Can We Use Bitcoins in Second Life?

Bitcoin, and the ideas behind it, will be a disrupter to the traditional notions of currency. In the end, currency will be better for it.

Edmund Moy, 38th Director of the United States Mint

         

          “Where are the bitcoins?”

          I asked this question in my last story about bitcoins in Second Life (SL) and I still haven’t found any.  (Significant Other thinks that it’s very vain of me to quote myself.  My

retort is who else writes about this stuff but me?)

          A recent search inworld revealed a few groups that discuss bitcoins purportedly but since many of these were associated with Bitcoin exchanges that had long since closed in

SL, I don’t have any hopes of anything going on.  

          I’ve done a fair bit of reading about Bitcoin since my last story.  (Anyone who’d like a great reading list just drop me a note!) What I’ve come away with is the question, “Can we use bitcoins in SL?”

          Before I answer that question, let me restate the problem first.  

          The only alternative currently for economic transactions inworld is Linden Dollars (L$).  Linden Lab (LL) has a monopoly.  Also, because of fairly stringent U.S. Treasury regulations on virtual currencies used in games and financial exchanges, LL has incentive to run a tight ship.  (Anecdotally, I’ve heard that while Federal penitentiaries are nominally better than state pens, one is best advised to avoid incarceration therein.  Again, my knowledge is strictly anecdotal.)  

          If someone tried to use another form of exchange there have been issues with these.

          Real Life (RL) cash or commodities like gold are impractical.  How would exchanges or delivery be made?  How would foreign exchange fluctuations be factored in?  How would one legally work around LL and US Treasury regulations without spending a fortune on paperwork?

          Credit cards while addressing some of the functional and regulatory issues noted above have another set of problems.  Anonymity and security for starters.  Would you give your credit card number blindly inworld to an anonymous resident?  (If you would then please look me up.  I have a virtual bridge that I’d like to show you!)  Then there’s the cost.  RL financial institutions charge a fee for each transaction charged to a card payable by the merchant.  Which raises another slight problem.  How many RL banks or credit card issuers

would issue a merchant account (Necessary to conduct credit card transactions.) to an anonymous business inworld.  (My guess is that their first phone call after a request like that would be to either the FBI or the Secret Service.)  

          OK, so those are all the traditional RL ways to possibly engage in financial activity inworld.  All non-starters.  

          Which brings me back to my original question, “Can we use bitcoins in SL?”

          The answer could very well be, “Why not?”

          Once one has obtained a bitcoin wallet in RL, one can use bitcoins.  Modifying kiosks or other payment devices in SL to accept bitcoins is a relatively straightforward exercise.  (Says a non-programmer.) Multi-signature bitcoin transactions and escrow services could be used to guarantee that all parties complete the transaction before payment is made.  

          Yes, some complexity and if escrow services are used then there would be some cost involved.  But, compared to what would be involved with any of the former payment methods that I’ve described, a relatively simple and inexpensive exercise.  

          Bitcoin can be a digital currency used across the Metaverse.  

          Bitcoin is secure and anonymous while eliminating the “play money” step with all the costs and inefficiencies that virtual currencies bring to the table.  Bitcoin would be faced with introducing its technology to virtual worlds, gaining adoption by a significant number of parties, and conversion of existing pricing to a one denominated in bitcoins.  

          A few disclaimers.  There’s always a few!  (Significant Other’s worried that I’ll be responsible for the next Great Recession.) 

          I’m not an attorney.  I don’t work with foreign exchanges in RL.  I’m advancing a few ideas here that are probably going to be the focus of some debate around the LL Terms of Service (ToS) and US Treasury regulations.  (Not to mention all the other governments in the world.)  Income earned inworld would still be subject to taxation.  I haven’t a clue how this would all work!  

          But, it’s a great discussion to have, isn’t it?

          I would love to hear from anyone who has any knowledge in this area!  

          Better yet!

          I’d really love to hear from anyone who has actually done anything with these ideas in SL or any other virtual world!  I’m sure my loyal readers (All three of them would like to hear as well!  OK, maybe just two of them, the other really enjoys my stories about nudist resorts inworld.)  

          One final thought, I’m not one of those who subscribe to the conspiracy theory that Bitcoin is a scam put together by the CIA and NSA.  

As always, I’m grateful to all inworld for their kindness and time in stopping to talk with a stranger who was passing through their lives!  

          My Twitter handle is @webspelunker.  Please feel free to follow me and I’d be happy to follow you.

I can be found on Google+ as webspelunker Ghostraven.

My flickr Photostream is located here.

On Skype I’m webspelunker Ghostraven.

I welcome feedback from readers, please either comment on my blog or e-mail me at webspelunker@gmail.com . 

          If you would like to read about my other adventures in Second Life please click here. 

          Open roads and kind fires!