In fact, many users are making a substantial living out of their virtual income, even generating an equivalent of more than $100,000 in real world dollars (Hemp, 2006). On average, Second Life members spend $1.5 million per day on virtual transactions, including virtual real estate transactions (Alter, 2008). While it is difficult to get an accurate estimate of the number of Second Life users due to the dynamic environment, and one in which one user may be represented by more than one avatar, Second Life is estimated to have more than 6.6 million active users from around the world (Moran, 2007), up from a handful of users in 2003 when Second Life started to gain popularity (Wiki Second Life, 2010).
TopVirtual Money
Second Life has similarities with EBay (www.ebay.com), where users trade goods in exchange for money. In order to acquire goods inside Second Life, users can convert their U.S. dollars, Euros, or other currencies into Linden dollars, and vice versa. Linden dollars work in a similar fashion to any other foreign currency (Chung, 2008; Freeman, 2008).
Firms and entrepreneurs are seeing virtual worlds as an opportunity and a new channel to do business and advertise. For instance, fashion designer Giorgio Armani has a store in Second Life that resembles its main store located in Milan (Bonifield and Tomas, 2008). In addition to many smaller firms, large firms such as Dell, General Motors, Toyota, Nissan, Mercedes-Benz, Coca-Cola, and Nike have also stores inside Second Life. Some of them sell their products; others use their shops for branding, or to obtain customer feedback (Bonifield and Tomas, 2008). Virtual Worlds may be the equivalent of adding another dimension to business transactions.
In a real economy, money is defined as having the following two characteristics: money as a medium of exchange, and money as a temporary store of value (Hirshleifer, 1988). So, do Linden dollars really have the characteristics of real world currency? Can Linden Dollars be considered real money? In the case of Second Life, Linden dollars are only used inside the virtual world Second Life which we can say is the equivalent of a geographical boundary, but this does not affect the fact that we can classify Linden Dollars as a currency because they still have the two basic properties of money mentioned above: it is a medium of exchange inside the virtual world, and can be used as a temporary store of value and users can do any transaction like in the real world. Also, real currencies are usually used within a geographical boundary (Yamaguchi, 2004). In the case of the Linden dollar, there is an exchange rate and therefore it is valuable in the real world and people may accept it as a means of payment. Lindex is the official Second Life currency exchange.
Linden Labs has changed their policy related to virtual banks after the collapse of Ginko Financial in August 2007, and as of January 2008, if someone wants to have an ATM inside Second Life or offer interest on an investment in Second Life, then they need to show proof of a government registration in order to avoid cases of fraud that have happened in the past (Second Life News Center, 2008).