A star-studded panel on Virtual Currency / Virtual Business = Big Business took place on Thursday at the end of the Virtual Worlds Fall 2007 conference, featuring Guntram Graef of Anshe Chung Studios, Peter MillionsofUs (formerly employed by Linden Lab and the creator of the LindeX), John Zdanowski (Zee Linden, CFO of Linden Lab), and John Bates, evangelist for Entropia Universe.

The general feel of the panel, noted by moderator Edward Castronova, was that virtual businesses and their platforms have been making so much money that they need to understand government regulations and international business practices—the established players in the industry know how to make money, and their focus has been on doing business legally and keeping up with the upcoming wave of regulations on virtual worlds, including charging Value Added Tax to European SL residents and eliminating gambling. The discussions centered around the virtual currencies of Second Life and Entropia Universe, which are similarly convertible to real money but have a different exchange system.

Entropia Universe has a fixed-rate system connected to the US dollar; 10 PED are equal to one USD and will always be guaranteed at that rate. (Entropia Universe is licensed to do banking transactions as a bank; it operates legally out of Sweden, where parent company Mindark.com is based.) Second Life's system is a variable-rate system sold on the Linden exchange and through third-party currency exchanges; it is currently holding steady at L$ 266 to one USD, due to Linden Lab's regulation on Linden dollar supply and mainland availability.

Virtual commodities are controlled by limiting supply: in Entropia Universe, a gun obtained by a player through an item drop can be sold back to EU for 6 USD, but if that gun is a highly rare and desirable item, it can be sold to another player for 2600 USD. On a larger scale, the Linden Dollar inside Second Life is controlled in part by tracking mainland prices, and Linden Lab stops selling mainland sims when land drops below a certain value per square meter, as well as stabilizing the currency by selling or not selling Lindens on the exchange.

The definition of virtual and real currency comes into play when government taxes are applied: real transactions need to be taxed in Europe under Value Added Tax, but virtual transactions (including player to player transactions, which include the LindeX) do not. Said Zdanowski, “The Linden Dollar is not official currency — it's more like a limited-license right to use certain features of Second Life.”

Zdanowski also had some interesting points about ending gambling in Second Life, since American laws prohibit virtual gambling by US-run businesses: “When we had to shut down gambling — because our credit card companies were putting pressure on us not to enable transactions, user-to-user transactions