Reality pricks the Second Life property bubble

Did we learn nothing from the dot-com bust? It's just five years after everyone woke up to the absurdity of investing in loss-making petfood retailers promoted by sock-puppets and other wonders of the dot-com bubble. Yet the only advance we seem to have made is that our financial naivety has reached new levels of sophistication. Here in the 21st century, investing in companies that retail physical goods and property is old hat. Now we invest in imaginary companies that trade in imaginary goods and services using an imaginary currency — and yet still we complain when the bubble bursts — or at least the denizens of the Second Life virtual community are complaining.

What did they expect? Did they not realize that a totally imaginary world is even more exposed to calamitous risks than the real world? Entrepreneurs, designers, retailers and property speculators who've built property or acquired assets inside of Second Life shouldn't assume that anything is permanent or sustainable about this early experiment in creating a virtual shared world. Converting US dollars into Linden dollars may not qualify as Internet gambling as defined by Congress, but it's not something you should do with dollars you couldn't afford to lose.

Of course the same can also be said in the real world about a lot of things — buying condo properties off-plan in Florida, for instance. The virtual world of Second Life is merely reflecting the unpredictable nature of life out here in the real world. Setting up in business is risky, the value of any asset can fall as easily as it can rise, and financial stability is as much about fickle confidence as it is about solid fundamentals. Those are realities no one can escape from, not even in the imaginary world of Second Life.