Market Discussions

Ran into general newbold in our Alliance channel today [...]

100% Legit.

Have had 20b with them for the last 7 weeks.

Even if you have 20b with them that doesn't make them legit. You give them isk, they write 20 on a screen. Then every week they write a higher number, 21 for example. But you don't actually have the isk, you lost that when you gave it to them, what they're giving you back are increasing amounts of theoretical debt which will never be repaid.

Sadly it doesn't work like that. It is easy to make 5% (or 500%) on small amounts but very, very hard to make that on large amounts. Most eve businesses are fairly time intensive and you can't just add an indefinite number of new businesses to your portfolio to scale up your business earnings indefinitely unless you have a corresponding indefinite amount of time. There are very, very few businesses that can absorb hundreds of billions in capital with a) a workload that is acceptable, and b) a decent return, partly because there is a huge amount of isk in eve and a great deal of competition for the high volume, low workload markets.

A year or so ago, Tornsoul (who runs a longstanding investment bank with c. 250bil of capital) asked on MD what the largest amount would be that a business plan could return a 1% profit on per month. The best answer was something slightly over 10 trillion but this was achieved through a very active use of only 100bil (earning 100% returns per month, equalling 1% on 10 trillion) rather than through using the whole thing. It seems that if you are going to actively manage isk, there comes a point at which the most efficient thing to do is just leave most of it to one side and extract as much profit as you can from a smaller amount.

Which leads to a second point. Since there is little, or even negative, added value in utilising very large amounts of capital over utilising smaller amounts this raises the question as to why any bank manager would want to raise very large amounts and then give most of the profits to his or her customers, rather than raising a much smaller amount and keeping almost all the profit for themself. The return on time invested for a bank manager managing very large sums are exceedingly poor, to the extent that it is a bad economic decision to run a bank in the first place. This obviously leads people to suspect that those who want to run banks intend to profit from them in other ways.

There have been four notable banks in EVE so far (not counting BMBE) - EIB, FuryBank, EBANK and DBANK.

EIB: probably a Ponzi scheme from the start

FuryBank: lost assets during the fall of Fountain, lost access to assets in Fountain, lost its previous business model of supplying POS fuel to Fountain, owner had two (?) private mothership losses in the same timeframe - initially Fury Trader seemed set on trying to recover from these blows but eventually he went the scam route instead. The end of 0.0-related investments on MD.

EBANK: lost significant assets in failed investments (KIA). CEO had real-life issues and decided to rather convert the ISK into $$$ than wait for the full realization of just how broke the bank really was (full audit of the bank's finances had been scheduled for some time) and try to fix the mess. During liquidation of the remaining parts it became clear that the bank's IT manager had also prepared a theft by granting himself account balances without depositing corresponding ISK.

DBANK: turned from a two man operation into a one man operation; took on more commitments than it could handle; Shortly after DBANK had suffered a major theft by an employee (Xabier), Shar accidentally the bank's central database (as he was afraid that customer details might be exposed through a mistake in server configuration). Owner seemed initially willing to reconstruct the database and reopen the bank. Eventually he went the scam route instead - probably after realizing that on top of having lost their account/transaction database (with no recent backups available) the bank had been broke for quite some time and there was no realistic way to recover.

There's a lesson to be learned here. Banks in EVE don't work. Trust isn't even the core issue - the sequence is rapid growth -> financial failure -> burnout -> scam.

Both EBANK and DBANK tried to limit growth by lowering interest rates - but even at 1.5%/month EBANK got swamped with ISK.

totally off topic... i never understood this mentality. Sluts don't "deserve" to be raped. Could they dress differently? Sure. Could they act differently? Sure. But they don't "deserve" criminal abuse. Dont' get me wrong i don't lose much sleep over morons getting screwed over.