While I hate beating to death the Second Life story, I couldn’t pass up the opportunity to comment on Second Life’s decision to go open source. First off let me say that I always thought Second Life was a great idea and still do. I already considered it sort of a virtual manifestation of open-source (Second Life citizens had to spend time developing items for the game), but now they are actually letting out the code. Although the Techcrunch article touches on what would happen if Linden Labs had given access to the actual source grid, they didn’t really touch on the economic impact of this decision.

According to Secondlife’s homepage statistics, over $1 million US dollars have been spent in the game in the last 24 hours. Additionally, the LindeX currency exchange has traded approximately $150,000 in the past day. While this isn’t a massive amount of money it is fairly significant for a virtual world. Imagine if the U.S. treasury decided to automate all of their systems and then went open source (obviously this would never happen but it’s fun to imagine). There would be widespread panic and the dollar would tank.

In terms of the Second Life, players in the virtual world most likely leave most of their money within the virtual world and have little expectation of making much return on their investment. On the other hand there are those that actually make a living off the game (take for instance Second Life’s first millionaire), should they be concerned? Linden Labs admits that making the code public does create some security risks. According to their opensource FAQ:

This move will eventually increase the security of Second Life since there are now more people looking at the code, highlighting potential exploits and providing bug fixes and updates. There will always those who wish to crack any type of software for malicious purposes. Opening the source code doesn‚Äôt change our exposure to that, since these crackers retroengineer proprietary code anyway. In fact, it takes some of the sport out of doing just that.> We can’t foresee every possible way that some people might be able to create an abusive viewer, but we’ve done a thorough audit and taken other precautions to ensure that the new availabilty of source code will be an unambiguously positive experience. More on this in later questions…
Bottom line, the virtual economy is probably safe for now. All of the serious participants in the virtual economy are most likely risk-neutral in their tolerance for financial risk (this could be an interesting study), and thus they aren’t going to suddenly start pulling out their money. If the virtual economy was made up of risk-adverse citizens, they would be in some real trouble. Rather than being concerned (as I know all of us are), I think this could possibly provide some exciting features for the game. One thought that just popped in to my head: could these programmers create revenue generating robots? Might be interesting.