Runescape Merchanting Guide
Table of Contents
|What to Merchant:|
|How to Merchant:|
What you need to know:Ponzi schemes are fraudulent and will eventually collapse. Stay Away!
In part I we examined some of the fundamentals of investment banks. While they may have come across as relatively harmless or benign you should be extremely weary of another point: some of them are nothing more than Ponzi schemes.
What is a Ponzi scheme?An investment scheme that pays its early investors with the investment funds of other investors.
An example should make this more transparent:
I start an investment bank. I approach you, player X, and persuade you to invest your gold coins in my operation. I promise to pay you a 10% return in 48 hours as I have a sure-fire way of making money but I need some startup capital. Enticed by the promise of a quick return, Player X decides to loan me the money.Ponzi schemes such as this play out more often than anyone would like to admit, often preying on people's good will and desire to get rich quick. (We all want that, don't we?) How then does this relate to investment banks you ask?
I then approach player Y with a similar offer. Player Y is also convinced of my success and decides to buy in for 100m.
Now that I have 200M gold coins, I return to player X and I give her 100M gold coins plus the 10% interest (10M) I promised. But my 48 hour clock on Player Y's investment is elapsing quickly.
In order to meet my pledge to Player Y, Player X either needs to be convinced so much of my success that they double down, or I need to find someone else to invest some more capital. If I can't, the entire scam falls apart.
It all comes down to the promise of a quick return for a capital investment. In essence, offering too high an interest rate more than likely means the borrower has to take extraordinary measures to meet his or her obligations to the investor; or, more likely, the borrower will default and you will be left with nothing.
Some common sense tips to keep you safe:
- If it sounds too good to be true, it probably is. (Yes, that sucks.)
- Vouches for someone's credibility should never be enough
- This does not mean abandon all of your friends. But as anyone in business can tell you the key getting in the door is relationships. Ponzi schemes pray on these relationships because your guard is automatically lowered more than if a stranger were to approach you.
- Merchanting is public act such that is not hard to confirm whether someone is all smoke and mirrors. A simple search on the Runescape forums for their username can often tell you a lot. If there is no evidence to support merchant activity changes are they may be switching usernames (a red flag if there ever was one) or they simply aren't really merchanting.
- If on the other hand they insist that they're more private in their business dealings - perhaps preferring to lurk on forms or idle in busy merchanting worlds - there is no harm in dropping by and investigating a little further. Most merchants operate on predetermined schedules (which mirror closely the market). Ask if anyone has heard of them.