Legalise Loans

Discussion in 'The Suggestion Box' started by darkness_hunter, Feb 8, 2015.

  1. Hello Staff!
    I am posting this to suggest that you legalise loans on this server.
    I say this because the economy is very low compared to when I first joined this server 967 days ago.
    There still is, as there always will be, a highly wealthy class, but the moderately wealthy class has almost been wiped out altogether.
    This is a situation opposite to that of my earliest experience on this server.
    I know you realize this is the case since you have been changing the supply of diamond.
    This is a good step forward but is not enough to bring back economic prosperity to this server.
    I believe that one way to bring back the moderately wealthy class is to open back up the field of finance.
    Moderate it as you can, to ensure the safety of newcomers ,but do not ban altogether the loaning of money by individuals.
    I am certain that this would be a great step towards increasing the economic prosperity of this server, if you were to allow it to happen.
    Thank you,
  2. Loans cause more problems than they solve. They were banned because of it. When they weren't banned I did run a bank but it became hard to manage the money of everyone who had paid me or I had paid out.

    Probably best to keep loans banned. If a system could be put in for them to become easier to manage for players and staff then I have no objections.
    mba2012, 607, SoulPunisher and 7 others like this.
  3. I'm not staff but I'm gonna respond anyway ;)

    How would you know considering that there is no way for players to look into the rupee amount another player has?

    And well, I can't help wonder what you would consider wealthy and moderate? Right now I own approx. 30k and the most I did to get that was voting and some minor trading.

    But how would allowing loans change anything?

    Because if you set out a loan, one way or the other, you'd still need to pay people back. Ergo: the money which you gained isn't yours to begin with. So if you, at this moment, don't have much means to make money, how is getting a loan going to change that?

    Also; if people need money, and need serious money, then all they need to do is vote for the server. If you keep up the voting for 10 days straight you'll have made yourself at least 10000r with the addition of some rupee bonuses as well 2 emeralds and 3 diamonds. Which, in their own turn, can be sold for good prices in some shops as well.

    I really don't see how loans would affect this in any way?

    Personally I don't see this happening anytime soon. The potential problems which loans bring with them don't weigh up against any possible benefits. At least in my opinion.
  4. I would completely disagree with this portion of the statement. There is always a moderately wealthy class on here. The question is whether or not one is willing to work their way up the ladder. If we're prone to wanting quick gains via low cost/low risk and high reward methods, you'll be sitting on your hands for quite some time waiting for something to happen that'll likely never happen.

    Study the market. Find the demand and mold yourself to fit that demand. If you have the patience and time, you'll be making a pretty good chunk of change before too long.
    Devartete, ShelLuser and SecretAznEks like this.
  5. Loans work great in real life because in real life you're forced to be responsible. You can't not show up to life for a couple days. Also, in real life banks (usually, anyways) have collateral on a loan, which gives you an incentive to pay up. For example, people who take out mortgages on a house put up the house itself as collateral, so if they fail to pay the bank forecloses on their house and takes it back.

    Minecraft just doesn't have this kind of accountability. Not only is there a dearth of valuable items to put up as collateral, someone could just stop logging into EMC, and then what? Loans cause wayy too many unanswerable problems in minecraft, and even if my aforementioned points were moot, they still wouldn't work to solve the class gap you speak of.
    Kephras and M4nic_M1ner like this.
  6. Minecraft Repo XD

    part of minecraft's rent-a-block :3

    totally not using the term rent-a-center
  7. I wonder what you consider moderately wealthy ? I know many players between 500k-2mil that's what I would call moderately wealthy. You can make 200k every few days of you know how and want to. It's all about what you as a player wants to do. Personally I like the idea of banks and loans and interest and dividends. But only because it's a part of the economy. But alas it's not meant to be.
  8. How can I go about making 200K every few days?
  9. Trade secret. ;)

    I've given you everything you need to take advantage of the market earlier though. It's up to those who look at it to put forth the time and effort to analyze the market.
  10. Why thank you for making me feel utterly poor now :confused:

    (naah, joking! :p)

    You're right of course; money is (relatively) easily made. This weekend I've done some serious mining and right now I'm sitting on a mining load of 10 diamond ore blocks, 20 emerald ore blocks, one stack of redstone ore blocks and also managed to bag myself at least 5 emerald blocks (so 45 emeralds) and 17 diamond blocks (153 diamonds, aka 2 stacks and 25 diamonds).

    Keywords: Extreme Hills, a good dose of patience and good tools (pick axes / shovel).

    There are shops where I can sell my diamonds for approx. 60 - 80r. Lets say 60: 153 * 60 = 9180r.

    I know I can sell emeralds for approx. 80 as well: 45 * 80 = 3600r.

    And I have no idea about that redstone. I'm also ignoring my ore blocks which I can sell higher (I've sold emerald ore blocks already for approx. 200r per block. So say; 20 * 200 = 4000r).

    So if I wasn't too lazy to sell this stuff (I like collecting / hoarding better for now) I'd have made myself approx. 16k already.

    And that was only a few mining expeditions which I started last Friday (I got kinda excited so I "vented" about it).

    But still... considering me poor... I don't know if I'll ever recover from that :D
  11. Uh oh, guess I'm in trouble now.... :eek:
  12. A good idea is to take advantage of other people's chase to riches. If you ever watch Trading Places, the commodities company in it does not generally buy and sell commodities themselves, but rather organises the trades of its clients, meaning that they always get paid fees.

    Ideas based on this include:
    • Writing a book on how to get rich and selling it at a high price to suggest it is a great book (don't overinflate the price though or you could get punished for false advertising/scamming)
    • Operate farms and charge for access
    • Allow people to hire out pickaxes, weapons, armour, etc. for use in mining and fighting mobs for their valuable drops
    You could probably come up with more :)
  13. I said 200k

    And like most economies it takes money to make money.

    This is about loans and banking let's put it back on topic.
  14. Exactly.
    Or what if the person just refuses to pay back?

    - Enforcement. EMC staff would have fixed rules and enforce paying back - if possible. They do that already in case of stealing, scam etc. Of course you need the proof - like written book + rupee log.

    - Insurance. Sometimes people will just lose the money and can not pay back. A bank needs to calculate with such losses and have an internal insurance for it. If 5% of the people don't pay back, the other 95% have to pay for them, the bank has to calculate this into the interest rate.

    Banks are not allowed on EMC for two main reasons:
    - The staff has enough to do and wants to avoid any possible source of trouble. Most of the staff probably doesn't really know how banks work, e.g. how to calculate loan / interest rate / installments. How would they check whether the bank did something wrong or not?
    - Most (probably) of the people here do not understand how loans really work. I did give private loans several times. If you know the person well then there are most probably no problems at all. If you don't and if it happens that it is a kid, you can expect that it will either forget about the loan next week or come back and say "sorry, I can't pay back, I'm broke" - and expect that you will just forget about that loan.

    BTW, nothing prevents people here to give or take private loans. Many people do this in various forms. You even have some level of security - if something goes wrong you can yell "stealing" or "scam" and the mods will try to help.

    If banks were allowed on EMC I would consider running a bank - even writing a piece of software to take care of bank accounts - that would allow people to do on-line banking.
    That would be interesting and fun :)
  15. Which is where the loans come into play, but in this case I disagree a little.

    It doesn't take money; all that money does is make thing easier on you, thus making it quicker to make more money. But required?

    If you have money up front you could buy yourself diamonds (or a pick axe), then an anvil, then an enchanted book and before you know you got yourself a nice Eff. V, Unbreaking III pickaxe. It will sure make mining a whole lot easier. But I beg to differ that its required.

    On SMP5 I have a little (amateurish) mining operation setup. Right now I use mostly stone picks and have 2 iron ones which I use to mine ore. You can probably imagine that its not going very fast. But despite that I'm still digging up a good share of iron and even got some diamonds. I can put the iron to use for armor, or more tools, and those diamonds for extra cash (or better tools). Then more mining can ensue and...

    Thing is; eventually I can get to the exact same spot (where loot is concerned) which I'm in with the mining operation I mentioned earlier (smp2 waste which bagged me all those goodies). It just takes more time.
    Palmsugar and Dragonhawk32 like this.
  16. I wouldn't mind being a banker myself. I think the idea is great but not currently enforceable. Maybe one day they will figure out a good way to do it.
    M4nic_M1ner likes this.
  17. I think the idea of a bank isn't bad although there are reasons for banning it. The main problem is that either side could just stop existing a a bad things happen from there. If it were to happen, some clause saying that "using a bank is dangerous and staff can't help in the case that bad things happen" would be necessary.
    M4nic_M1ner likes this.
  18. yea and a way to make sure bankers can collect on assets.
    M4nic_M1ner likes this.
  19. Similar to IRL, this can happen and does happen (although rather seldom), so you need few simple rules for that case:

    - if a bank becomes not functional, one trustworthy team of 2-3 is named liquidator. There is a period of time where people can file in their claims (like 1-2 months). The tangible belongings are auctioned. After that, the liquidator splits the money between the claimants proportionally.

    - if a user with a debt under some minimum amount goes out of existence, banks internal insurance covers it. No hassle.

    - if a user with a debt over that amount expires or anything like that, his belongings are auctioned and the debt is payed from that. If there are other claimants, it is again split proportionally.

    - a bank can be run by at least 3 people, and at lest 3 have to be over 21 and have at least finished high school.

    - a bank must have substantial own capital ... e.g. minimum 20M, where at least the half of it has to be in rupees

    - a bank must have capital adequacy ratio of e.g. 25% or higher. This means, simplified, that if the bank goes bankrupt or non-functional, the investors and saving accounts get at least 25% of their money back.

    - for banks operation, a separate designated MC account has to be used, perhaps owned by EMC. The management of the bank has the password.

    - banking license costs 1M rupees at the start plus 100k per year. This covers the costs for EMC / additional needed moderation.

    We can not expect EMC owners / staff to do anything in this direction if the community is not really interested. I think interested people would need to gather, work on it and produce good rules and present a turnkey solution to the community and EMC owners.
    Mirr0rr and Dragonhawk32 like this.
  20. Hello again everyone!
    Thank you all for your comments about the flaws in running a banking system on EMC.
    I will attempt to respond to everything that has been said in this comment.


    I agree with you partially. I see how running a bank on your own can quickly become problematic, but this wasn't what I proposed. I suggested that EMC legalises individual loans between two inviduals who are not part of a bank organisation , assuring that at the moment of the transaction, both parties are aware of the risks. They should provide proof from both parties to the EMC staff that they are both perfectly aware of what is happening and how much money they could lose if it goes wrong.
    I would also propose and organised banking system, consisting of many people. This would assure it's stability.


    I don't believe you fully understood what I was trying to say (my bad for not being more specific :) ). When I discuss loans it is with the assumption that the recievers of the loan will not sit on that pile of money and watch the interest rates rise. When accepting a loan you are essentially risking to lose everything you have. I thought it logical that a person with such a great pressure on him/her, would use that money to make money. As I will later discuss, using great sums of money as a trader can be very profitable.


    Oh thank you great master for your wise words on the field of finance :) . More seriously now, I never doubted the presence of a moderately wealthy class. What I said was relative to when I joined the server 968 days ago. I see you joined the server 62 days ago so perhaps you did not experience EMC as it was before (unless you have another, older account), so let me tell you how EMC was two years ago. When I first joined the server, I got very rich, very fast. I was a trader, I would accept loans for about an hour in order to be able to buy the great amounts of raw material that my clients asked for, I would then make my transactions, return the entire loan and the interest, and keep half of my profit (the other half was the interest). Using this method ,I could make 10K every few hours. By banning loans EMC has greatly weakened the financial opportunities for traders. I can assure you that this is an accidental destruction of the most profitable kind of transaction. When I say "most profitable" this is because, when you successfully complete a deal as a trader, everyone in the system is happy. The source has sold it's raw material, the individual who lent me money has earned his interest, I have earned some profit, and the client to who I deliver the raw material has saved a great sum of money. This is what I want to bring back to this server. I want to bring back the days in which everyone was easily earning money in a way that profited everyone. Ofcourse there can be some scammers but we should put in place a set of foolproof regulations to ensure that, if this happens, the scammers are caught and banned, and the collateral damage (in terms of money loss) is negligible.


    I completely agree with the principles you have put forth and I would suggest that they be used to regulate a banking system in EMC ( If the staff were to allow it).
    I would also recommend that a team of financially-educated admins be hired, this is in response to the fact that few admins know how to perform the necessary financial calulations (as somebody has already mentioned), and the problem that the staff are already too busy with other affairs. This could be a solution to both of those problems.

    Everyone: Thank you all for having thoroughly thought this through in order to provide me with relevant critisism. I hope I have responded to all of the points put forth by everyone. Hopefully I have convinced you that not only is finance a universally profitable market, but also a possibly stable and safe market, if the EMC staff were to put into place a set of adequate regulations.

    Thank you all

    Dragonhawk32 likes this.