Though buying virtual objects is probably the primary use of Linden $, people do in fact use the Second Life's currency to pay people for things besides just virtual objects.
Many people use L$ to pay for actual real-world services such as programming, website development, writing, editing, translation, etc.
There are lots of classified ads within Second Life - I've even seen ads for people claiming to be real-world therapists, offering to counsel people within Second Life in exchange for L$.
A couple times I got some really cheap 10-minute psychic readings, for about $1 or $2 in real money.
I took some cheap lessons on the programming language PHP (which were a really fantastic, useful introduction), and attended some lectures on astrology (if I recall correctly, I didn't _have_ to pay for those, but they encouraged donations).
Quite a while back, if I recall correctly, I encountered an auction website where people could apparently buy real-world objects for Linden dollars (though I'm not sure how trustworthy that website was and I didn't register).
I myself have used Second Life as an alternative to PayPal just to send money to people without incurring any of PayPal's fees. These days, I also always offer Second Life as a payment method for any services or real world objects I try to sell.
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Originally Posted by escapee  The "value" of the money depends on how many goods are produced in a system. in the case of virtual world, there is no limit on how many virtual goods can be produced as long as the founders keep adding more servers and memory for the purpose of expansion. So there will be no inflation in virtual world with the exception of very rare virtual super powerful items usually found in MMORPG. |
Actually, it appears that inflation is somehow a possibility in Second Life's economy, but, Second Life seems to control it effectively by taking L$ out of circulation in various ways, such as by charging L$ for services like classified ads, upload fees for images, sounds, etc.
One useful (though also dangerous) thing about a virtual currency is, unlike a real-world currency system, it's possible to have 100% accurate knowledge of exactly what the economic system is doing at any given time. All the numbers are in the system. I'm sure the company that runs Second Life could probably even find out anything they wanted about transactions between individual users, etc.
Meanwhile, real-world economic systems involve a lot more guesswork and estimation.
Come to think of it, a virtual currency could actually be a very bad, dangerous system in the hands of any tyrant who wanted to tax the living heck out of everyone and permit no financial privacy to anyone whatsoever, and easily seize the assets of people, create their own money out of thin air at will, surreptitiously fix the currency's exchange rate at a desired level instead of letting the market freely determine the price, etc. It might actually not be such a good idea.
But, perhaps it would be less dangerous if there were a wide variety of different providers instead of one major provider with a monopoly.
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In real world though, we have 6 billion people competing for limited amount of essential goods like food, metals, water & energy with almost unlimited amount of fictitious digital money ( created by CBs all over the world to fund deficit spending ). So the end result will always be rampant inflation unless we learn the magic to create food or energy out of THIN AIR.
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Hmm... well, I don't know. There must be _some_ good, realistic solution that simply hasn't been thought of yet. I hope...
Best wishes,
Apollia