Let the Games Begin!

With the WSE's announcement that it is leaving the Linden Dollar behind and going to trade solely in World Internet Currency units (WICs), the competition has begun for companies to be from the WSE to other exchanges. Already two have jumped ship: MAI and HOT, and one has sworn allegiance: DDE. As for the other side of the coin, to my knowledge two of the exchanges, VSTEX and CapEx are offering incentives for companies to switch. VSTEX is offering 10% off their IPO/relising fees, and CapEx is offering 100% off of them, both for a limited time.

It's an interesting battle, really. DDE's decision to stay surprised me greatly, as I would have thought that a business being conducted in Linden dollars, established in Linden dollars, and (until now) paying dividends until Linden dollars would have wanted to stay away from changing currencies and paying loads of transaction fees in order to bring any kind of value to their shareholders. But Delicious tends to know what she's doing, so maybe she's got something up her sleeve that I don't know about.

The question in my mind is how many of the WSE's 42 companies will jump ship in the next month. I really can't understand any retail or land company wanting to stay on the WSE now. Scripters and investment firms could still survive in WICs, since the scripters can simply request payment in USD and the investment firms should be savvy enough in whatever currency. I had originally thought the flight would be more severe, but so far it seems like companies are proceeding as normal, much to my surprise.

As to WSE 4.0 itself, I can only conclude that Luke Connell is attempting to reach outside the walls of Second Life, probably for at least two reasons. The first is that if he leaves Second Life and keeps the companies with him, he's outside the reach of Linden Lab's mighty ban hammer. The second reason is that he allows himself to list firms from other worlds, perhaps the Entropia Universe or IMVU. If it works, it could be amazing.

However, also I've got to wonder about the profitability of HCL at this point. We know HCL has defaulted twice on its bonds, and has had no income for 50-some days and counting. HCL owns an island with low occupancy, but tier still comes due, as well as a hefy (and ad-free, I believe) web server. According to the HCL income statements, HCL had L$8.3 million in profit (neglecting the L$2.78 million they owe in bond interest currently*) ending January 1, which is about USD$31,300. I'm not saying they're going bankrupt right away, but between all the expenses (who pays for Connell's RL expenses, anyway?) I've got to wonder if this conversion to WICs isn't just all smoke and mirrors to mitigate some deposit liabilities.

With no one demanding Linden dollars, who is to say what's happening to those dollars? While there may be an initial "dump the WICs" session, I imagine the WIC will be fairly illiquid. Some hefty transaction fees could make sure people keep their "game tokens" as WICs and not as Lindens, allowing Connell free use of all the Lindens deposited into the WSE.

But enough of the theories, I have a more important question to the CEOs of the WSE: Which of you will stand by a twice-defaulted exchange moving away from your primary transaction currency? Which of you will remain next to the CEO who has played a major role in the collapse of not one, but two of Second Life's major banking institutions? And how will you justify it to your investors?



*If anyone can explain to me how you can manage to post an L$8.3 million profit and yet not have L$2.8 million to pay your bondholders with, I'd love to hear that reasoning. Please include the mathematics behind it.