Panel Discussion on Second Life Stock Exchanges

This Friday, I will be moderating a panel discussion in Second Life (as my alter-ego Beyers Sellers).  The goal of the panel is to allow the panelists to describe the current state of the markets, and what they would like and expect to see in the future (particularly regarding regulatory and non-regulatory ways to strengthen investor confidence). 

I will be asking questions on my own behalf, and also on behalf of audience members and any others who cannot attend.  So Terra Novans, what questions would you like to ask this august panel? 

Keep in mind that the panel is not the venue to name names of people you believe are untrustworthy, nor to ask why you lost 3000 Lindens in ABC Company on January 12th, etc.  (Come to think of it, Terra Nova probably isn't the right venue for that either.)  Instead, this is a forward-looking discussion about what could be done better in the future, and what progress will require from exchanges, possible regulatory bodies inside and outside Second Life, and whether/should Linden Lab take any active role. 
Here are the details:

Panel Discussion on Second Life Financial Markets
A Metaversed Geek Meet
Co-sponsored by Dr. Dobbs Journal, Information Week and Cornell University
Dr Dobbs Island, Noon SLT, Friday, July 13th.

Panelists:
Maelstrom Baphomet, COO of AVIX
LukeConnell Vandeverre/Sinatra , CEO of WSE
Arbitrage Wise, CEO of SL Capital Exchange (a proposed exchange)
Mystik Boucher, CEO of Mystik Designs, listed on WSE
TraderJohn Susa, Chairman of SL Exchange Commission
OliveEue Sholokhov, CEO, SL Business Bureau
Beyers Sellers, Cornell University Professor (moderator)

Comments

[Richard Bartle]

1.

I don't have a question, but I have to say I like your SL name!

Richard

[Stephanie Gerson]

2.

Thanks for organizing this event Robert, sounds interesting and I hope to attend. I'm sure I'll have more specific questions on the day of, but in preparation, something I've been wondering about SL stock exchanges in general: do different ones invest in SL firms, FL firms that have SL presence, FL firms, all of the above, otherwise? Can an SL firm 'go public'? Is there something we can read about the basics of SL stock exchanges before the meeting in order to prepare?

ps. Sorry to say I haven't had time to read your paper, but soon ;)

[Steven Hornik]

3.

Where will this panel discussion be located?? Dr. Dobbs Island or somewhere else?

[Andy Havens]

4.

As a "regular SL player type guy" (i.e., not a finance person), one question I'd like answered is if there is a generally accepted "good" reason to have SL stock markets or exchanges at all.

In RL, we know why there are stock exchanges, of course. And there are certainly people who game those. But in a sandbox kinda world like SL, I wonder if playing with the fake money, per se, without adding users, content, etc. to the world is inherently harmful to the platform. Not saying I think it is, but the question has crossed my mind. In one way, it almost feels like gambling on little league sports; yeah, you can do it... but is it really part of the whole "ideal?"

Again... I ain't sayin' it's wrong. I just don't know that beyond making money by working the flow, what the real reasons for an exchange in world might be. Does it encourage growth? Do people use these systems to fund SL development? Is is another social activity that is fun/gamey for the players?

So my question is... what's the benefit/point?

And, really... seriously... I'm not trying to be glib or a pain. I just don't get it (yet).

[Numtini]

5.

The notion of an SL specific in game stock exchange is silly. If a company has sufficient income to warrant investment, it can raise its investment outside of game in the real world. If it can't, then it's just playing at playing the stock market and they'll probably nip off with your cash anyway.

[dmx]

6.

I have a question.

How the *heck* do people expect to realise returns on what effectively a closed system dependant on people who want to have fun, not get pushed around by money dorks in suits.

Considering the aparent failure of SL to capture any substantial percentage of the market (Its like a few % max), people are still not asking WHY. My punt;- The money people are loving it to death.

Kick out the gold farmers. (Yes, that sounds like a troll, but Im not joking, I really think people are not thinking this out beyond the gee-whiz factor of buying , uh, polygons on screens)

[Dr. Cat]

7.

I think each new "real world" financial institution that transitions to virtual worlds is fascinating to watch. I certainly spent a lot of time tinkering with the World of Warcraft auction house back when I was playing that game.

My main question would be whether the operators of the various exchanges think there's enough of a critical mass now of business with significant income but cash flow issues that require raising capital to finance expansion, and startups that require seed money but have a decent chance of enough of them being viable. (Obviously some are going to fail & that's acceptable if enough others succeed and give a decent return on investment.) Or are they running these exchanges because they think we're right on the verge of having enough viable businesses to support a market, and they want to be there first and/or encourage that day to arrive sooner?

In either case, I'd like to hear them asked what info they have to support their decisions. Any data they might have gathered (or even estimated) about the number of Second Life businesses, their revenues, total size of the market, etc. would be of interest.

I'm a lot less interested in hearing about how many investors there are and how much they're investing. I assume some number of people would be willing to invest initially because of the novelty, or having run out of other things they're interested in doing with their virtual money. What I'm really more curious about is how likely these markets are to be able to produce enough return on investment to keep people investing for years to come. Is this premature, or has its time arrived?

[randolfe_]

8.

It is earlier than premature. There is nowhere near enough potential liquidity to support anything like a "stock market" in Second Life. At best the market will be an OTC market.

My question for the panel is what exactly an equity security in Second Life represents. It cannot be defined as a residual financial claim on the firm, as I understand it. (a) no one has any financial claim (or property claim) on anything in SL aside from some conceptual IP, that includes actual virtual currency. You don't own it, LL does. (b) the "Firm" may not actually exist, unless you are requiring registrations and filings. (c) anonymity. It's not enough that the market or some other "agency" verifies "firms", but in order for an efficient market to develop you *must* publicize the participant firms and pierce their anonymity, or investors cannot perform due diligence or independent analysis. Everyone knows the primary determinant in the success of a firm is its management.

Assuming I can overcome my trepidations with investing into something where I have no established property rights, no financial claims, in unverifiable firms run by anonymous people, on a market with practically no liquidity, I still have another question. Why? There are no capital controls in Virtual Mayberry associated with moving money *in* from the outside. Given the fxr, I'll always do better to raise capital "abroad" and translate that into SL.

[Shava Nerad/Shava Suntzu in SL]

9.

Thanks, Beyers! Since I ended up working on a 6-figure proposal to bring in an east Asian company this week (real dollars take precedent...!), my gig as grrl reporter in SL got delayed -- so now I believe we'll be sending a video crew from Life4U to film this panel, as a followup to my interview with TraderJohn where I met you last week.

Another nice case where procrastination is going to do me good!

My conclusion so far is that the stock exchanges are a combination of angel investment and social networking/rating -- they don't really resemble an outside stock exchange, but they're a fascinating exercise in microfinance.

As a memetic bard, I wonder if they aren't hurting themselves by calling the institutions "stock exchanges" instead of "rated investor circles" or somesuch.

Looking foward to the panel!

Shava

[Tyler]

10.

Like all currencies in their infancies were backed by some sort of commodity.

In the case of Second Life and it's currency of the Linden, I would like to see steps taken towards making each Linden equivalent to a (small) share of the company that owns Second Life.

This kind of arrangement would surely boost confidence in the enterprise, a kind of a "gold standard" to the technology age =)

[Amarilla]

11.

@ Tyler : excellent ideea, thank you very much !
Starting tomorrow i'm gonna sell " Fictional Virtual Real LL shares " . Well, not me, ofcourse, but LL's avatar wich i'm allowed to operate inside SL according to my SL free-( and fake ) account. Then using the same avatar ( wich i repeat, as EULA/TOS states, belongs to LL ), i'm gonna convert the $L into $ USD !
I love SL ! Eviva el RMT and the Virtuality !

[jay]

12.

Hi, I wish if I can share my research on Leading Stock Exchanges Portals Online here.

Jay

[sopitikoj]

13.

Hi

Hi! I like your site. Thanks for more interesting information. I wish good luck to you. Thanks!


G'night