We can argue about whether virtual worlds are a waste of time or great entertainment. But the folks at Linden Lab, which runs Second Life, clearly believe that virtual worlds can improve our lives in the real world. The company announced today that it’s holding a contest where it will pay $10,000 to whoever creates a project in Second Life that most improves daily life beyond the virtual world.

The project should improve the way people work, learn, and communicate in their daily lives outside of Second Life, and the winning entry must be original work that is both technically and aesthetically well executed and able to inspire and influence future development, knowledge, creativity and collaboration inside and outside Second Life. The award fits Linden Lab’s corporate mission of creating an online world that advances the human condition.

Second Life residents have already created things such as virtual philanthropies, medical research projects, educational projects and business test markets.

The company will take applications from today through Jan. 15, 2009 and will announce the winner by April 30, 2009.

Here are some of my ideas:

— Adultery finder: Set up a sting in Second Life where you can entrap a wayward spouse into an online fling and then report back to the other spouse in the real world.

— Budget helper: Eliminate all fees associated with using virtual worlds.

— War ender: Get two sides to agree to settle their real-world disputes inside Second Life and then abide by the resolution in the real world.

— Addiction stopper: Advertise the services of addiction counseling services to those who spend a little too much time inside Second Life.

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