To sell Linden dollars for real world currency, the current "fee structure" remains the same at one and a half percent with a minimum fee of $3 USD. But the maximum fee is going up from $15 USD to $25.

There was some debate about the issue on a thread in the official forums, some outright opposing it, others conceding the Lab probably had justifiable reasons to raise prices. One woman commented packing up and taking things to Opensim might not be a good ideas as on the Kitely grid "there is a 20% fee to sell on Kitely market and a 45 day wait to get your money to Paypal." and "there are many less BUYERS on Opensim so your chances of selling are possibly less."

If one takes the Lab's explanation at face value, their costs of making sure the transactions go smoothly while taking steps against "fraud and money laundering" are going up, either having to replace equipment, or get new equipment and employees as a result of new regulations or perhaps as a result of complaints about their service.  Hamlet Au of New World Notes suspected the latter might be a partial reason as he'd been hearing reports of some content creators suffering "financial crippling delays" in getting their real-world money from the Lab after selling them Linden dollars. So perhaps this is a case of the Lab responding to the complaints, but felt the users had to help pay for the costs. Hamlet also had another, sobering, explanation, "The Second Life economy is slowly but surely shrinking, so those who are still in the economy will have to pay more to keep participating in it."

In any event, the changes go into effect June 19.

Source: Hamlet Au

Bixyl Shuftan

Sansar Update: Video, Images, Details on Sansar Dollar, Fees, Release Date After March

By Bixyl Shuftan

A couple days ago on January 4, Linden Lab released some details on Sansar. One was a video, Sansar Creation Preview, featuring Loz Hyde, noted for being the man behind Meshworks and has worked on motion pictures such as "Terminator Salvation" and "Guardians of the Galaxy" (2014 interview by Draxtor Despress).



Details about Sansar's virtual currency, the Sansar Dollar, were also made public when "Road to VR" magazine talked to "a representative of Linden Lab." The Sansar Dollar will be made available at the rate of 100 per US Dollar or one cent apiece.

The exchange rate between USD and Sansar dollars will be floating and will vary according to supply and demand. The rate will not necessarily be equal to the exchange rate between USD and Linden dollars in Second Life (which is also floating). To begin with, the exchange rate is about USD1 to S$100.

Second Life users will not be able to directly exchange Linden Dollars for Sansar Dollars, at least "for now." The Linden Dollars would have to be sold on the Lindex for real world currency (in which Linden Lab takes a cut), and then the user used the money to buy Sansar dollars. The representative did say that they "have not yet determined the rate of commission" they will be taking from Sansar users selling it's virtual currency for real world money.

On Upload VR, it was mentioned that as of December 2016, there were 700 content creators in Sansar, and Linden Lab was planning on giving more an early start before the official release. In an interview with Tom's Hardware, the number given was "roughly 500, maybe 600."

 In an interview with Venturebeat, Ebbe Altberg revealed Linden Lab will be charging both transaction fees for purchases in Sansar and "hosting fees" for virtual land, “We want it to be low enough that it does not add unnecessary friction to the economy ... But we do want to get a piece of the GDP and then make the hosting fees for Sansar as low as possible. We charged quite a bit for the hosting fees in Second Life and didn’t have a consumption tax to take part of the GDP. So now we will balance the hosting fees and the consumption fees in the economy.”

At one point in the Tom's Hardware interview, Altberg commented, "we continue to add more creators .... And we will continue to do this throughout the first quarter." Later on, the interviewer asked, "So, you’re running the private creator preview for Sansar for the next quarter or so?" Altberg answered, "Yeah. We’re trying to be data driven in the process as opposed to date driven. I wouldn't say we have all kinds of luxuries and that we’re taking our sweet time, but we want to make sure that it's incredibly great by the time any user can get access."

So it seems instead of the announced release date of January 2017, this month, it looks like Sansar will not be available until at least April, possibly longer.

Sources: New World Notes, Modem World,

Bixyl Shuftan

Linden Lab Annouces Hike in Paypal/Skrill Transaction Fees, "Faster Credit Processing"

For those who use Paypal or Skrill to buy their virtual currency from Linden Lab, their fees are going to go up. On Monday, it was announced in the official Second Life blog that there would be some "Upcoming changes to fees" starting on April 5.

In addition to taking time, processing credit and paying real money to users’ PayPal and Skrill accounts incurs costs to Linden Lab. Each transaction actually costs us more than the $1 (USD) fee we have been charging. To address that and in light of the significant investments we’ve made to improve the related systems and processes, we will be making some adjustments to the fee structure, beginning next month.
 
As of April 5, 2016, instead of charging a flat fee of $1 (USD) per transaction, we will charge a fee of 1.5% of the transaction value, with a minimum fee of $3 (USD) and a maximum of $15 (USD). Additionally, the fee for purchasing L$ on the LindeX will increase 10¢, from $0.30 (USD) to $0.40 (USD) per transaction.

But it wasn't all bad news. Linden Lab stated it has been making some changes to how transactions of money is made. So people will be able to sell Linden dollars for real-life currency from the Lab at a faster time. The Lab is saying most of their purchases of Linden dollars for real ones will be completed within two days, though some will take longer.

We’re happy to announce that we will significantly improve how quickly we’re able to process a majority of credit requests. Based on current data, we estimate that the upgrades we’ve made will allow approximately 75% of process credit requests to be completed within 2 business days. 
 
For a minority of requests, the process may still take 5 business days. Because we’re dealing with sending real money to users around the world, we may require additional information and perform other processes that could impact the time needed. A good rule of thumb is that the better we know you as a customer, the more likely it is we’ll be able to quickly process your credit requests.

On the SL Universe forums, one store owner mentioned getting an email from Linden Lab asking about their source of income. It was suggested the email was related to the changes in how transactions are carried out, though there was no way to confirm it.

To read the blog post in it's entirety, Click here.

Longtime Bitcoin Developer Quits, States It Has "Failed"

By Bixyl Shuftan

Bitcoin, the noted electronic currency that's gained a following among computer geeks attracted to the idea of a worldwide virtual currency and those looking for an alternative to the US dollar and other currencies backed by big banks, has made news time to time, such as when it went through wild price swings in March and April 2013, and when one of it's largest exchanges, Mt Gox, went bankrupt in Feb 2014. Since then, the Crypto currency has continued on, making news recently as the best performing currency in 2015, gaining close to 40 percent.

But a couple weeks ago, it was dealt a major setback when one of it's developers and longtime advocate, Mike Hearn, sold all his bitcoin and published a blog, saying Bitcoin had failed, and would no longer be taking part in it. He wrote, "It has failed because the community has failed. What was meant to be a new, decentralized form of money that lacked “systemically important institutions” and “too big to fail” has become something even worse: a system completely controlled by just a handful of people. Worse still, the network is on the brink of technical collapse. The mechanisms that should have prevented this outcome have broken down ..."

So what are the problems? The big one, Hearn stated, is that the rate at which Bitcoin transactions can be made has been decreasing to the point it's networks are running out of capacity and becoming unreliable. Backlogs at peak times are becoming increasingly common. The blocks in it's blockchain have been steadily increasing, but the capacity cap of each block remains unchanged. While there are several reasons that the capacity limit hasn't been raised, the big one is that it's been effectively controlled by Chinese miners, "just two of whom control more than 50% of the hash power. At a recent conference over 95% of hashing power was controlled by a handful of guys sitting on a single stage."

So why won't they allow the capacity to grow? Hearn wrote, " the Chinese internet is so broken by their government’s firewall that moving data across the border barely works at all, with speeds routinely worse than what mobile phones provide. Imagine an entire country connected to the rest of the world by cheap hotel wifi, and you’ve got the picture. Right now, the Chinese miners are able to — just about — maintain their connection to the global internet and claim the 25 BTC reward ($11,000) that each block they create gives them. But if the Bitcoin network got more popular, they fear taking part would get too difficult and they’d lose their income stream. This gives them a perverse financial incentive to actually try and stop Bitcoin becoming popular."

As Hamlet Au would comment in New World Notes, "Ironically enough ... a currency that is so appealing to libertarians" was being strangled "because of well, the Chinese Communist Party. ... A virtual currency which promised to free us from government oversight and oppression is being successfully strangled in its crib by one of the world's most oppressive regimes. Without hardly even trying."

Despite this blow, Bitcoin remains popular. And it's unlikely it will collapse anytime soon. But as Chris Baraniuk writing for the BBC put it, "it certainly look(s) as though fundamental questions over how Bitcoin works are now coming to a head."

Sources: Mike Hearn, BBC, New World Notes.

Bixyl Shuftan

Bitcoin Declared "Legitimate" at US Senate Committee, Value Climbs, Actual Use Remains Small

By Bixyl Shuftan

A few days ago, a US Senate committee held a hearing about Bitcoin, the noted virtual currency. The meeting was held following the closing of the Silk Road Website due to illegal activity in which users were required to pay with Bitcoins, and 3.6 million dollars worth of the money were confiscated through encryption keys found in confiscated computer equipment. Various representatives, as well as submitted reports were heard. Among the opening remarks was one by committee chair Senator Thomas Carper, "Virtual currencies, perhaps most notably Bitcoin, have captured the imagination of some, struck fear among others, and confused the heck out of the rest of us."

Among the reports heard by the committee was a letter released by the FBI, which stated that they recognized virtual currency as offering "legitimate financial services." The value of Bitcoin, which had plummeted to about $110 US dollars following the Silk Road closure and recovered to $200 by late October, quickly soared to $900, then dropping to just over $700. While it was agreed the rise was driven by speculation, the endorsement of the currency was also seen as a factor, "regulatory interest in Bitcon … traditionally has a positive effect on the price."

While the virtual currency has been turning a few heads, not everyone is impressed. Currently, there are only just over 70,000 transactions using Bitcoin a day. While more than the 47,000 per day in June 2012, and 64,000 in April 2013, as Hamlet Au of New World Notes put it, "There are probably more people using Linden dollars in Second Life then there are people using Bitcoin in the entire world." And this is "years after the hype wave over Second Life has long since died down" while Bitcoin is still clearly in it's.

It was the US government taking an interest in virtual currency that some feel was one of the reasons for Linden Lab suddenly banning third party Linden exchange services in May, a decision that was reversed weeks later. The Podex Exchange allows Second Life residents to purchase Lindens with Bitcoin.

Sources, BBC News, Bloomberg, Daily Dot, New World Notes


Bixyl Shuftan

Virtual Cash Makes Real-Life News with Bitcoin Crash

By Bixyl Shuftan


Last month, the US Department of the Treasury issued "guidelines" aimed at virtual currencies. While the Linden dollar will be affected by the Government's interest, another virtual currency with a larger distribution and volume was also targeted: the bitcoin.

Wikipedia defines the Bitcoin, abbreviated to BTC sometimes, as "an online commodity that is based on an open-source, peer-to-peer encryption protocol … creation and transfer is accomplished on an Internet-based network and is not managed by any central authority." Bitcoins are created through "miners" that automatically add new amounts by "adding codes to a decentralized log, which is updated and archived periodically." They're transferred electronically, either via computer, or through handheld devices like smartphones.

Computer geeks are sometimes drawn to it due to it's online nature. But as banks are not necessary in the exchange, and it is not created by governments, some people are attracted to it due to the lack of involvement by larger institutions. It's also gotten some skeptics because of the lack of involvement by larger institutions, and concerns that drug traffickers and other criminals use it as an easy way to sell illegal goods.

Bitcoin went through what some are calling a "bubble" recently when it's value jumped from about $90 in late March to a high of $260 on the morning of Wednesday April 10th. Then the value crashed, plummeting to around $130 in six hours. It regained some of it's lost value the following day, rising to $160. As of the writing of this article, bitcoincharts.com listed the value as $99.00.


The crash was linked to an unknown bitcoin owner who up and gave away $13,000 in bitcoins via the Reddit social website. But there have been other problems. There have been attempts by hackers to break into computers and make it mine bitcoins for the hijacker. News of this did cause a drop in the value of Bitcoins on April 4, but the price surge continued again. There was also an account hacking in which $12,800 worth of Bitcoin was stolen.


The crash has caused some to feel Bitcoins, or any other unregulated currency, is just too risky. But others are still trading them. Even as all this was going on, people in the US Treasury Department had already taken notice. In March, the Department of Treasury's FinCEN issued it's guidelines, defining Bitcoin as a "de-centralized virtual currency" with "no central repository and no single administrator, and … persons may obtain by their own computing or manufacturing effort." Like Linden Labs, Bitcoin miners in the United States will have to file anti-money laundering reports with the Treasury Department, in addition to registering with them. There is a "blurred definition" however between users of Bitcoin and "administrators." Could a miner be considered just a user as long as the Bitcoins created weren't traded for US dollars or other real-life money?

Already having caught the interest of the US Government, with the news of hacking attacks and the market volatility, bitcoin is highly likely to face additional scrutiny from both American and European authorities. It's laissez-faire days of being free from big business and government may soon be coming to a close.

For information on what a bitcion cost, check this April 14th article at techcrunch.com.

Second image from salon.com

Sources: Wikipeda, BBC News, CNN, verge.com, Modern Payment Systems

Bixyl Shuftan

Jacek Shuftan of Podex on the US Treasury's New Guidelines for Virtual Currency

By Bixyl Shuftan

On Friday April 5th, Second Life Newser wrote about the US Department of the Treasury's new guidelines on virtual currency. This move has consequences for Linden Lab as they'll have to spend time, and probably money on extra lawyers, on required paperwork for them. And it's likely this is just the beginning.

Over the weekend, I met up with Jacek Shuftan, the head of the Podex Exchange. He had spoken briefly about the matter at the time the article then was being written, "every coin has two sides, if (Linden dollars) were virtual currency, it would be more trustworthy, and (Second Life) will have more investors." I felt as a Linden reseller, he would have more to say on the matter.

I asked him, "Was there anything else you wanted to say about the US Treasury and Linden Lab?"

"I am still thinking how close it is, and if it (will) happen," Jacek answered, "For now, it is not an obligatory law. For now, it's guidelines. But it does appear there will soon be some regulations. I think that bitcoin is the main point of this, and Lindens is only side effect. But anyway, it can be a pain for us all."

"Anyway, it's too late to stop (the) economical revolution started with virtual currencies. If they ban LS, people will sell objects in SL for, bitcoins, Avination CS, or whatever else. It's only a few lines of coding. Even the real world is full of such 'currencies.' If you go to car wash and get a special metal coin to put into machine, what is it if not currency? You can sell it to other car drivers, exchange it for a glass of beer, or keep it and sell for a higher price when the price of a car wash will go up. Or you can just return it to car wash owner and get cash back. Isn't it currency like Lindens, guaranteed by the car wash owner."

"But nobody cares. and governments look at virtual coins because they are new, and the turnover is higher than a car wash (grin).

I asked, "So even if the Lab calls it's Linden dollars a 'transferable license' and not virtural currency?"

"Its not important what name Linden dollars are called," Jacek answered, "if real-life authorities say it's currency."

"I am afraid it's inevitable, governments can not let citizens have something independent of them."

"So you think it's more about control," I asked, "and not so much a desire for another source to tax?"

"Both," he answered, "It's not a secret that lots of bitcoins are used for illegal operations, and governments want to control it. But taxation is also something tempting for governments. If we go this way, ie if we tax Lindens, what about (virtual) land? It's also a possession. Should we write in a yearly tax statement - 512 sqm parcel by the sea? Ferrari car, 123 prims, bought on Marketplace?"

"I can bet any money that officials do not know what to do with it. So they are just testing now."

I asked, "So they're just seeing what they can do before people complain?"

"I think (to them), it looks like a pimple." Jacek answered, "New activity, like virtual economy, appears. Nobody cares at first, but its growing and growing. You try to ignore it as long as you can, because nobody likes having a pimple at the end of the nose. But finally, it's so big and painful that you must accept it, and we are close to this moment."

I asked, "So that's how you think government sees it, in your opinion?"

"Yes," Jacek answered, "They tried to ignore it as long as they could. And now, its high time to do something. But nobody knows what. So they gave us this paper … And they can always say it's only guidelines if something goes wrong. We observe the same tendency in Europe, and in the USA. So it's a worldwide problem, I think."

" 'There is no such wickedness, or cruelty, which otherwise would not have committed a mild and liberal government, when it runs out of money.' Alexis de Tocqueville, at least through Google translator."

"We will see what the future brings. But people adapt fast. We are very flexible in Second Life."

The interview then ended, and Jacek went about his way.

Jacek Shuftan’s Podex Exchange, sometimes called the Podex bank, exchanges Lindens for several world currencies. Recently they moved to the Coda sim at (45, 218, 61).

Bixyl Shuftan

Podex’s Jacek Shuftan on Buying Lindens

Second Life Newser recently got in contact with the owner of the Podex Exchange, Jacek Shuftan. He had a few things on his mind. Notably among them were a few bits of advice on how to purchase Lindens safely. “Finances are not the sexiest part of Second Life,” Jacek admitted, though reminded a little knowledge in the area is helpful and convenient.

Jacek’s observation was that most residents on the Grid, “think it is not legal to sell Lindens, which is not true. And they think banks are illegal ... media (stories) make people scared (smile). So let’s start with the bank ban, that the majority of people think that banks are illegal. This is not true. What is illegal is to take deposits and offer (interest). Exchanging Lindens, ie, buying and selling, is legal. Linden Labs allows it. The catch is, it can be risky. But there are ways to minimize the risk.”

“We can describe buying Lindens and the risk with it as a pyramid,” Jacek commented, one with levels of safety, “At the top us Linden Lab, there is no risk buying from them. The next level are third-party exchanges. They are usually registered real-life companies with real-life addresses and telephone numbers, operating on the market. There is a tiny risk as they are not Linden Lab and not as large as they. However, most do not have prices as competitive as Linden Lab, as it depends on the currency rate. Their advantage is they have a larger limit on transactions, if they have limits at all, and a wider range of payment methods. Not just credit cards or Paypal, but they also take traditional money orders, in both buying and selling Lindens.”

The next and bottom level, Jacek explained, are individual avatars not connected to any company, “Let me repeat once again, it is LEGAL to buy and sell Lindens from and to normal avatars. Usually they have good prices, as they are often (content ) creators who sell their Lindens. But it is also the most risky way. If you buy fraudulent Lindens, are are at the biggest risk as they will be taken back from your account, and you can be given a fine 150 percent the amount, not to mention the possibility of a ban from Second Life, as you can be suspected of cooperation in fraud.” With third-party transactions, Jacek stated, there was no risk of fraud.

It was possible to lessen the risk from buying Lindens from individual avatars, “the best idea is to use your logic. If an avatar is one day old, and is offering to sell a hundred thousand Lindens, there’s a 99 percent chance it was stolen. So my humble advice, check how old is the avatar. It is also a good idea to ask how he earned the Linden dollars. He sells, so he should tell it. Check to see if he really has a shop or company/ If an avatar owns an island, he probably does not want to cheat you for twenty Euros.”

“To limit the risk, you can always send him half of the money, then he will send you some of the Lindens, etc. And never buy a big sum as your first transaction with an individual. Try with a thousand Lindens or less. If all is okay, buy more in a few days. Avatars dealing in fraud are usually banned in a few days. Do NOT trust avatars who sell Lindens at extremely low process, like half of Linden Lab’s rate. Why wouldn’t they sell it on the Linden Exchange? You can ask them yourself. Ask the seller to put the Lindens on eBay or any other auction portal which needs registering data. It can always be a fake account, but it needs some effort, so then you can verify him.”

“Ask your friends for recommendations. If someone bought Lindens and wasn’t cheated, you probably won’t be cheated as well. If you pay the seller by post office money transfer, ask him for full details with the address, pretending your bank needs it. You can also ask about telephone numbers, to talk with him personally. Anything that verifies the seller is good for you. If he hides something, that should make you worry. Legal sellers have nothing to hide. Check to see if the seller has a verified account in his profile, and CC connected. Thieves usually do not do it.”

A question that I had for Jacek was with non-US currencies, how does he figure out the exchange rate? “(I) calculate it manually or with script,” he answered, “but US dollars is always a base for calculation. And because of the difference between currency rates, Lindens can be even cheaper from third party transactions than with Linden Labs when you buy in your local currency, as Linden Labs charges in US dollars.”

Jacek Shuftan’s Podex Exchange is in the Moonberry sim at (26, 223, 34), and exchanges Lindens for several world currencies.

Bixyl Shuftan