So I’m newly back to Eve. Over the years I’ve seen huge banks come and go. Just about every in game bank fails, and even the ones that run for a while are declared scams.
Hypothetically how would you pull it off? You’d need an outside reputable person to do audits and look over the books. Any one person controlling the funds is free to run off with them. Even in a group, one person running off can cripple the bank.
Ideas?
IRL banks are scams, too. They are kept in check because the banks police themselves.
Banks in Eve don’t work because there is no productive place to put isk. Industry is fully developed. It is not that Eve banks were “declared” scams - they were scams.
Banks police themselves or are heavily regulated by the federal government. As long as scamming is ok in eve, there can be no legitimate bank.
I have always wanted to start a small bank in Eve!
Banks will need some sort of an income, that income would come from investments and interest collected from loans. IRL, banks that fails are already backed by the Federal Government in the US up to $500K (if I remember correctly). Here we do not have a Federal Government that insures everyone (unless a giant Alliance does it), an investment system to make profits, and loans given out to collect enough interests to pay the dividends to the customers. There are other systems that IRL banks use to expand their profits but if you have not notice their dividends are pretty low when it comes to banks itself (less than 1%).
Trust. That is the basis for everything related to anything in EVE. If Chribba were to create a bank tomorrow, im sure people would trust him enough to invest, and he would probably create a legit bank.
Hard to say. Maybe there are some banks that started off as legit, or atleast try to be legit. Kinda like Bernie Madoff. He didnt start as a ponzi scheme. Only when the market crashed in like the 80s, did he lose the investment money and decided to lie and scam his way up. And once youre that committed, you cant escape it. Its like a lie that you have to keep continuing, because there is no way to get out of it anymore. Youve invested so much of other peoples money that you have to keep at it.
Does anyone here have any advice on how to start from scratch and small of creating a Bank ingame?
Trust. Start small, take a few years, and build up your reputation.
Then throw it all away and keep all the isk, like Darkness.
Ask for help.
He is kinda doing that right now.
Most trillionaires use holding corps where they have a major share hold. You can try but I don’t think anyone could pull it off anymore. The ones that exist work, and no one would trust a new one.
Long time no see.
Real world banking started when people with valuable assets deposited those assets with a trusted merchant - typically a local goldsmith, and the goldsmith issued a depository receipt for the asset.
People quickly figured out that they didn’t need to redeem the asset when they wanted to buy something - they could simply trade the receipts. On the other side the goldsmiths realized they didn’t need enough gold to cover 100% of the receipts in circulation - they could lend receipts against the promise of future payment.
Initially there was no regulatory framework and a lot of the small banks went broke - much like Eve.
One problem in Eve is that money is created by individual players through ratting and other activities. In the real world, money is created by bank loans since the banks only need a small reserve and a secured loan counts as part of the reserve. Central banks adjust interest rates and reserve requirements to regulate the process.
The question for Eve is what value would a bank add to the economy and even if the banker is perfectly trustworthy, what happens if real life forces them to take a break from the game?
The banks in eve give people liquid isk. Liquidity in itself is an asset.
Especially for the player that clears out the entire bank.
EDIT
Due to grievious shortcomings in the shareholder system I am amending my proposal to using “courier contracts”.
I’m having to learn about them and rework some theories.
Building on the “corporations-as-accounts” model.
First and foremost, owning a corporation gives transparency to its finances. And the point of a bank is a bank can take money from your account to “invest” with it, and do other things with it…and give it back to you at interest.
So here’s how that starts to look.
You give an account holder say 999 out of 1000 shares (retaining 1 share for some ownership in the company).
That account holder can see that they deposited 99,900,000 isk to buy 999 shares.
They see that the bank, per its agreement, has removed 20million (remember banks in the real world have reserve requirements for the same reasons. You have to keep 10% or 20% in reserve to meet the demands of your customers).
They know that if they want to withdraw money from the account, they can sell a share at the fractional cost of the total account. So they can sell a share back to the bank for 100,000 or something like that.
Then, if they buy another share for 10 million, they know their account is now worth 109,800,000. Their 999 shares (they bought back a share to make a deposit), are now worth 109,800,000/999.
This represents how the Bank and Customer transact and keep witness of the transaction.
Of course, as with any BUSINESS, trust has to exist to maintain a relationship. But this method is much more VERIFIABLE than just “bookkeeping”.
Would you not agree?
The rules would exist and can be pasted into the description of each company/account.
The serviceability of the bank is that they offer a nominal, safe return on investment. In turn the bank does whatever they want with the money within the agreed upon reserve allowance.
I think the reserve allowance should be conservatively high, probably 80%. Meaning the bank never plays with more than 20% of the capital it raises through deposits.
You have to keep more that 50% of all shares. Otherwise if someone else acquires the majority of the shares, say by buying them from other players, then they can make themselves CEO and steal all the money. Thats how I got burned in the past.
All banks are scams - in RL and IG. All this handwaving about “investment” is as absurd IG as it is IRL. Banks are designed to steal money from (more or less) greedy people. RL banks take a very long term approach while Eve banks tend to prefer much shorter timelines.
Just do it.
Don’t worry about anyone on the forums, save for your actual customers if they decide to reach out to you here.
Find your customers in game and make sure they’re paid on time, every time.
Keep it simple. Set a cap on the number of customers you initially take on, and the number or bank services you provide.
That, and it’s a time commitment on your part. I’ve run two successful–and small–banks, and RL issues ended both of them when I had to step away from the game.
Finally, keep a reserve and pay back your customer’s deposits if and when you have to leave the game.
That’s it.