New World Notes

Sell Your Linden Dollars for Bitcoins in Second Life (If You Don't Mind the Long Wait & Losing Value from the Trade)

Turns out you can sell your Linden Dollars for Bitcoin, the virtual currency lots of people talk about (even though few of them use it as an actual currency), from within Second Life, where about 400,000 people regularly use the virtual world's official money. Software engineer Sam Williams documents his experience of doing just that, via the Virtual World Exchange. It's pretty time-consuming:

In order to initiate the transfer, I had to visit one of VirWoX’s terminals inside Second Life, where I deposited L$5,195. That’s me in the image above, with what appears to be some sort of cat behind me... The final step was simply to get the money out of my VirWoX account and into a bitcoin “wallet,” a secure address that acts as my public identity on the bitcoin network. This turned out to be, by far, the most time-consuming step. After downloading the recommended bitcoin client, I needed to wait about five hours for it sync with the network.

And if I'm looking at the current exchange rates right, he lost a few dollars of value in the process:

Bitcoin Owners Buying Over USD$650K in Linden Dollars Per Month on a Single Exchange!

Bitcoin may not be used by many people, but here's a very interesting thing: It's being used to buy a lot of Linden Dollars, the official currency of Second Life. Reader Danielle recently pointed us to this very interesting chart of Linden Dollar-Bitcoin transactions on the Virtual World Exchange. If I'm reading it right, 167,629,615 in Linden Dollars were recently exchanged for Bitcoin and vice versa in a single 30 day period -- that's over USD$650,000 at current market rates, per month. On just one third party exchange. (There are others where Bitoin is traded for Linden Dollars, I believe.)

Now, this isn't a massive amount of Linden Dollars in the wider scheme of things, since tens of millions worth of L$ changes hands on a monthly basis, but it is significant. Especially because Linden Dollars can and often are bought and sold for US dollars. The tantalizing question (which we'll likely never know) is this:

Bitcoin Usage Now Under 15K, According to Bitcoin Wiki Link UPDATE: Bitcoin Advocates Disagree, Point to Link that Shows... Less than 25K Daily Bitcoin Users

Last week when I discussed seven reasons why Bitcoin is probably not a good alternative for virtual worlds, one of them was, "Hardly anyone seems to use Bitcoin". This chart linked to by Bitcoin's own Wiki seems to strengthen that claims. According to the Wiki, "[t]he best estimation [of users] is to count how many Bitcoin clients connected to the network in the last 24 hours... The estimate as of September 2011 is about 60,000 users." As of July 2012, however, that number has decreased quite a lot:

Weekend Listening: Bitcoin Podcast With Virtual World Philosopher Ren Reynolds & Economist Jon Matonis

Click here to hear a 15 minute conservation between Ren Reynolds of Virtual Policy and economist and virtual currency expert Jon Matonis talking about Bitcoin. Good introduction to the currency, how it's "mined", how it resembles physical cash, and some of the other fascinating issues around it. Read some of my coverage of Bitcoin here.

Facebook Testing Credits on Third Party Sites -- Big Move to Become the Internet's Main Virtual Currency

Facebook is now testing the use of its virtual currency, Facebook Credits, on third party sites outside of Facebook. This is a huge move but not an unexpected one: When I wrote an analysis paper on Credits back in May, this was among the top forecasts. Since then, I'd roughly estimate about 25-40 million people regularly using Facebook Credits now, just to play games within Facebook. Since then, there's also a lot of non-gaming content you can buy with Facebook Credits, such as music and TV shows, making this install base much more likely to grow. And if this trial launch of third party sites is successful (as is very likely), I bet we'll see more content being offered for Facebook Credits, even physical products and services. That's right: Facebook Credits are on track to become the Internet's official virtual currency.

Speaking of which: Hey, Linden Lab, I hope you're applying to become a third party site that sells your own Second Life virtual currency for Facebook Credits. I really think the nearly 200,000 people in your Facebook group will be excited by that offer. As will the hundreds of thousands more who would be, after it went online.

Occupy Wall Street Protesters Accepting Donations in Bitcoin; Big Test for the Controversial Virtual Currency

Feed the Protest, a media site affiliated with the anti-corporate "Occupy Wall Street" protests that have convulsed downtown New York in recent weeks, is now accepting donations in Bitcoin, the virtual currency. This comes after Paypal declined to complete donations to the site owner's account, reportedly over 8 year old charges made to his stolen debit card. So instead, Feed the Protest has been accepting donations in Bitcoin, starting September 27.

Since then, site spokesman "kh" tells me, "I think we've received about 56BTC so far and that's after I have sent 15 to my cohort to cash out for transportation costs." At current market exchange rates, one Bitcoin is worth about USD$5, so Bitcoin owners have given the cause only about $350 so far. Following analysis from Paul Krugman and Ed Castronova, I've expressed skepticism that Bitcoin, while interesting, could really be a viable currency, in great part because it doesn't seem to be used to buy that many actual goods and services. Given the anti-authoritarian nature of the Occupy Wall Street group and Bitcoin's supporters, this would seem to be a perfect overlap of ideology and functionality. It will be interesting to see how many Bitcoin owners will step up to donate to help the protest keep running.

Hat tip: Karl Stiefvater, who told me, "Here's why bitcoin is a big deal."