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Here is what I've learned from watching virtual currencies since the days of Ultima Online.

1. Money becomes less valuable over time. Just like a dollar today isn't worth what it was in 1950.

2. This is due to inflation (more currency entering circulation thanks to virtual fiscal policy) and due to a decline in demand for it. The decline in demand is when a game or virtual world ceases growing and begins to shrink. There is a VERY good curve to explain that trend. I can't find it now, but Raph Koster had it on his website. If you watch the curve, then you can predict when supply of a currency should outpace demand. Then the currency becomes less valuable because fewer new users and old users need it to outfit their avatars/toons/whatever.

3. Virtual worlds are games. No matter how we coat it by calling it virtual, most users find some enjoyment from the "game" whether it be sex or gambling or socializing or running a business. As long as there is fun, people will continue to visit the world and spend money. Many players don't consider the virtual currency to be that valuable. It is like a token at Six Flags—if you don't spend it before you leave, you aren't really thinking about it when you get home. You toss it in a drawer and forget about it. I'm not sure how many that would be; however, I suspect the average players don't even really think about selling their Linden $'s.

With that said, I fully expect the L$ to be worth less five years from now, but so what. In other virtual worlds, prices increased on valuable goods as more currency entered circulation. ie: the uber mages staff went from 10platinum to 50platinum. I'd expect the same to happen in Second Life. Other virtual economies survived, I'd expect this one will too! ;-)