Moopf Murray spent 40 hours developing his $60 Skoopf roller skates and has sold 60,000 pairs in two years. The talented young designer’s other bestselling products include ice skates and vending machines. The twist? He doesn’t exist.

For Moopf is a digital avatar: the part-time persona of a Derbyshire software developer in Second Life, a 3-D virtual world in cyberspace. Moopf might not be real, but the same cannot be said for the cash he earns.

He isn’t the only one looking to make a profit in Second Life, the computer platform that has morphed from the utopian preserve of techie types to a media sensation in little more than a year. This week Ailin Graef became the first dollar millionaire in Second Life after two years of buying and selling virtual real estate through her avatar, Anshe Chung.

Second Life now has more than 1.4 million residents, with $500,000 (£257,000) changing hands “in-world” every day. So what is Second Life and can non-geeks cash in? Second Life was launched in 1999 by Linden Lab, a privately owned company based in San Francisco, as “an online digital world imagined, owned and created by its residents”.

When you sign up, you are assigned a digital character, known as an avatar. You design the look of your character from a list of basic attributes. Experienced Second Lifers learn how to add new elements, such as new clothes and gestures.

Second Lifers socialise, buy and sell virtual land and build and trade interactive content — the virtual clothes, goods and homes that avatars wear, use and inhabit. Virtual versions of almost anything real can be built using scripting, modelling and animation software. Enterprising Second Lifers then sell their creations to other avatars, sometimes in plush stores complete with sales staff.

Gareth Lancaster, 33, the software developer behind the Moopf avatar and online brand, makes a second income of between $20,000 and $30,000 a year from sales of his virtual skates and vending machines in Second Life.

Mr Lancaster says his success is built on 17 years’ experience in IT and a strong interest in design. “To cash in on Second Life takes a lot of knowledge and work,” he says. “It’s easy to produce something, but it’s not easy to make that something stand out.”

Big business has seen an unmissable marketing opportunity. Sony BMG, Sun Microsystems and Nissan have built an in-world presence, creating brash corporate headquarters where real-world executives meet for virtual talks. Other big names using the platform include IBM, adidas, MTV and the BBC. In October Reuters opened an in-world bureau and assigned a journalist to report from Second Life.

Non-corporate residents can buy in to a number of potential money-making ventures. One option is to set up a small business, like Moopf. Another is to invest in virtual land. Linden Lab sells a 16-acre island for $1,250. Second Lifers have created a property market online, where desirable plots are bought and sold for escalating sums.

Keen Second Lifers predict that the shares in virtual companies will be as keenly traded as those on the London Stock Exchange. The virtual world already has the Metaverse Stock Exchange, but it has only one listed company so far — a property company.

All this commercial activity is conducted using the Second Life currency, the Linden dollar, which can be exchanged for the US dollar at Linden Lab’s LindeX currency exchange. Rates fluctuate in line with supply and demand but have remained stable at about L$250 to $1.

LindeX charges 3.5 per cent commission on all currency sales. UK residents use PayPal to transfer funds between Second Life US dollar accounts and real accounts and it costs $1 to move cash from your virtual account to a real bank account.

The Treasury is looking at the tax implications of in-world trade. For now, Linden dollar income within Second Life is untaxed, but earnings withdrawn from the virtual economy are taxed as normal.

Justin Modray, of Bestinvest, the independent financial adviser, says that speculation in virtual land, stock or currency is high-risk. The platform could be a passing fad and not the future of the internet that some predict. Only 10,000 to 15,000 of the 1.4 million-plus registered residents are online at any time.

Furthermore, Second Life is not regulated by the Financial Services Authority (FSA), so there is little redress if things go wrong. Mr Modray says: “I would suggest investing no more than fun money. A better route might be to set up a trade or profession in Second Life.”

Lisa Forrester, of Manchester, is the real person behind the avatar Leah Salome, chief executive of Made Virtual. Ms Forrester, 33, left BT in August to work full-time on content creation in Second Life for a projected £37,000 a year. She says: “To create things of a high standard takes months, even years of practice and experimentation.”

That level of expertise is not possessed by the secretive Edinburgh secretary behind Cardie Mahoney, a Second Life supermodel and escort. The PA, who says she is “nothing special or stunning in real life”, customised her almond-eyed avatar using the simple modelling tools available free to all residents and buys her outfits at in-world boutiques.

Cardie spends about four hours a day in the virtual world: two hours working and two hours of social time. The L$1,500 that she charges clients for “half an hour of my time” converts to “pocket money” of about $6.

How to get started in Second Life

A detailed breakdown of land prices is available on the Second Life website, starting at L$512 for a first plot of 512 square metres. Monthly “land fees” of at least $5 apply on all land held beyond this first plot.

For more on consumer affairs visit www.timesonline.co.uk/consumeraffairs