Looking Back: The Podex Exchange

By Bixyl Shuftan

Over time, the Second Life Newser has had a number of sponsors. Farshore Radio and Lorena Chung have been with us for a few years, and more recently Montecito Bay and the CDS. But our first and longest lasting one was the Podex Exchange. Sometimes called the Podex Bank in it's first days, they were a virtual currency exchange service, exchanging Linden dollars with US dollars and other real-life currencies such as British Pounds, Euros, Japanese Yen, and others. Early on, one could both buy and sell. As they were faster than Linden Lab's Lindex, many who used Second Life as a source of real-life income saw Podex as a good alternative as the official Linden exchange service could take days to complete a transaction of Lindens for real money.

The owner of Podex, Jacek Shuftan, approached me in Fall 2010. Although the Newser had done an number of advertisements since it's founding a few months earlier, it had yet to find a cash sponsor. Jacek had done business with our predecessor, the Second Life Newspaper, and hearing about us was interested in this higher level of advertising. The deal was done, and their banner soon appeared on the Newser's front page near the top just underneath the banner for the Sunweaver Estates, which was our land sponsor.

Soon after that, we had a short article about them on November 30, describing who they were. In January 2012, we interviewed Jacek about buying Linden dollars from Podex. “We can describe buying Lindens and the risk with it as a pyramid,” Jacek commented, one with levels of safety, “At the top is Linden Lab, there is no risk buying from them. The next level are third-party exchanges. They are usually registered real-life companies with real-life addresses and telephone numbers, operating on the market. There is a tiny risk as they are not Linden Lab and not as large as they. However, most do not have prices as competitive as Linden Lab." Podex was competitive with it's prices, and had more options in what real life currencies to use and how to make the payments, such as credit the payments, such as credit cards and Paypall.

“Finances are not the sexiest part of Second Life,” Jacek once admitted. And after the first couple articles, I wondered how I could write more about him as I was interested in doing some free adverts for him as a bonus. Then I had an idea: do a fictional story as a commercial of a satisfied client. So on February 2011 came the first of our fun adverts. For the one next month, I had the idea of a dumb bank robber who failed hilariously and it turned out there was no chance of success even if he was competent. I went ahead and asked Jacek ahead of time, and he told he to go for it. And that would be the first of many of the misadventures of "Clumsy Cooper" as the raccoon bandit came to be known. Later on, Jacek would do a "Bank Robbery" video of his own.

So for a few years, my "Polish Cousin," as he called himself as we had the same Second Life surname, continued to do business with us. In April 2013, they moved their inworld location from Moonburry to Coda. But also in April 2013, the US Treasury Department published a paper about guidelines for the regulation of virtual currencies. Jacek thought it was potentially good as "if (Linden dollars) were virtual currency, it would be more trustworthy, and (Second Life) will have more investors."

But instead the following month, Linden Lab announced the biggest change in Second Life's economy since the ban on gambling: third-party Linden exchange services were no longer authorized. Jacek called it a "Really strange move of LL. … I really do not understand (their) motives." He tried to keep Podex open and tried to contact the Lab to talk to them. But instead they suspended his accounts and by doing so shut Podex down. But thanks to an outcry of the residents, some whom were saying they couldn't use the official Lindex and were talking about leaving Second Life for other grids, Linden Lab did a partial backdown. Third-party Linden exchangers could operate, but they had to register with the Lab, and could only sell Linden dollars. Linden Lab would insist on a monopoly of buying Linden dollars for real money. This was satisfactory for most residents, though a couple people from outside the United States would complain to me they couldn't use the Lindex and had a pile of Linden dollars they could no longer sell for their country's cash. Linden Lab would not authorize Podex to resume operations for almost three weeks after it reauthorized others, possibly because they saw his wanting to talk instead of shutting down right away as defiance.

Despite it's rough treatment by Linden Lab, Podex resumed business as a top Linden exchanger, and even hosted an art gallery in it's new building. The commercial articles featuring satisfied customers and more of the misadventures of "Clumsy Cooper" resumed. All went well for a couple more years. Then out of the blue, Linden Lab announced in June 2015 that as of August 1, they would no longer allow third-party Linden exchangers to operate, claiming improvements to the Lindex were satisfactory of the needs of "the vast majority of Second Life users." While some residents were highly critical of this, "it smacks of bullying for LL to usurp those income streams by fiat." Jacek remained hopeful at first,  "Linden Lab is not stable in it's decisions, as history taught us before, so I do hope that their decision would be changed in the future, as it happened before with 3rd party resellers closure." He was quoted as saying, "the Lab is only shooting itself in the foot ... Payment methods wich they offer are not accessible in many countries, so they will not only lose profit but also their best clients who invest real money in (the) grid, and now will not be able to do it."

Despite a petition to the Lab for them to change their mind, Linden Lab stubbornly stuck to it's decision. Then in late July 2015, a few days before the Aug 1 deadline, Podex closed operations in Second Life. On their website, they used the words "temporarily suspend," suggesting they were holding out hope. I would check by the office building in Coda every so often. When I dropped by on November 1, 2015, the office itself was gone. After five years, our first and longest-lasting sponsor was gone from Second Life. "Clumsy Cooper" would make one more appearance at the end of the month in the last of the fictional articles about Podex.

While the loss of Second Life as a market for Podex was bad, it wasn't fatal. Starting with the InWorldz grid in 2014, they had been moving to a number of smaller virtual worlds. Today, they boast services in over two dozen. While there is no doubt they don't make as much money as before, they are still around. Just outside Second Life.

The closing of our longest-lasting sponsor was bad, but for the Newser, it's misfortune was compounded by the closing of our other longtime sponsor at the time: Steelhead. Although it's owner then, TotalLunar Eclipse, had a number of real life troubles, it was Linden Lab locking out his account in a dispute that pushed him into making that decision. 2015 would see other questionable moves by LInden Lab, such as locking the account of Flea Bussy and almost closing Grendel's Children, one of Second Life's best known malls, if not the best known. And then there was the closing of the SS Galaxy, the largest build on the Grid, that had been doing well until hit with a series of griefing attacks that the Lab was little help with. It was, from my point of view, "The Year of the Linden Screw-Up."

Eventually, the Newser would weather the storm and get more sponsors, Farshore Radio, Lorena Chung, Montecito Bay, and the Confederation of Democratic Simulators. But we never have forgotten our first, and so far our longest running cash sponsor.

Bixyl Shuftan