Tasting The Metaverse: Q&A With Second Life Founder Philip Rosedale

Philip Rosedale is a digital pioneer, founder of Second Life, one of the first virtual worlds and still a leading social platform for adults. Linden Lab, Second Life’s parent company, now has two decades of experience in managing an online world, including development of a virtual currency traded around the globe. He talks to Global Finance about what they’ve learned and larger hopes for the metaverse. An extended version of this interview can be found here.

Global Finance: What is the metaverse and do all businesses need to be there?

Philip Rosedale: When people say ‘metaverse,’ they think of a live social version of the Internet, combining two changes. First is moving from 2D to 3D. Many things we do on the Internet will make more sense in 3D. Second is interaction with other people in real time.

When I started in Second Life, I would have told you ‘yes’ every business would need to be in the metaverse but now I don’t think that’s necessarily so. We will almost certainly do some types of shopping in 3D environments where we have a live presence with others. I wouldn’t say, though, that it’s necessary for everything.

GF: What have you learned these past 20 years about virtual social interaction?

Rosedale: Second Life demonstrates specifically that technology can be a good thing as it relates to improving human relationships. You can read lots about this from other people than us—in academic papers. We know there’s a lot of good that can happen when people are in virtual World’s together. 

GF: How does the platform support or encourage that?

Rosedale: Second Life shows that the business of providing a virtual world can be done with the highest possible profitability through fees. It’s not based on advertising. It doesn’t have any mission to manipulate your behavior or watch you. Social media, as a business, has grown through surveillance and behavioral targeting. To extend that business model to the virtual world, well, the potential harm is inestimable. Because if I know from your body movement that you’re nervous, or that you’re suffering from a certain disease—which, by the way, very, very much works—then I’m going to be able to manipulate you in ways that are insanely beyond anything we’ve seen.

And you don’t know where the advertisements are. In the real world, we put ads in little squares so there’s a fair fight between consumer and advertiser. But with social media, we broke that rule. We said, Now I can be a pretend person that tries to sell you things, and you don’t even know. That’s true already on social media, and look what harm it’s done.

I don’t think most of us mean to cause harm. I have talked to a lot of people who are very reasonable yet don’t understand the risks with advertising.

GF: How does the Linden dollar compare to crypto?

Rosedale: The Linden Dollar, Second Life’s currency, was in many ways the first digital currency—certainly the first that traded against the dollar. Second Life also built a whole business (Tilia) that provides currency exchange functions to virtual World’s. We’re one of the few companies that has all the regulatory licenses, particularly in the US, to do legal transfer of money.

Linden Lab has a very different way of managing the money in the system than either traditional banking or cryptocurrencies: essentially a combination of a basic income and a transparent sale of new currency on an open market. With Second Life, we were able to increase the money supply in the world in proportion to the productivity and the new people that were coming in. But cryptocurrencies do not have an increasing supply; they are a poker game. And at the end of that game, there will be one winner. If you have a fixed number of tokens and a free market, very quickly, you have only one winner—Elon.