The other day, a client asked me to speak with them about using Second Life as a training environment. They provide training through seminars and web based training and are considering expanding into Second Life.

We talked about using Second Life as a storefront and as a virtual seminar room. We talked about doing mixed reality conferences where the speakers addressed a real conference, but the video stream was piped into a virtual conference room. We talked about ways of handling interactions between the attendees of the real life conference and attendees of the virtual conference, including how to handle registrations, cancellations and refunds.

We talked about providing video on demand in Second Life, and linking Second Life to the companies website. We even spoke about creating machinima, videos of events in Second Life that could be used for the trainings.

We talked about the education information Second Life provides and about some of the more interesting education programs such as Idaho Bioterrorism Awareness and Preparedness Program's Play2Train.

We talked about an article by Anders Gronstedt in Training and Development magazine about the use of Second Life in the training and development industry.

Yet some of the best training opportunities are real life, or Second Life, and not the ones planned out in a training plan. When I got home, I found an event like that which had just occurred.

Since December, 2004, Ginko Finance has been a banking entity on Second Life. They had ATMs around Second Life, where you could deposit money. They paid a very generous interest rate of over 44% annualized. I put a little bit of the free Linden Dollars I had received into the account. I had even thought about changing some U.S. Dollars into Linden Dollars and depositing it in the account.

However, as the old adage goes, if it looks like it is too good to be true, it probably is. I didn’t see any way that this could be sustainable. They reached deposits in the range of 200,000,000 Linden Dollars. That is worth over half a million U.S. Dollars.

In a statement from Ginko Finance, they said,

As you probably already know, Ginko Financial has experienced some challenges in these last couple of weeks. Following the ban on gambling in Second Life we began experiencing a wave of withdrawals from Ginko Financial. This led the funds we keep in reserve for day to day use to be exhausted, which evolved into a full blown panic depleting even our last line of cash reserves and resulting in the current situation, with about L$50,000,000 queued up for withdrawal.

Most people never experience a run on a bank, or a liquidity crisis. Those who follow the market news may have been hearing about a liquidity crisis in the mortgage securities market, but it probably hasn’t affected them personally.

People in Second Life are unlikely to be investing in junk bonds, but that is exactly what has happened to some of the players.

After considerable thought, we have concluded that the only way forward from this is to convert, compulsorily, all customer deposits into a tradeable debt security called Ginko Perpetual Bonds. These bonds, listed on the World Stock Exchange ( www.wselive.com), will allow Ginko Financial to recover from recent events by removing all pressure from our cash reserves while providing accountholders with a way to cash out on an open market.

Last night, I visited WSE’s chat room where people were rapidly learning about trading. There were discussions about market orders and limit orders, and whether or not one should buy or sell the bonds at this point.

For me, it was fun. I read the research on various offerings. I bought and sold some of the bonds and put in some limit orders. I investigated the interface to see if there were any opportunities to gather and analyze data, or even to do some programmatic trading.

For others, it was much less fun. I met people who had earned over 600,000 Linden Dollars and had seen their savings go from around $2,000 down to $300. This was money they hoped to use to pay for a fun trip. Others had actually taken U.S. Dollars, converted them to Linden Dollars and seen their investments wiped out.

I feel sorry for the people who just received a $1,700 education in banking and investments that they had not been planning on. Yet I do hope that people take advantage of this as a great learning opportunity. When I checked last night, trading in Ginko Perpetual Bonds was making up about 85% of the trading volume. This is over a nine-fold increase in trading at WSE. Will WSE handle the growth in trading smoothly?

We shall see. According to press release on July 28th, they’ve already experienced, survived, and hopefully learned from a former employee that embezzled funds.

Will they add new features that will facilitate programmatic analysis, and perhaps even programmatic trading of securities, or the ability to create derivatives? I hope so.

I expect over the coming months, we shall see more unexpected and highly valuable learning experiences take place in Second Life and I look forward to participating in as many of them as possible.