Second Life's virtual money can become real-life cash

Newbies show up in Second Life without so much as 40 acres and a mule, so their avatars need hair, and fancy shoes for a concert or suits for business meetings, and a house, and art for the house, and maybe a waterfall for the living room -- virtual goods that cost real money.

Last year, as the physical economy withered, Second Life's economy blossomed, with user-to-user transactions topping $567 million in actual U.S. currency, a 65 percent jump over 2008. About 770,000 unique users made repeat visits to Second Life in December, and the users, known as residents, cashed out $55 million of their Second Life earnings last year, transferring that money to PayPal accounts. The big purchases in Second Life are land and the material goods residents put on that land. It isn't real land, obviously, but digital space that looks like land. Users control the intellectual property rights to whatever they build, giving them economic incentive to create things. And create they do.