Advantages of grid using OMC or Podex vs using Paypal + fictional currency?

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Advantages of grid using OMC or Podex vs using Paypal + fictional currency?

Erik Bainbridge (Apollo Manga)
Advantages of grid using OMC or Podex vs using Paypal + fictional currency? What are the advantages and disadvantages of using Paypal as a grid currency rather than OMC or Podex?  I'm interested in the perspectives both of people who sell in grids and of grid owners.  I am building a grid for a company that wants to use a Kitely model of fictional currency combined with Paypal instead of using OMC or Podex.  I think the complexity of setting up fictional currency + Paypal could outweigh the advantages.  I need both perspectives so I can give my client the best advice.

Erik Gordon Bainbridge
Author, virtual worlds builder (avatar: Apollo Manga)
www.VirtualMarin.com
www.ErikBainbridge.com

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Re: Advantages of grid using OMC or Podex vs using Paypal + fictional currency?

dogwomble
One thing to take into account is the issue of trust.  I don't want to
paint OMC or Podex out to be untrustworthy - they're probably the complete
opposite - however from the point of view of somebody new to OpenSim whose
never heard of them, they're probably more likely to trust the
better-known PayPal due to the reputation they've built up elsewhere.

If you're trying to attract existing OpenSim users, this may not be an
issue at all - they may already be aware of OMC and Podex and are more
likely to put trust into them.  However if you're trying to attract new
people to OpenSim, it is worth giving some thought to the PayPal option,
particularly if you're anticipating large volumes of transactions taking
place.

> What are the advantages and disadvantages of using Paypal as a grid
> currency rather than OMC or Podex?  I'm interested in the perspectives
> both of people who sell in grids and of grid owners.  I am building a grid
> for a company that wants to use a Kitely model of fictional currency
> combined with Paypal instead of using OMC or Podex.  I think the
> complexity of setting up fictional currency + Paypal could outweigh the
> advantages.  I need both perspectives so I can give my client the best
> advice.
>
> Erik Gordon Bainbridge
> Author, virtual worlds builder (avatar: Apollo Manga)
> www.VirtualMarin.com
> www.ErikBainbridge.com_______________________________________________
> Opensim-users mailing list
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Re: Advantages of grid using OMC or Podex vs using Paypal + fictional currency?

Ethan Gardener
In reply to this post by Erik Bainbridge (Apollo Manga)
On Thu, Dec 18, 2014, at 02:07 PM, Erik Gordon Bainbridge wrote:
What are the advantages and disadvantages of using Paypal as a grid currency rather than OMC or Podex?  I'm interested in the perspectives both of people who sell in grids and of grid owners.  I am building a grid for a company that wants to use a Kitely model of fictional currency combined with Paypal instead of using OMC or Podex.  I think the complexity of setting up fictional currency + Paypal could outweigh the advantages.  I need both perspectives so I can give my client the best advice.
 
What? OMC and Podex both offer "fictional currency" backed by real money. Any grid with an exchangeable currency provides "fictional currency" backed by real money in one way or another. Your choice is whether to contract with a company (OMC or Podex) which specializes in this, or to making your own system.
 
Making your own system doesn't just mean writing code, you will also have to choose what rules to apply. If I were doing this, I'd think deciding on the rules would be harder work than writing the code.

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Re: Advantages of grid using OMC or Podex vs using Paypal + fictional currency?

John Sheridan
Correct me if I'm wrong, but aren't virtual currency providers required to register with the government now (ala BitCoin)? I know on the SL side of things they made some changes wherein those who cash out over a certain amount yearly need to register their tax information.  Maybe it would be worth running this past your lawyer or accountant?


On 12/18/2014 05:18 PM, Ethan Grammatikidis wrote:
On Thu, Dec 18, 2014, at 02:07 PM, Erik Gordon Bainbridge wrote:
What are the advantages and disadvantages of using Paypal as a grid currency rather than OMC or Podex?  I'm interested in the perspectives both of people who sell in grids and of grid owners.  I am building a grid for a company that wants to use a Kitely model of fictional currency combined with Paypal instead of using OMC or Podex.  I think the complexity of setting up fictional currency + Paypal could outweigh the advantages.  I need both perspectives so I can give my client the best advice.
 
What? OMC and Podex both offer "fictional currency" backed by real money. Any grid with an exchangeable currency provides "fictional currency" backed by real money in one way or another. Your choice is whether to contract with a company (OMC or Podex) which specializes in this, or to making your own system.
 
Making your own system doesn't just mean writing code, you will also have to choose what rules to apply. If I were doing this, I'd think deciding on the rules would be harder work than writing the code.


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Re: Advantages of grid using OMC or Podex vs using Paypal + fictional currency?

M.E. Verhagen
I do not think paypal, omc, podex or others are the virtual currency providers of the grids. The grids sure have do their taxes in the country the reside in. 
There is no such requirement thing for the grids to report transactions over a certain amount. (The banks in the eu have got some rules about reporting large transactions and so, but there does not exists such a requirement for the companies living here.) 

2014-12-19 3:27 GMT+01:00 John Sheridan <[hidden email]>:
Correct me if I'm wrong, but aren't virtual currency providers required to register with the government now (ala BitCoin)? I know on the SL side of things they made some changes wherein those who cash out over a certain amount yearly need to register their tax information.  Maybe it would be worth running this past your lawyer or accountant?



On 12/18/2014 05:18 PM, Ethan Grammatikidis wrote:
On Thu, Dec 18, 2014, at 02:07 PM, Erik Gordon Bainbridge wrote:
What are the advantages and disadvantages of using Paypal as a grid currency rather than OMC or Podex?  I'm interested in the perspectives both of people who sell in grids and of grid owners.  I am building a grid for a company that wants to use a Kitely model of fictional currency combined with Paypal instead of using OMC or Podex.  I think the complexity of setting up fictional currency + Paypal could outweigh the advantages.  I need both perspectives so I can give my client the best advice.
 
What? OMC and Podex both offer "fictional currency" backed by real money. Any grid with an exchangeable currency provides "fictional currency" backed by real money in one way or another. Your choice is whether to contract with a company (OMC or Podex) which specializes in this, or to making your own system.
 
Making your own system doesn't just mean writing code, you will also have to choose what rules to apply. If I were doing this, I'd think deciding on the rules would be harder work than writing the code.


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Re: Advantages of grid using OMC or Podex vs using Paypal + fictional currency?

Edmund Edgar-2
In reply to this post by John Sheridan
On 19 December 2014 at 11:27, John Sheridan <[hidden email]> wrote:
> Correct me if I'm wrong, but aren't virtual currency providers required to
> register with the government now (ala BitCoin)? I know on the SL side of
> things they made some changes wherein those who cash out over a certain
> amount yearly need to register their tax information.  Maybe it would be
> worth running this past your lawyer or accountant?

IANAL but that seems to be the situation in the US, if you allow
people to cash out. I haven't heard of any actual enforcement, but the
theoretical penalties are quite steep. This is the key opinion from
FinCen, in addition to which the individual states have an amazing
rats nest of requirements that aren't discussed here:
http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html

Another interesting question arising from this is how much you have to
worry about this stuff if you're not based in the US but some of your
customers are.

IIUC OMC is based in the EU (Austria?) - I'd be interested to hear if
anyone knows what their regulatory status is.

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Re: Advantages of grid using OMC or Podex vs using Paypal + fictional currency?

Olivier van Helden
In reply to this post by M.E. Verhagen
In my experience, Paypal DOES report to governemnts, over a certain amount. This is mandatory for them.

The grids, like any other commercial service, are supposed to report their own transactions (how much virtual currency they sold) but may escape from the rules of a banking service like paypal (report what the users earned), at least as far as there are a few transactions.

It brings an interesting question. If I sold this year 1000 "MUC" (My Own Currency) for, keep it simple, 1000 EUR... These are in my users' accounts, and they will spend it and, some day, they will ask a refund, so this is not my money. How do I calculate what I really earned? If I don't make it clear, the tax controlers may consider my 1000 EUR as benefit and I will have to pay taxes on money somebody else owns. That's why reporting users transactions is not only a requirement, it would also be safe practice to avoid paying taxes on behalf of users.


      Le 19/12/2014 07:09, M.E. Verhagen a écrit :
I do not think paypal, omc, podex or others are the virtual currency providers of the grids. The grids sure have do their taxes in the country the reside in. 
There is no such requirement thing for the grids to report transactions over a certain amount. (The banks in the eu have got some rules about reporting large transactions and so, but there does not exists such a requirement for the companies living here.) 

2014-12-19 3:27 GMT+01:00 John Sheridan <[hidden email]>:
Correct me if I'm wrong, but aren't virtual currency providers required to register with the government now (ala BitCoin)? I know on the SL side of things they made some changes wherein those who cash out over a certain amount yearly need to register their tax information.  Maybe it would be worth running this past your lawyer or accountant?



On 12/18/2014 05:18 PM, Ethan Grammatikidis wrote:
On Thu, Dec 18, 2014, at 02:07 PM, Erik Gordon Bainbridge wrote:
What are the advantages and disadvantages of using Paypal as a grid currency rather than OMC or Podex?  I'm interested in the perspectives both of people who sell in grids and of grid owners.  I am building a grid for a company that wants to use a Kitely model of fictional currency combined with Paypal instead of using OMC or Podex.  I think the complexity of setting up fictional currency + Paypal could outweigh the advantages.  I need both perspectives so I can give my client the best advice.
 
What? OMC and Podex both offer "fictional currency" backed by real money. Any grid with an exchangeable currency provides "fictional currency" backed by real money in one way or another. Your choice is whether to contract with a company (OMC or Podex) which specializes in this, or to making your own system.
 
Making your own system doesn't just mean writing code, you will also have to choose what rules to apply. If I were doing this, I'd think deciding on the rules would be harder work than writing the code.


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Re: Advantages of grid using OMC or Podex vs using Paypal + fictional currency?

Erik Bainbridge (Apollo Manga)
In reply to this post by Erik Bainbridge (Apollo Manga)
Re: [Opensim-users] Advantages of grid using OMC or Podex vs using Paypal + fictional currency? You're correct, but the problem is that it's not clear exactly who needs to register. FinCEN hasn't clarified their regulations yet for virtual worlds.   I've spoken with FinCEN and I've read the rules. The rules were written for Bitcoin and define three types of participants in a virtual currency: 1) currency administrators, 2) currency exchangers, and 3) individual users.  The first two need to register with FinCEN but users do not.

It's clear that currency companies, and virtual worlds with their own currencies like Second Life should register with FiNCEN, but it doesn't cover virtual worlds that don't administer or exchange their own currencies.  Under these circumstances, under the rules a grid owner might be considered a user,  except for the fact that the rules define a user as "a person". .I've also found that there's disagreement in the OpenSim community about whether foreign-based companies like  Virwox and Podex need to register with FinCEN, though my personal opinion is that they do need to.

Until FiNCEN issues some clarification about its policy towards virtual worlds, it's best to err on the side of caution.  However I'm trying to balance that with not being happy with a strictly Paypal implementation in a grid  (without using the Paypal currency module, with introduces other risks and problems).

Erik Gordon Bainbridge Author, virtual worlds builder/reporter
www.VirtualMarin.com
www.ErikBainbridge.com
www.examiner.com/second-life-in-national/apollo-manga
www.WarriorBrothers.com
www.MountainBikeRoots.com

> Correct me if I'm wrong, but aren't virtual currency providers required
> to register with the government now (ala BitCoin)? I know on the SL side
> of things they made some changes wherein those who cash out over a
> certain amount yearly need to register their tax information.  Maybe it
> would be worth running this past your lawyer or accountant?
>
>
> On 12/18/2014 05:18 PM, Ethan Grammatikidis wrote:
>> On Thu, Dec 18, 2014, at 02:07 PM, Erik Gordon Bainbridge wrote:
>>> What are the advantages and disadvantages of using Paypal as a grid
>>> currency rather than OMC or Podex?  I'm interested in the
>>> perspectives both of people who sell in grids and of grid owners.  I
>>> am building a grid for a company that wants to use a Kitely model of
>>> fictional currency combined with Paypal instead of using OMC or
>>> Podex.  I think the complexity of setting up fictional currency +
>>> Paypal could outweigh the advantages.  I need both perspectives so I
>>> can give my client the best advice.
>> What? OMC and Podex both offer "fictional currency" backed by real
>> money. Any grid with an exchangeable currency provides "fictional
>> currency" backed by real money in one way or another. Your choice is
>> whether to contract with a company (OMC or Podex) which specializes in
>> this, or to making your own system.
>> Making your own system doesn't just mean writing code, you will also
>> have to choose what rules to apply. If I were doing this, I'd think
>> deciding on the rules would be harder work than writing the code.

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Re: Advantages of grid using OMC or Podex vs using Paypal + fictional currency?

David Saunders-2
Ok, We went though this couple years ago when we set up the grid.  We went with OMC then because it aloud transfer or Liden$ to OMC$ and it was all prepackaged. But about 6 month ago or so lots of or uses got hit with none use penalties and lost all there funds. Because of this and the OMC money add on we could not find any support for it we jumped into the deep end and started out own grid bank and currency.  

  We now have a stable money system that will not disappear over time and have to restart a region to get it back. The users are very happy with it and merchants love it. We run a closed private grid,with 400+ members with 50+ active in the last 30 days.  

 It took us several months to come up with a homebrew plugin for it, but we have couple excellent OS modders in our mists to handle it.   USers can buy DN Coins by paypal or  SL$. All the funds are kept with in an account that is separated from the working funds of the grid and kept that way. If we have a run on the bank we will have enough so users to sell off there Coins.  Our security include a full transaction record of all coins so we can know if we get an issue.  We also don't allow large amount of coins to be bought or sold at one time. But they can be trading in world as much as they own.   

  The system been activated since last spring and our users are very happy with it, especially the nightmares we were having with the old system never knowing if it would be working or not. But don't let this sway you much,  there lots to homebrewing a grid banking system, make sure you have your back covered in liabilities before you go down this path. 

   I still recommend finding a 3rd party who can handle this for you, it just one thing you don't have to worry about if you host a grid.  One thing that would be nice, is to have a common money system that can be used across all grids, but this a very hard task to do. This is why we went a 3rd party at first and found the problems were worse the the benefits for us.  

 Banks require users to trust them to work. 



On Fri, Dec 19, 2014 at 8:24 PM, Erik Gordon Bainbridge <[hidden email]> wrote:
You're correct, but the problem is that it's not clear exactly who needs to register. FinCEN hasn't clarified their regulations yet for virtual worlds.   I've spoken with FinCEN and I've read the rules. The rules were written for Bitcoin and define three types of participants in a virtual currency: 1) currency administrators, 2) currency exchangers, and 3) individual users.  The first two need to register with FinCEN but users do not.

It's clear that currency companies, and virtual worlds with their own currencies like Second Life should register with FiNCEN, but it doesn't cover virtual worlds that don't administer or exchange their own currencies.  Under these circumstances, under the rules a grid owner might be considered a user,  except for the fact that the rules define a user as "a person". .I've also found that there's disagreement in the OpenSim community about whether foreign-based companies like  Virwox and Podex need to register with FinCEN, though my personal opinion is that they do need to.

Until FiNCEN issues some clarification about its policy towards virtual worlds, it's best to err on the side of caution.  However I'm trying to balance that with not being happy with a strictly Paypal implementation in a grid  (without using the Paypal currency module, with introduces other risks and problems).

Erik Gordon Bainbridge Author, virtual worlds builder/reporter
www.VirtualMarin.com
www.ErikBainbridge.com
www.examiner.com/second-life-in-national/apollo-manga
www.WarriorBrothers.com
www.MountainBikeRoots.com

> Correct me if I'm wrong, but aren't virtual currency providers required
> to register with the government now (ala BitCoin)? I know on the SL side
> of things they made some changes wherein those who cash out over a
> certain amount yearly need to register their tax information.  Maybe it
> would be worth running this past your lawyer or accountant?
>
>
> On 12/18/2014 05:18 PM, Ethan Grammatikidis wrote:
>> On Thu, Dec 18, 2014, at 02:07 PM, Erik Gordon Bainbridge wrote:
>>> What are the advantages and disadvantages of using Paypal as a grid
>>> currency rather than OMC or Podex?  I'm interested in the
>>> perspectives both of people who sell in grids and of grid owners.  I
>>> am building a grid for a company that wants to use a Kitely model of
>>> fictional currency combined with Paypal instead of using OMC or
>>> Podex.  I think the complexity of setting up fictional currency +
>>> Paypal could outweigh the advantages.  I need both perspectives so I
>>> can give my client the best advice.
>> What? OMC and Podex both offer "fictional currency" backed by real
>> money. Any grid with an exchangeable currency provides "fictional
>> currency" backed by real money in one way or another. Your choice is
>> whether to contract with a company (OMC or Podex) which specializes in
>> this, or to making your own system.
>> Making your own system doesn't just mean writing code, you will also
>> have to choose what rules to apply. If I were doing this, I'd think
>> deciding on the rules would be harder work than writing the code.

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