IntLib Interviews President of Meta Bank in SL

Today, we are sitting down in the virtual reality of Second Life with Thor Columbia, President of Meta Bank, which exists entirely within the SL universe. Meta Bank is an interesting example of the sorts of enterprises that are developing entirely "in world", and eventually will become concerns capable of being a "real life" living for those engaged in such ventures. From his perspective as President of Meta Bank, Thor has a unique perspective and view of the SL economy, how it began and is developing, and where it is headed. Given the many libertarian aspects of SL, we sought out this interview to gain a look into this perspective for the benefit of our readers.

For the reader, there will be references to various Second Life specific terms or acronym. SL refers to Second Life, RL refers to your “real life”. A Linden Dollar is the form of currency in Second Life, and currently exchanges for US Federal Reserve Notes at about 275 Lindens per $1 FRN.

[9:31] Thor Columbia: Welcome to Meta Bank
[9:31] IntLib: Thanks for having me
[9:32] Thor Columbia: I'm glad to hear some one is covering more about the banking system here in SL.
[9:32] IntLib: Its something of interest to people in the libertarian community.
[9:32] Thor Columbia: Speaking of which I am an active member of the Maryland Libertarian Party. I'm the current Chair of the Howard County Libertarian Party in Maryland
[9:34] IntLib: Ah, excellent. So you campaigned for Mr. Zeese?
[9:35] Thor Columbia: I know him well and he is a great guy, but I have been spending most of my time trying to get a local judge elected, David Titman in Howard County, who just got 30% in the primary. The way the judges’ races work in Maryland is that the Libertarian Party is able to nominate him to the final election day, but he also runs in the primaries against the Democrat and Republican.
[9:37] IntLib: Then that is a good result. Nice way it works down there.
[9:37] Thor Columbia: If we got over 50% of the vote on primary day he would have knocked off one of the competitors but the way it worked out he will be in a 3 way race
[9:37] IntLib: Well, 30% of 3 is a damn good result
[9:38] Thor Columbia: He is running a very good campaign, lots of poll workers, takes NO donations from lawyers as he sees it as a conflict of interest for a judge
[9:39] Thor Columbia: I have been following the Free State Project since day 1. I love the Porcupine you have as your group mascot.

[9:41] IntLib: Does Meta Bank and the other banks in SL operate as full reserve or fractional reserve systems within the SL economy? When you take in x Lindens in deposits, do you lend out x Lindens, or are you able to lend out a multiple of your deposits based on a reserve ratio?
[9:42] Thor Columbia: We loan out a percentage of our total lindens that come in the form of deposits, normally 70%. Also unlike some of the other banks we keep the lindens we get in deposits with in the SL economy. By that I mean, we take in SL dollars and loan to businesses and people in SL. Some of the other banks (Ginko for instance) takes SL dollars and uses them in RL businesses.

[9:45] IntLib: Ah, so they are able to extract dollars from the system. Is there any record of a balance of payments between the SL and RL economies?
[9:46] Thor Columbia: Not really, as you may know there is a market for the SL dollars in which they are freely bought and sold. As it is more dollars come in then go out, however a bank taking money out of the economy and draining the capital base does not seem productive to me. That is why I started Meta Bank, because I wanted to create a capital base that would grow in-world businesses.

[9:48] IntLib: Excellent. Sounds like I chose the right banker. Perhaps you can explain what the typical lending terms are and how they differ from what people are used to in RL?
[9:48] Thor Columbia: They are very similar to the terms in RL, first you pick a plot of land you would like to buy, then you come to us and apply for a loan. If you meet the basic criteria, then we purchase the land for you. You make weekly payments to the bank for a period of 60 to 90 days, depending on the size of the loan, and when the payments are complete we deed full ownership over to you. The payments are pre-calculated to include the amount of the interest in this case (0.25%) per day. If you fail to make several of the payments in a row we will first give reminders, however if no payments are made we sell the land to recoup the bank's loss.

[9:55] IntLib: What percent of your customers default on loans?
[9:56] Thor Columbia: It seems to be relatively low, we have a good filtering system on the front end, the applicant must meet certain criteria, such as age of character, in order to show they are a long term member of the SL community.

[9:58] IntLib: Ah, that brings up a good question: lots of new players looking for First Land, and get business ideas in SL, what period of time must a new character be in SL to qualify?

In walks Extrems Brock, who works at the Bank.

[9:59] Extrems Brock: Hello there
[9:59] Thor Columbia: Hey Extrems
[9:59] IntLib: Hello Extrems
[9:59] Thor Columbia: Extrems is our resident builder and part time scripter here at Meta Bank.
[10:00] IntLib: I believe we met yesterday.
[10:00] Thor Columbia: excellent
[10:00] Thor Columbia: Well to your question, as a general rule loan officers want the customer to be at least 30 days old, as a rule if someone has been active in world for that long they are likely to stick around.

[10:03] IntLib: That sounds reasonable. Another question I had was to employment. It seems to me that there are very limited options for employment in SL: generally the camping chairs and dancing, and the adult industry, if someone wants to move beyond that, they seem to need specific skills in demand, like design or scripting, etc. I myself am trying to find work in SL as a writer. How does the lack of employment opportunities impact the economy and your lending?
[10:06] Thor Columbia: There is a lack of structural employment for the people in-world, however I think that as the companies grow and the economy grows more and more structured jobs will come, however the current system is very freedom oriented, instead of trying to meet the job requirements some one else sets there are thousands and thousands of people creating there own original content and being their own boss. I would compare it closest to a digital ebay; many people sell and buy on ebay. However there is always a lack of tiered employment, though since SL is more like a 3D internet than anything else I expect there will be many job opportunities in the future. Already many fortune 500 companies are moving into SL, and when RL companies realize the incredible potential of SL for making money a couple years from now, I expect to see a gold rush for talented workers in SL, similar to gold rush on programmers during the later 90s.

[10:12] IntLib: That sounds promising. As a long time freelancer myself, in various IT disciplines, I found that in the regular internet, many or most companies are reticent to employ someone strictly on a telecommuting basis. How do you think that that will differ with people working in SL, and will companies realize the difference?
[10:13] Thor Columbia: Well with SL it's all tele-commuting, in fact if you take "Electric Sheep" a successful SL company as an example, the members of the company are in different nations around the world, all working together in real time in SL. In fact as the price of oil continues to rise year after year I would not be surprised if we see more and more companies tele commuting entire divisions via SL.

[10:16] IntLib: Good point. Your reference to "Electric Sheep" is interesting, given its based on a cyberpunk novels name.
[10:16] Thor Columbia: Yeah, I once heard SL described very accurately as "The Matrix" without the scary machines.

[10:19] IntLib: Do you find that most people you lend to keep up their payments by injection of dollars, or through employment and business in world?
[10:21] Thor Columbia: I find that most people get there money through jobs, however there is a large contingent of the population that are shoppers and just spend spend spend. They figure it is only 10 to 20 RL dollars for shopping, however that goes a long way in SL. I myself input money from RL on a regular basis.

[10:23] IntLib: Do you offer any sort of "credit card" services beyond lending for tangible (as much as they can be) assets?
[10:24] Thor Columbia: We are working toward that goal of having a full selection of lending services: land lending, credit card and everything in between.

[10:25] IntLib: I myself made a promise to myself that outside of my blogs' AdSense money, I'd not put any money into SL, to see if this can truly be treated as a viable second economy by someone starting out fresh. Do you see that sort of thing happening, and are people able to work their way up the socioeconomic ladder with that kind of a standard, not subsidizing themselves with dollars?
[10:26] Thor Columbia: Yes I do, the guys at Electric Sheep are making a very good wage off of just their skills; they input no money originally, and I have seen many examples of this. Over 2000 people have SL as their full time RL job: creating content, scripts and everything.
[10:28] IntLib: Wow, that is impressive.
[10:29] Thor Columbia: Yes, this place is a libertarian dream, no limits; you can rise as far as you can imagine. The people that just shop will continue to shop, and some people just play for fun, however if you are entrepreneurial in any way you can accomplish incredible things.
[10:30] IntLib: I figured that there were essentially two classes of folk here, the tourists and those who try to live in world as much as possible
[10:31] Thor Columbia: This place is the great social equalizer, no one knows your name, race, age, social class, you are judged solely on your abilities, talent and attitude.

[10:31] IntLib: Do you have any discloseable data on the growth of the Meta Banks assets to date?
[10:32] Thor Columbia: No I would not want to have the other banks aware of our size. However I will tell you we are growing at a double-digit monthly rate. The largest bank in SL is Ginko Financial, but we intend with a better business system to surpass them with in a year.

[10:34] IntLib: That sounds like you've got your work cut out. What, btw, is the asset size of Ginko?
[10:35] Thor Columbia: Unknown, they don't disclose, however I know enough to say they have upwards of 10's of thousands of USD, however with out any transparence, it may well be in the 100's of thousands of USD. Your guess is as good as mine, however a good guidepost is the number of ATM's they have.

[10:36] IntLib: Okay, so they likely expect so much business from any given ATM eh?
[10:37] Thor Columbia: yes, and I know they have several hundred ATM's with in SL. We are rapidly expanding our own ATM base but we have a long way to go to surpass the Ginko.

[10:38] IntLib: I've talked with some other libertarians who are interested in establishing some sort of a gold backed system of finance here in SL. What do you think of such proposals, and are they really necessary?
[10:40] Thor Columbia: I like the idea of creating a system backed with something real, our current fiat systems seems unsustainable to me, however I don't think anything here will surpass the linden dollar in use, and I like the fact that it is not a pegged currency and instead a free market currency. If you wanted a backed currency I would need it to be traded on an open market.

[10:42] IntLib: Okay, um well, from my involvement in Blogshares and using their B$ currency, I had wondered at the possibility of establishing some sort of currency exchange between the two systems. Would that be viable here?
[10:43] Thor Columbia: btw, do you know where I can get one of those International Libertarian t-shirts?
[10:43] IntLib: Oh yeah, I'll give you a copy, made it myself.
[10:43] Thor Columbia: Excellent. Off topic, but "International Libertarian"?
[10:44] Thor Columbia accepted your inventory offer.
[10:44] IntLib: Ah, well, it started originally as a tiff between myself and L Neil Smith, over his anti-war sentiments and my anti-isolationist ones, but I am applying IntLib to becoming a blog that reports on stories and issues of libertarian concern that happen anywhere in the world.
[10:48] Thor Columbia: Excellent, I am disappointed when some one wants the libertarian ideal for their own country but is not willing to support the fight for human freedom elsewhere. Any way, back to your question, and thanks for the shirt.
[10:50] IntLib: No problem
[10:51] Thor Columbia: It would be interesting to see a completely digital economy using a currency supported by a gold or other metal standard.
[10:52] IntLib: How about exchanges with other virtual currencies, like Blogshares B$?
[10:53] Thor Columbia: I don't know how the logistics would work but it would be interesting to try.

[10:54] IntLib: Okay. Is there anything that you'd like to communicate with the general public or the libertarian community about your experiences or Meta Bank?
[10:55] Thor Columbia: Yes. People live within the limits they place on them self's. I believe we should all strive to higher goals for freedom and self improvement, in the world of business I think we would all do very well to forget the structured higher education model of employment. While it takes more energy to judge a person on ability and not a piece of paper, you will find much greater reward in the end.

[10:59] Thor Columbia: Are you still involved with the FSP? Please pass on that the Howard County Libertarian Party fully supports the goals of the Free State Project. After the election we intend to help in any way we can to create the light on the hill that this county needs in the form of the Free State Project.
[11:02] IntLib: That is great to hear. We're still working towards our ultimate membership goals, but have also launched a group called The First 1000, of a thousand people who have pledged to move within a year. So far, we've got over 430 in state, though we started with about 250 who were already residents.
[11:03] Thor Columbia: In fact I hope to have a house in New Hampshire with in a couple years, however I am not dependent on the [membership] threshold as I am coming to join the FSP one way or another. I think we need some more people involved, however I think the greatest need is more in the way of money for the Libertarian cause, and that is what I am working toward here and in several RL companies. I own a number of companies including a biodiesel company. We are building a 4 million gallon operation here in Maryland. However I would like to make New Hampshire the RL head quarters of Meta Bank as it grows.

[11:14] IntLib: Another question I had about SL economics is, that in RL, for example, settlement and development began with agriculture and hunting, then light industry and heavy industry. Why do you think that no attempt has been made to enable those sorts of resource utilization economics in SL to build wealth and infrastructure?
[11:15] Thor Columbia: In SL there are truly only two commodities, other than the skills of people which is a natural commodity, those two commodities are land and primitives. Labor, land and prims. We are rapidly refining these to create original content and workable structures. It’s amazing to see the evolution of it all.

[11:18] IntLib: Okay, a question I had about the limitations of primitives for given lots, why isn't there a mechanism for people to buy more primitives for their land, or is there?
[11:19] Thor Columbia: well currently if you run over you just buy more land and use the primitives on either that land or your old land

[11:19] IntLib: Sure, but doesn't that generate a lot of open land, which is generally useless in a virtual system like this?
[11:22] Thor Columbia: Understood, however that works out well as it gives open space next to another very developed structure. It all depends on how much detail you want on a property, most places do not need so many prims
[11:23] Extrems Brock: Oh yeah Thor, we need more primitives again.
[11:23] Thor Columbia: However it would be nice if they sold prims without the land, it would make it simpler.

[11:24] IntLib: Yeah, I guess my question philosophically is, outside of creating open space between structures as you say, is that its nice to have a sort of environmental sentiment (as it seems to me), but without trees and animals living in the space, what is the point?
[11:25] Thor Columbia: Esthetics I suppose, however it is more basic then that, each square can only support so many prims I think is the deal, some thing they need to upgrade.

NOTE: Each area of ~65,000 sq meters, called a ‘region’ or ‘sim’ is supported in the Linden Labs Network by a single server. Too may prims in one region overloads the server and causes what is called “lag”, or a slowing of the sim. This also tends to occur when there are lots of people in a single sim at one time, particularly people who are implementing their own personal primitives. In order to minimize lag, LL restricts the number of prims per square meter that land owners can build.

[11:26] IntLib: Okay, um being new, I'm not totally clear on its definition, so perhaps you can explain what exactly a "primitive" is? I understand they are objects. (Thor conjures a wood textured cube on the conference room table)
[11:27] Thor Columbia: That is a prim
[11:27] Extremes Brock: A primitive is a physical basic 3D shape. Each primitive uses server resources.
[11:27] Thor Columbia: It is a box or cube or a 3D shape in which you can change and mold into anything and everything you see, the chair your sitting in, the wall, everything in the room is made of many prims, colored and changes and made to look like other objects.
[11:28] IntLib: Okay, I understand that, but for instance, is one of these chairs one primitive, or multiple primitives?
[11:28] Extrems Brock: Multiple, you can only make complex shapes with multiple primitives.
[11:28] IntLib: So a more complex object eats up more primitives.
[11:29] Thor Columbia: You got it. Each lot of land gets a certain number of prims, and if you go beyond that you must buy more.
[11:29] Extrems Brock: 3 per 16m, 117 per 512m, 15000 per 65,536m, 65,536m = one region
[11:30] IntLib: Okay, understood. I've been shopping land, btw, so I have a basic understanding of the prim limits on each parcel. Would you say that there is a significant market in people buying land and developing sub parcels for resale, or is that market oversupplied? Can the land barons buy a parcel and tap off some of its prims for themselves, then resell the land with fewer prims?
[11:32] Extrems Brock: This can be done on a private estate (I think).
[11:33] Thor Columbia: Yes there is money in land resale, however it has to be done on a very very large scale to be economical.
[11:34] IntLib: Do the apartment building developers do very well?
[11:34] Thor Columbia: They do all right, the big money is in developing plots for RL companies that are willing to pay huge sums for custom jobs.

[11:36] IntLib: Ah, interesting. Some friends of mine own Uvvy Island, and are developing a sort of corporate center there, and I've seen similar setups elsewhere, but they seemed under occupied, in fact, a LOT of SL seems under occupied. What is your take on that?
[11:37] Thor Columbia: Well that will change over time, and get more dense over time, at first a player may get land and then not do anything with it. The land gets abandoned and people start using it more and more for more productive things

[11:38] IntLib: Oh, another question about First Land. Is that something a new user is expected to buy outright, or do they finance it?
[11:39] Thor Columbia: They normally buy out right since it is less then two USD

[11:39] Thor Columbia: Intlibber, it's been a pleasure but I have to log off for an hour or so.
[11:40] IntLib: Sure no problem, I was just going to thank you for your time.
[11:40] Thor Columbia: I'll contact you later. It's great to hear what the FSP doing.
[11:41] IntLib: Its good to hear there are more folks in SL from the movement. Feel free to stop by the Gimme Liberty Bar any time, we often meet there to listen to Free Talk Live, which is a syndicated and podcasted radio show by Free Staters.
[11:41] Thor Columbia: Great I'll see you there... bye. (Thor vanishes)