Tycoons Buy In to New Virtual Banks

May 10th, 2007

Actual banking has hit the virtual world – one of them, at least. Entropia Universe this week made $400,000 in real cash on the sale of five banking licenses. The licenses will allow their owners to lend cash to the community's participants for the virtual purchase of anything from game-fighting weapons to real estate.

In the world of Entropia, status and wealth are built via the accumulation of sought after weapons or properties. Users can use these acquisitions to slay dragons, squash monsters or just purchase real estate.

The market for these virtual goods is so fierce that electronic sweatshops emerged years ago in developing countries. Workers in Asia or Eastern Europe would toil away at their computers for 12 hours a day and sell accumulated goods over the Internet for thousands. Online auction sites like eBay and Yahoo! Auctions announced an initial crack down on such sales in 2001, though eBay again banned the practice in January and made an exception for a rival game, Second Life , because it is not technically a game, according to eBay. Linden Lab's Second Life trades "Linden dollars," among its residents, which can be exchanged for U.S. currency.

Now, the virtual world's citizens have turned to more legitimate money-making pursuits. One of the banking licenses was purchased for $90,000 by Jon "NeverDie" Jacobs, an Entropia nightclub owner and one of the world's most well known players. Jacobs and his other banking rivals must pony up an additional $100,000 as seed money.

The other tycoons include avatars Janus JD D'Arcwire, representing an undisclosed real life bank, who paid $59,060; avatar Yuri iNTellect, representing Russian Internet payment provider MONETA.ru, by Efremov, who paid $99,900;, Second Life celeb Anshe Chung, who paid 60,000; and an anonymous entrepreneur using the avatar name "Jolana Kitty Brice," who paid $95,000.

The banking licenses are only good for two years.

But while goods in the real world might depreciate in value when they are re-sold, used goods in Entropia generally increase in value as they are passed on, Jacobs said. This means participants are hesitant to part with their acquisitions, knowing they'll have to pay an inflated price if they ever want to recover them. Virtual banks, therefore, provide funds for players who need money to grow their holdings but don't want to sell their belongings to fund those ventures.

To acquire his banking license, however, Jacobs sold off expensive virtual belongings like spaceships and guns. Jacobs held on to Club NeverDie, a nightclub he runs on an asteroid in the world of Entropia. He re-financed his real home in Miami to purchase the asteroid in 2005 for $100,000, and the club alone now brings in about $200,000 a year, he said. On Monday, for example, he earned $775.

Club NeverDie earns its money from patrons who pay Jacobs a fee to hunt on the club's grounds. Jacobs said he invested a lot of money to create intriguing characters and monsters that Entropia denizens would find entertaining to hunt. He also spent $10,000 to purchase an egg that is supposed to "change the world," he said. No one actually knows what is inside the egg or when its contents will emerge, but it sits patiently on display at Club NeverDie.

Just getting to Club NeverDie is an expense, as users must fork over $2.50 to hitch a ride on a spaceship to Jacobs' asteroid. Jacobs currently owns several spaceship docking stations on his asteroid and will eventually charge a fee for the use of that space, he said.

Despite his success online, Jacobs is not looking to parlay his Entropia success into real-world business deals. "I am much more suited for the virtual world," Jacobs said. "I'm just a gamer."

In fact he charts his monetary success with the help of two handwritten ledgers and has little patience with software programs. He bought Quicken three times to organize his finances and never used it, he said.

Jacobs was introduced to gaming in 1980 with the game Wizardry , which was played on an Apple IIe. In the 1990's, he turned to games like Everquest, but they were very time consuming and ultimately unprofitable. "People called it Evercrack or Divorce in a Box," Jacobs said.

There needed to be a balance and Entropia Universe "met that balance with cash," Jacobs said. "Real cash and a massive, multi-player community go hand in hand."

What does this mean for the average computer user looking for a little Entropia escapism? Players without any start-up capital can earn 20 cents an hour collecting the sweat off monsters' backs, which they can sell in Entropia for inflated prices, Jacobs said. Collect sweat for 40 hours and that's $8.00 you can use to start your empire, he said. Once players have amassed $100, they have the option of transferring that money to a bank in the real world.

Copyright 2007 by Ziff Davis Media, Distributed by United Press International