Saturday, July 28, 2007

Financial regulations in SL - good, bad, or inevitable ?

With the unfolding of the WSE-gate, and the Ginko fighting bank run (presumably the second is caused by the rough moves of the LL to smash down the casinos in SL), it is interesting how the future would develop.

Financial institutions are to a huge extent based on trust in the good will of the establishment - none of the real world banks holds the cash reserves equal to 100% of the deposits - otherwise they would simply have no instrument to work with to pay the interest. So, the situation with Ginko is just a typical consumer rush - reading the interview with Nicholas Portocarrero, he seems to be a reasonable person, so hopefully this is a temporary - assuming that the latest news do not shake the economy hard enough to eliminate the high-return opportunities.

But the WSE story does set quite a few interesting examples and questions.. Will the investors just eat the pill and continue as is, or will they form any kind of controlling entity ?

IRL the financial establishments are regulated by the government, does this mean we need to re-run the SLelections with real voting, and all the boring stuff that comes with it ?

SL has been always touted as "a new society", and what I am observing is that the humans behind the screens drive it more and more to be just a replica of what we have already in the first life. So, then, what's the point ? I do think that the interface in firstlife is still way better than in secondlife, and is free to join :)

I've been thinking about this and more and more come to a conclusion that the only way to achieve anything cardinally different is to apply cardinally different rules to build it.

Here goes my pick, just for a mental experiment :-)

  1. The privacy is eliminated. Anyone has the right to know anything about anyone, and the target should be made aware of the activity of obtaining such a knowledge. No animal is more equal than the other.

  2. The ground rule would be "do not do to others that you would not like to be done to you".

  3. A dispute is resolved by a random selection of N members of the society, in a sufficient quantity to avoid the possibility of bribing/biased opinion - who judge the action based on the previous rule, by applying it to themselves.

  4. The only measure of punishment is a temporary of permanent full expulsion from the society.

While the first one does sound scary and orwellian - it is not. The scariness of the lack of privacy comes from the fact of the unequal lack of privacy, and of the imperfection of the ones that have more privacy than yourself. There is only one drawback in this system which I see - it would be vulnerable to privilege escalation by the ones "in the know" of the system of enforcement/informing - which obviously has to be fully automatic and distributed. This needs further thought. However, assuming the "cybergod" could have been made perfect, I think these rules would might form an interesting society. Best ? Probably not. Coherent ? I think so. Definitely more coherent than we have today - the rules will take care that only the "similar" will remain. And, since according to Bruce Schneier, the majority of the people are good - it should lead to the good society.

But until there is a platform to try those things out and experiment - we'll need to wait, and meanwhile we return to our regularly scheduled programming...

UPD: Nice coverage by Wrath here. The "last lottery" winner does make me think I was a bit too naive in the above post, and everything is a bit more fun :)

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