[First published 20-Mar-2012]
You know how it is; you’re out shopping, you don’t have enough L$, so your cursor heads up to that familiar button in the top right of the screen labelled “Buy L$”. It’s so easy, it’s so convenient, and it’s so quick.
But, wait! That convenience comes at a price. You are buying L$ at whatever rate Linden Lab feel like giving you, and that’s not the best rate.
What do I mean by rate? Well, when you go abroad you often convert some of your normal currency into the currency used by the country you’re going to visit, and you are offered an exchange rate. In other words you buy some of that currency, just like you might purchase any other service or ‘thing’. And, just like buying anything, different people have different prices and it is a good idea to shop around for the best price.
It’s not just limited to people going on holiday either – there’s a whole area of Finance called “Foreign Exchange” (often abbreviated to ForEx or FX) that deals with this.
It’s a less-known fact that Second Life has its own little Foreign Exchange Market, called the Linden Exchange (or LindeX for short) which is accessed via the Second Life website.
Here people buy and sell L$ using US$. And it is here where you can get more L$ for your US$.
So, how does this differ from the good old in-world “Buy L$” button on your Viewer? Well, it’s way less convenient I will admit, although I find it kind of fun! But you have the reward of getting more L$ for your US dollars by being able to shop for the best price, which is what it’s all about.
Instead of just converting US$ to L$, you offer to buy L$ for a certain amount of US$. This is known as a Limit Buy which is a conditional purchase. You are offering to buy L$ from one or more people who are selling for a certain price or better. On the LindeX your offer will stay open until it is either ‘Filled’ (ie. the transaction completes successfully) or until you cancel it.
Depending on how aggressive your Offer Price is, how long it takes to fill could be measured in seconds, minutes, hours, days or never! Also, for larger purchases, you may get a partial fill, which is when more than one seller fulfils part of your order as no single seller is selling at the price you want to pay in the quantity you want to buy. The remaining unfilled amount keeps the order open until all of the order fills.
(If you’re interested in further reading, then some of the basics of ForEx are available here, although it is in no way needed and I only provide it for your interest because I think I’ve covered enough here already)
“Enough with the waffle, Becca. Just tell me how to do it!”, I hear you saying. Well, ok, if you insist.
But before I do, just indulge me in one more bit of background information because I think it is kind of important, plus it took me ages to get my head round this. And this information is of use when going abroad in RL as well as buying L$ in SL.
When you are buying currency, you want the number on the exchange rate to be as big as possible. And when you are selling you want it to be as small as possible. Simple as that.
So, if you want to buy L$ then a rate of L$270 is much better than a rate of L$250. That is to say, for every $1 you spend, you get that many L$. It seems logical enough when you put it that way.
But when you come to sell L$ (say, if you are a merchant or if you have an incredibly generous boyfriend who gives you way too much L$) then a bigger number is worse and a smaller number is better. Because a rate of L$250 means you need to spend L$250 to get $1, whilst a rate of L$230 means you only need to spend L$230 to get $1. So you get more US$ for the same amount of L$.
Ok, so bearing that in mind, how do we actually go about doing this? (Finally! – Ed)
Log into the Official Second Life website at http://secondlife.com (you’ll need to use your username and password that you use for logging into SL itself) and then on the left hand side you’ll see a section called “Linden Exchange”.
Another big improvement since I first wrote this article is that back then you had a separate L$ and US$ balance, and you needed to first add US$ to your US$ account (with a minimum spend of US$25), and then buy L$ with your US$ balance. Thankfully it is now all rolled into one step, although the downside is that the Transaction Fee has gone up significantly.
[Update: Transaction fees have gone up since I took that screenshot. Your mileage may vary!]
Instant Buy is the same rate you get in-world, so is not very interesting. What we’re interested in is “Limit Buy”.
A Limit Buy is where you offer to buy L$ for a certain price (ie. you set the Exchange Rate).
So all well and good, but what on earth do you put in the Exchange Rate field? Well, that’s the knub of the matter. That’s where the fun is.
You see, if you put a silly big number in there (“I would like a million squillion L$ for each of my US$”) then nobody will sell to you. And, indeed, if you put the same number as everyone else in then why should your order get filled over everyone else’s at the same price? You could be sitting there a while. No, what you want is a price that is ever so slightly better than a majority of the rest.
If you scroll down a little further you can see the currently open Buy and Sell orders, which gives you a good idea of your competition.
As you can see, there is quite a spread of offers. You remember that I said that the bigger the number the better it is for you when buying and a smaller number is better when selling? Well, the corollary here is that if you want to be more attractive to a seller then you want to reduce your expectations a little. So you might want to choose a slightly better offer than others.
Of course, it’s up to you ,and it all depends on how quickly you want to fill.
In the past, there used to be a big blip round the L$270 mark and offering L$268 was a sweet spot, but those days seem to be over, and its more like somewhere in the low L$250’s / high L$240’s.
Putting in a conservative offer to buy US$10 of L$ for L$260 per US$, plus the 60¢ transaction fee, and you can see that you get an extra L$90 for your money.
[Update: Figures were current at the time of writing but are amusingly out of date now!]
Obviously, this isn’t a huge amount but this was a conservative offer that will fill almost immediately. If you are willing to wait for the market to improve, you can put in a higher offer, which will give you many more L$, but it might take hours, if not days, to fill.
You can stop reading now if all you wanted was to know how to buy L$ at a slightly better rate, because really that’s all there is to it.
But I do have a little more background, if you’re interested. Please do read on!
If you want to see how the market has been trending historically, in order to try and predict where the market will go, then you can click “Market Data” via the ‘Manage’ menu on the left under ‘Linden Exchange’.
As you can see, the market has been pretty static for years – kept artificially so by Linden Lab – in stark contrast to the early days of Second Life where it fluctuated wildly and was a real financial market.
Finally, the reason for writing this post was it followed from a conversation I had in SL recently (as is often the case with my blog posts). And one of the questions I was asked is where do all these L$ come from? Who is it who is offering to sell them? Why do people want to sell L$?
Well, there are a number of people who generate L$ in-world. Whenever you make a purchase in a shop in-world you pay in L$ and some vendors make enough that they want to cash out some of their L$ into real money. Likewise, if you rent land or a skybox or a house or whatever and pay your tier in-world in L$, your landlord / landlady is receiving L$ they may want to cash out. And, of course, Linden Lab themselves generate a huge L$ income from tier, premium member fees, transaction fees, and the like and they are obviously keen to cash out into US$ too. And that’s where the rather poor Market Buy rate comes from; Linden Lab have so much L$ to offload, and so many people just click the “Buy L$” at the top of their Viewer in-world, that Linden Lab can offer a worse rate and coin in the difference. Think of it as a Convenience Tax.
So there you go. That’s how you get a slightly better rate when you want to buy L$.
Is it worth the extra hassle? Is a difference of a few L$ on a $10 purchase worth the extra effort? Well, only you can answer that question.