A look at how Second Life’s Linden Dollars helped boost the value of Bitcoin – Bitcoin News
When people think of Bitcoin’s past, they sometimes refer to topics like Mt Gox, the Silk Road, or the famous pizza transaction. However, it is often forgotten that the online virtual world Second Life played an important role in the early years of the Bitcoin network. In fact, some large Linden dollar (L $) holders who traded their virtual tokens for bitcoin may be crypto millionaires today.
Trade Linden virtual dollars for Bitcoin in the early days
Today almost everyone knows what Bitcoin is as the crypto asset has gained a lot of attention and notoriety over the past decade. In the past decade, the network effect has gained momentum and Bitcoin can be exchanged for almost any fiat currency in the world.
In the early days, this was not the case, even when some popular exchanges such as Mt Gox and New Liberty Standard were operating. The first known Fiat transaction was attributed to Martti Malmi (Sirius) when he sold 5,050 BTC for $ 5.02 with Paypal.
I found the first known Bitcoin to USD transaction from my email backups. I sold 5,050 BTC for $ 5.02 on 10/12/2009. https://t.co/8XcBmzJljf
– Martti Malmi (@marttimalmi) January 15, 2014
During these emerging times, some fiat currencies were traded using Bitcoin. It was also around this time that Second Life’s Linden Dollars (L $) were exchanged for large amounts of Bitcoin. Linden dollars are featured in the virtual world called Second Life, a game developed by Linden Lab in 2003.
When Bitcoin took off into higher gear in 2010-2013, the L $ saw Second Life and the virtual world too rapid growth. Second Life’s virtual economy met Satoshi’s creation in April 2011 when the company Virwox allowed L $ and BTC trading pairs.
Bitcoin had a fascinating relationship with Second Life users and because L $ could be exchanged for fiat, which gave BTC an alternative fiat gateway in the early days. Not only did the two virtual currencies enter into a symbiotic relationship, but it also resulted in people speculating which virtual asset was better.
After the now defunct Virwox conjured BTC pairs with L $, it also opened the floodgates for Second Life’s virtual economy from 2012 to 2013. During this period of Second Life’s bustling growth, there were indeed speculators argued that Linden dollars could become “real money” and a legitimate virtual economy.
In addition, the relationship between BTC and L $ led to the assumption that money laundering was involved in these two trading pairs. With Virwox, a trader could get in and out of the L $ economy, but also access C $, OMC, EUR, USD, GBP and CHF.
A study Written by Robert Stokes in 2012, claims the relationship between Linden Dollars and Bitcoin has increased “virtual money laundering”. The paper stressed that the ability to launder smaller amounts of illegal money through virtual currencies such as BTC and L $ is a problem for law enforcement agencies. Stokes’ paper suggests a “method of incorporating the Linden dollar and bitcoin into the anti-money laundering framework”.
Journalist sells all of his L $ for Bitcoin, user exchanges 3 billion US dollars in Bitcoin for 650,000 Linden dollars
Bitcoin’s relationship with Second Life and L $ faded a few years later, but definitely shared the stage with each other many opportunities. In 2013, Quartz columnist Sam Williams published wrote about how he sold all of his L $ for Bitcoin. As with most stories of BTC trades for L $ on Virwox, the trading experience sounded terrible. Anyone who used Virwox at the time understood that the user interface (UI) was a terrible experience.
However, Williams acquired a tenth of BTC for L $ 5,000 at this point. The conversion rate on June 13, 2021 for a single Linden dollar is $ 0.00313, which means Williams could have exchanged it for $ 15.63 today if he’d kept his L $ instead. Ars Technica author Timothy B. Lee written about L $ and BTC trading pairs continued in July 2012 when BTC hit a high of $ 9 per unit.
Tech author Wagner James Au too wrote an article about Bitcoin (BTC) in July 2012 when he stated that Bitcoiners were buying over L $ 650,000 per month with Virwox. Whoever bought the L $ sold 93,433 BTC, or $ 3.3 billion for L $ valued at $ 650,000 or the Second Life currency valued at $ 2,031, in 30 days.
James Au too laughed at bitcoin three years later when he said that the daily transaction rate in L $ was higher than BTC’s 100,000 confirmed transactions in 2015. James Au’s 2015 editorial said that BTC had been in tech every week for the past 4-5 years – and praised by the mainstream press. ”James Au criticized:
With over $ 400 million invested in Bitcoin-related startups since 2012, it is still only used about 100,000 times a day. That’s not to say that Linden Dollars are superior to Bitcoin – which is, after all, a virtual currency that is inextricably linked to a social game MMO platform. However, after all this hype, one might think that Silicon Valley would quickly have the same skepticism about Bitcoin as it did about Second Life after failing to keep its promises in 2006-2008.
Of course, Bitcoin is in the headlines almost every other day these days, and much more than just $ 400 million is being invested in crypto startups today. Second Life’s L $ has been forgotten as Bitcoin has moved into the spotlight, hitting $ 64,000 per coin this year. After BTC hit $ 20,000 in 2017, mainstream media experts said the crypto asset was “dead,” claiming no publicly traded company would put BTC on its balance sheet.
Skeptics would never have thought that a country like El Salvador would introduce Bitcoin as legal tender. As for Second Life’s Linden dollars in 2021, nobody believes that L $ could actually become a real economy these days. We also don’t know how many others besides Quartz columnist Sam Williams sold all of their Linden dollars for Bitcoin, but it’s likely that a number of people have traded L $ for BTC and have benefited a lot from it.
What do you think of the fascinating relationship between Bitcoin and Linden dollars? Let us know what you think on this matter in the comments below.
Photo credits: Shutterstock, Pixabay, Wiki Commons, Wagner James Au, Timothy B. Lee, Ars Technica, Quartz, Mt. Gox, Twitter,
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