Concept - EMC Stock Exchange

Discussion in 'Community Discussion' started by xHaro_Der, Jul 9, 2016.

  1. Ever since the legality of banks was established on EMC, I've been thinking about a pretty neat idea that would (in theory) be perfectly feasible if we could get some cooperation and infrastructure made and we, as a community, were to establish this properly.


    Please keep in mind that I am not a real life economist nor am I claiming to be, and thus there could easily be inaccuracies or oversights in my ideas. I’d appreciate if you are more knowledgeable on a given topic than I am for you to point out where work is needed so I can improve the idea.

    My idea: An Empire Minecraft Stock Exchange


    The Empire Minecraft Stock Exchange, in order to function, would need the following to be established:

    1) An organization maintaining the EMSE as follows:
    - A division overseeing operations as well as the financial oversight of assets being held within the stock exchange.
    - A division overseeing the issuance of shares as well as the transfer of shares.
    - A division maintaining the value of individual stocks and setting their values accordingly in the the EMSE interface (explained later on).
    - A division committed to preventing fraud within the organization itself. This division would be composed of highly trusted members of the community to ensure that corrupt and fraudulent activity within the EMSE organization is forbidden and enforced.
    - A managing body overseeing all operations.

    2) An interface for interacting with the EMSE as follows:
    - A website where you’re able to log into your EMC account and manage your portfolio. The EMSE organization would need to have a web developer(s) in charge of building and maintaining this website.
    - A view of all of the stocks listed on the EMSE as well as options to buy and sell each stock.
    - An index which displays the average growth or decline in the EMSE over time. To be included in the index average, a company should need to be traded on the EMSE and meet certain criteria.

    3) A main account for the EMSE as follows:
    - A new Minecraft account (or an existing account with its name changed) will be established.
    - This account will hold a single residence with a single building, being the EMSE headquarters. - This residence will be on Utopia for the sake of not preferring any particular SMP over another.
    - This account will need to claim a permanently derelict voucher so that its physical assets will never be lost.
    - This account will hold all of the funds and assets held by the EMSE organization and will receive all proceeds of the transaction fees collected by the EMSE.
    - Any expenses that need to be paid from the EMSE will be paid for using this account. The rupee balance and history will be closely monitored by the managing body to match up with the EMSE share exchanges and feeds paid.


    Fundamental operations:

    1) Companies will be established on the EMSE by their incorporator(s). The owners of the company designate a maximum number of shares that can be issued and choose an amount of equity that they would like to retain for themselves.

    2) The initial price per share for a company will be based off the ‘fair evaluation’ of the company divided by the calculated equity that each share of the company controls.

    3) The price per share for each company will need to calculated at a minimum of once per 48 hours. If the majority shareholders decide to update it more often, they may do so at a maximum frequency of once per hour.

    4) When a buy or sell order for one or more shares of a stock are made, the money for the shares should be paid to the EMSE main account and a bot will mark the transaction as paid for. After a holding period of 48 hours (in order to allow a buffer so that fraudulent activity can be refunded), the funds less the transaction fee will be forwarded to the owner(s) of the company.

    5) If a company is found by the EMSE fraud division to be faking sales or assets in order to sell shares at a higher evaluation, all shareholders that purchased shares through the EMSE will have their shares revoked and their money refunded at the full price they purchased them for, including the transaction fee.


    A few issues I can see that need a good system for resolving efficiently:

    1) What should the EMSE do about fraudulent activity after 48 hours has passed? If a company listed on the EMSE is found to be listing assets they don’t own in order to inflate their stock price, the current system would only protect shareholders that purchased their shares 48 hours prior to the discovery. Should shareholders that purchased their shares more than 48 hours prior have to absorb the loss individually and be taken as a general risk of investing in stocks at all, or should the EMSE have to use transaction fees to absorb the refund?

    2) How should companies that ‘fall off the face of the planet’ be handled? If a company with shareholders turns out to have its owner(s) cease operations, how should it be handled? Should it be taken as a general risk of investing in stocks at all, or should the EMSE have to use transaction fees to absorb the refunds? If the latter, then the criteria for getting a company incorporated in the EMSE would need to be fairly high in order to minimize the amount of cases like these that need to be handled.

    3) How can the EMSE better hold its companies accountable? With the current system already outlined, a company could easily lie about assets and all buyers from more than 48 hours prior would be out of luck as well as companies that cease to exist. There’s currently no assurance expressed or implied in the EMC banks & loans section of the rules, so we would need a better system of holding companies accountable for their actions regarding the EMSE.


    I’d love to hear all of your inputs on this idea that I’ve had for quite a while now. Let me know if you find a way to improve upon the current system I already outlined or if you think of a way to solve any of the problems I also listed or even if you think of another problem that I didn’t already think of that should be listed as needing a solution.

    - iHaro
    Melk73, DH32, jkrmnj and 2 others like this.
  2. I remember discussing this a few months ago :p
  3. You did? I don't believe I saw it then. I tossed the idea around in my head since banks were announced as being allowed, but I guess there's no way I can prove it then if you already made a thread for it.
    NathanRP likes this.
  4. I remember this too back on smp1!
    Good concept but it would be very hard to execute but it wouldn't hurt to try!
    xHaro_Der and NathanRP like this.
  5. Oh yeah, I remember tossing around the idea a while back on SMP1 with a few other people. I guess this is the result of that :p
    NathanRP likes this.
  6. I like your idea, but will people earn money from the stocks +1
  7. This would be an interesting twist to emc's economy in a way I have not seen on anyother server
    I think instead of a player being the managing overseer it should be a SS for that way they can be trusted and have no personal impact on the way economy
    FoxyRavenger and ShelLuser like this.
  8. I'm actually active on the stock exchange in real life and have given this many thoughts as well. I'd support this but I don't think it will work that easily.

    I think you should forget the website and all that for now and concentrate on essentials. Shops could come to the EMCSE and put out stocks. That gains them money (remember: a stock is more or less a second currency). People could then buy those stocks and would need to get something in return (dividend).

    My take would be a discount in a shop or... maybe money. But that's where things become complex.

    Players would also need to be able and trade with stocks (signed books would be my best bet). But how to create a virtual demand on those? That's not really easy. Maybe players would want to buy stocks based on the company owner (comparable to staff signatures) but...

    I'd definitely support the idea, I'd even want to participate to help make this work but in all honesty I am not sure if this is doable.
    Patr1cV, SirTah and xHaro_Der like this.
  9. As a web dev: You're not asking for something in any way trivial, but I wish you the best of luck and I'd love to see how it turns out.

    You should publish details on exactly how you plan on doing this. This will fairly well set the rupee to share valuation, and you will have to be very careful to avoid making the market extremely volatile in the early stages.

    Calculated by who and how? Typically this is determined by the buy and sell orders on the market. Are you going to allow open ended floating buy/sell orders, or is this a fixed price market where there are no open orders? This is the bread and butter of an actual market. This is what allows "shares" to actually have worth, and be another form of currency next to the rupee. Think about that for a minute.

    Suddenly this makes a lot more sense :)

    You're basically asking if you should be providing investment insurance. You could provide that for an additional fee, but really you run into the anonymity problem. There is no actual recourse or recompense should someone duck and run with the money.

    This boils down to the same reason why EMC staff want nothing to do with banks. There is absolutely zero accountability in the anonymous world of EMC. You could easily get a new account (Many people have multiple Minecraft accounts), and carry on after scamming a whole bunch of money out of people.

    I think it'll be interesting, and I'll certainly give it a shot should you pull it off :)
    xHaro_Der likes this.
  10. To buy stocks you use tokens because tokens have almost no use
  11. Thank you everyone so far who has replied to this thread and messaged me with your feedback! I've taken note of your thoughts and I'll make an amendment to the concept shortly :)
    This isn't a server feature that I'm suggesting and a stock exchange managed by staff has already been turned down previously as an idea. Tokens wouldn't be a feasible method of exchange anyways as they aren't meant to be exchanged.
  12. Btw what r tokens used for?

    Please search the wiki when you have a question about the server itself. If you can't find the answer on the wiki, then feel free to create a new thread under "Help & Support". :)
    SirTah likes this.
  14. Bump, I'd like some more feedback on this :)
    ShelLuser likes this.
  15. I meant to type this earlier but wanted to double check some details.

    What if signed books represented the stock and player bought and sold those? This would simplify having to set up a website to handle it since physical items will be the goods moving around. All buying and selling could be monitored in a thread and all exchanges must be logged. For example, player A buys a stock in player B for 100r. Player A later on decides to sell the stock for 120r. That player would post in a thread about the offer and see if anyone wants it. Player C decides to buy the stock for that amount and also posts on the thread. The book changes hands through the mail and Player C now owns that stock. A spreadsheet keeping track of stock changes would then be updated so the owners of a stock are known.

    I have very little experience in the nuances of a stock market so this system might skip some important details but it should simplify things significantly. This also could be used to remove the central party since each company initially distributes their own books and will be expected to handle stuff themselves.
    ShelLuser and SirTah like this.
  16. It's mainly due to wanting to prevent "lost" stocks and having a better way of keeping track of who owns what.
    ShelLuser likes this.
  17. A thread and spreadsheet can do that fairly well. If a player does manage to lose their signed book they won't be able to sell their stock until they find it. The company can also offer a replacement for a fee. Whoever is supposed to own it will be easily trackable.
    ShelLuser likes this.
  18. Maybe fun to know: stocks come in several flavors. There are stocks which are fully anonymous. So if you own the stock itself then you can sell those to whoever you want (which becomes very tricky these days because most stocks you currently own in the real world are virtual).

    Other than that there are also stocks which can be signed to your name. So the stick itself marks that you own it and therefor only you can sell it again.

    So the idea of a signed book could definitely work.

    The only problem I see: creating a virtual value for them. If I buy a book for, say, 100r then why would anyone buy this from me for 120r? Especially considering that they can buy this themselves.

    So maybe: first of all limit the amount of books (stocks) you're going to make, record this amount and do not cheat. Sorry if I sound overly dramatic, but that is really the weakest link here. This needs to be set up with fun in mind, and not so much profit. Because if you desire profit then I think you might get tempted to make more stocks "because you can" and if that eventually gets discovered... yeah...

    Another problem: how to put more value into these books.

    Maybe we could talk to some bigger shops on EMC to see if they could help here? It doesn't have to be big: "This stock grants you a 1 block discount with your purchase" (for example). So people buy stuff from $shop and get 1 block for free.

    That could create a virtual demand for these stocks. If you let out 64 of them then theoretically people could get 1 stack of free items (with a purchase!). that might be a drive to start collecting.

    Of course, the shops also need to get something out of this :) There is advertisement (every time people try to sell stocks they also name the shop) but maybe we can also provide some financial compensation?

    Or maybe shops could buy into this?

    Foof for thought?
    Patr1cV likes this.
  19. That's not how I would think a book system would work.

    Keep in mind that when I reference 'shares' as a noun, this means I'm talking about books signed by the EMSE asset account that represent a share of whatever company:

    a) The stock exchange building on Utopia would have a section for each stock listed on the market.

    b) Only the EMSE assets account can issue stocks because it needs to manage the fees going in and out, the assets going in and out, and most importantly to ensure that the fraud division is able to make sure that the number of books in circulation is exactly equivalent to the number of shares in circulation (or else somebody %#&$ed up somewhere along the line).

    c) The shares that are available will be in the company's chest and it's value plus the EMSE fee will be listed on the B section of the shop sign, and it's value minus the EMSE fee will be listed on the S section of the shop sign. So anybody looking to buy shares will be able to buy them for the value of the stock plus whatever the fee rate is and anybody will be able to sell their shares back to EMSE (which is indirectly the company) for the value of the stock minus the EMSE fee.

    d) When the value of a company changes, the price on the company's share stock sign will simply change to adjust. So, assuming we have a hypothetical EMSE fee of 5%, Deez Nutz Incorporated has a share price of 1000r and they're having a crappy day and the share price falls by 200r. The shop sign before this day will sell shares for 1050r and buy them back for 950r. After the great Deez Nutz Incorporated crash, the shop sign will be adjusted to sell shares for the new price of 840r and buy them back for 760r. The value of the stock directly influences the buy/sell shop sign for the shares.

    Naturally, with these conditions in place, the demand and therefore the value of all of the existing shares will rise and fall according to the current price. If the share of Deez Nutz Incorporated rises to 2000r, all of the shares will rise to a similar level since the EMSE will be buy and selling DNI shares at a delta starting at 2000r.
    SirTah likes this.
  20. Thanks for the information. Here are some ways the problems you describe can be solved
    • Limiting the number of stocks will definitely need to happen. At the start a company will have to specify that they have x stocks for sale. Any stock added to the market must first be registered by the company in the spreadsheet. After that, they will be able to post their offer to sell it publicly in a thread for a certain price. First come first serve. This helps with the cheating problem since investors simply won't buy stock that hasn't been properly documented.
    • As for value, the company can be in charge of giving their stocks value. This is the part of stock markets I understand the least so a real world explanation would be nice. My idea though is that companies can offer either special benefits to those that hold their stock and/or pay dividends to stock owners. Companies report their recent earnings and will have a predefined amount of that earning they pay back amongst the stock owners. This one would be harder to lie about since the dividends are actually sent out and must match the earnings. As for the incentive for companies to sell stock, I am not that sure. Once again, I don't really understand the motivations for a company that well irl beyond the initial money so someone else can likely give a better idea.
    SirTah likes this.