pirateat40's end game

[curious]

I'd like to start a discussion about pirateat40 and his 2 projects: GPUMax and Bitcoin Savings & Trust. The following is pure speculation on my part, as I have no proof of anything. I just wanted to hear other people's opinion and am not trying to spread FUD.

pirateat40 may be just a very smart person that happened to be working on 2 very ambitious projects, but something just doesn't seem right about him.

Who is buying mining shares for PPS*1.4? Why would anyone do that? Pool hopping is not that profitable anymore, right? Why doesn't pirate disclose the reason for these purchases. How is pirate making >1% a day the money he borrows? If he really is legitimately making so much money, why give 7% interest/week when his closest competitor is giving 3% interest/week. And most banks have money with pirate to be able to pay out that much. There's ton of people waiting to give him money, so wouldn't the right business move be to lower interest rate and make more money? I've learned that if something seems too good to be true, it generally is. Could this be a long con? Or is he actually making honest money with these 2 projects?

Here's what I'm getting at, what if his end game is to kill bitcoin? What if the fed decided that they want to put an end to bitcoin before it becomes a bigger threat. Think about it. If you were trying to kill bitcoin, what would you do? You'd want to do a 51% attack to shatter everyone's confidence and at the same time pull off the biggest bitcoin heist ever. If mining hardware costs $1 per mhash, to match the total network hashrate of 11 thash, you would need to spend $11 million. Wouldn't GPUMax be the cheaper and smarter way to do the 51% attack? You need to convince 51% of the network to use it. PPS*1.4 would do it. And to convince people that it's not malicious, only allow purchases to mine at specific pools. But what's to prevent pirateat40 from one day use all that mining power maliciously? So how much does it cost to pay half the network 40% more on the earnings 1/4 of the time (i'm assuming there's only public work 1/4 of the time)? 7200 btc are mined a day... so 7200 * 1/2 * .4 * 1/4 = 360 btc or just $1800/day. Run that for a year, and it's only $657,000. And that's if he has half the networking hashrate, which hopefully is not close to yet. So this is a lot less than the $11 mil that would be needed to buy mining hardware. Trick bitcoin miners into attack their own network... brilliant!

So now how do you make 360 btc a day? You can either spend your own money or start a HYIP. So build up bitcoin-otc to have people trust you then start lending money at 1% interest a day and use people's deposit to pay the interest and the money needed to keep purchase on GPUMax. Keep growing the total loan amount so you have enough money but keep the growth contained so that you don't pay too much interest. And build up hype by making it hard for people to deposit money with you.

This scam can probably last until he gets 51% of the mining power. Then use whatever money is left in the BTCST accounts and do a 51% attack against mtgox and other exchanges at the same time. Then disappear with all the money. What do people think? Far fetched or possible?

EDIT: previous discussion in newbies forum: https://bitcointalk.org/index.php?topic=77457.0

[1714686681]

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[1714686681]

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[copumpkin]

The following is pure speculation on my part, as I have no proof of anything. I just wanted to hear other people's opinion and am not trying to spread FUD.

This scam can probably last until he gets 51% of the mining power. Then use whatever money is left in the BTCST accounts and do a 51% attack against mtgox and other exchanges at the same time. Then disappear with all the money.

So this is speculation, opinion, and not FUD, and then you're talking about a scam. You also seem to feel no need to link to the prior discussion in the newbies forum, which suggests that your intentions are not so much to spark discussion as to stir up shit.

Also, every post you've made has been related to pirate, so you seem like more than a curious newbie. This is just speculation, and my opinion, and I'm not trying to spread FUD here, but you sound like a bit of a sockpuppet.

[vragnaroda]

Put up or shut up.

[JusticeForYou]

If you believe that to be the case, how can YOU make money off of that scenario?

How much would you pay for all that hashing power? nvm, what do people pay for all that computing power in a year?

PEOPLE, change your perspectives.

Let me try another method. Why would I pay you 2¢ for 1¢?  Because pennies before 1982 are worth 3¢.

There are many ways Pirate can pay what he pays in a limited economy. Which this is. Why do people like to jump to the negative reasons rather than the possibilities? People outsmart themselves often.

Don't assume the negative because of an assumption. I've said this a lot lately. Assumptions often lead you where you want to go.

Prepare for the bad and hope for the best.

More importantly, why did you go negative rather than come up with a positive way pirate could accomplish his system.

What Ifs are never ending.

What If he is the government overpaying for something? Nah... The government wouldn't waste the money. Would they?

If you are really interested tho... Do your due diligence on the company.

[P4man]

IThere are many ways Pirate can pay what he pays in a limited economy. Which this is. Why do people like to jump to the negative reasons rather than the possibilities? People outsmart themselves often.

If there are so many ways, why dont you list some ways that explain why what pirate does is more profitable than borrow money from a bank and buying coins with it? Assuming he'd even still need to borrow , at this point one would expect Pirate to have earned enough to finance his own operation without needing external capital. I dont see his requirements for external capital diminishing though, he seems to need ever more which by itself should raise red flags. If whatever he does is indeed profitable youd expect by now he'd need less capital to finance whatever he is doing.

The same goes for GPUmax. Im sure you will say there are many reasons people will pay 150%, but I dont see them; even laundering coins wouldnt yield those kinds of returns, particularly not  for bitcoins which are inherently difficult to trace. More importantly, I dont see anyone offering anything remotely close to those prices anywhere else besides gpumax. FWIW I just auctioned off 1M shares, were people falling over themselves to buy them at 150% ? Nope. They bid roughly what they are worth. Why would someone, anyone prefer to buy them at gpumax for 50% more?

Im all for not accusing anyone of scamming without proof, but there is a sticky "Trust no one" on this forum for a reason. When something sounds too good to be true, its not unreasonable to contemplate the possibility it is indeed not true. Maybe there is a business model behind it that Im too stupid to figure out, but until someone gives me a credible explanation, Id rather distrust pirate then my own ability to reason.

[bitcoinBull]

Blatant, brazen scam through and through. A rating on #bitcoin-otc is the perfect 'in' and the ratings would snowball from the participants. A lot probably know it deep down, but will defend it publicly until they're ready to take their principal + "gains" out (of course they never are). The participants in pyramid schemes are just as guilty and will get what they deserve. Fractional monetary expansion always collapses.

The lack of transparency is completely anti-thetical to the principals of bitcoin. I trust bitcoin because the blockchain is a fully visible ledger.

[norulezapply]

Don't forget someone can just hack into GPUMax with lots of people's miners are pointing there, then pointing everyone's miners towards a private server, essentially like a big pool..

[556j]

First, as to why someone would buy shares at gpumax.

Say they really don't want their transactions followed. I can't think of a better way than to trade "tainted" coins for freshly minted ones.  ( Lets assume coins are tainted via willing trade rather than stealing or other victim crimes. )

But why do it this way rather than other "laundering" methods. Well if volume is big enough the fees will be huge. You also have to trust whoever the launderer is. You have to trust lots of different site or pool operators with your coins all the time and that their system actually works along with a few other things. Can't just buy shares at other pools because the volume is so big (do others even accept btc?) . So rather you just offer a really high buy price to get more volume. Keep in mind your main concern is volume more than price per bitcoin. It could take so long to cash out you lose more in volatility than "overpaying" for shares. It seems buyers outnumber miners on average for gpumax.

As for the savings and trust. I don't really know. Someone with control over a few hundred thousand USD worth of BTC could surely make good money. We know he has the programming skills to make a site like gpumax, it's not unreasonable to assume he has arb bots or other ways to exploit the market with his holdings. It can also be used to further obfuscate any BTC earnings.

[P4man]

First, as to why someone would buy shares at gpumax.

Say they really don't want their transactions followed. I can't think of a better way than to trade "tainted" coins for freshly minted ones.  ( Lets assume coins are tainted via willing trade rather than stealing or other victim crimes. )

But why do it this way rather than other "laundering" methods. Well if volume is big enough the fees will be huge. You also have to trust whoever the launderer is. You have to trust lots of different site or pool operators with your coins all the time and that their system actually works along with a few other things. Can't just buy shares at other pools because the volume is so big (do others even accept btc?) . So rather you just offer a really high buy price to get more volume. Keep in mind your main concern is volume more than price per bitcoin. It could take so long to cash out you lose more in volatility than "overpaying" for shares. It seems buyers outnumber miners on average for gpumax.

I might believe this if I saw it elsewhere besides gpumax. The volume argument doesnt make much sense. There are plenty of opportunities to rent big farms, Ive not seen anyone pay anything like gpumax prices.  You think someone like GigaVPS would say no to an offer to buy his hashes perpetually at "only" 130%?

But if someone is reading this, I got 50+GH available for rent with far lower stales and issues than GPUmax for a 50% lower surcharge.  Im not kidding, I can provide that.  And yet no one will take it.

Why?

As for the savings and trust. I don't really know. Someone with control over a few hundred thousand USD worth of BTC could surely make good money. We know he has the programming skills to make a site like gpumax, it's not unreasonable to assume he has arb bots or other ways to exploit the market with his holdings.

Yes it is unreasonable to just assume that. All the other arbitration bots have proven to be scams. You wouldnt need that kind of coins for it anyway.

[vuce]

This scam can probably last until he gets 51% of the mining power. Then use whatever money is left in the BTCST accounts and do a 51% attack against mtgox and other exchanges at the same time. Then disappear with all the money. What do people think? Far fetched or possible?

Can you explain what exactly is a "51% attack against mtgox", please? 

[556j]

I might believe this if I saw it elsewhere besides gpumax.

I can only think of one "team" this would be valuable to. So to me it makes sense there is only one and they run everything themselves. In fact it's the only way I see it actually working for it's intended purpose (increased security) When you have to constantly work through others (renting p2p or through other pool) it becomes less anon for more work and risk (scams) , rather than just set up some sites that eventually will run mostly automated and you are in control of everything yourself. As long as you have the skills to set up a site like that.

[P4man]

I can only think of one "team" this would be valuable to. So to me it makes sense there is only one and they run everything themselves. In fact it's the only way I see it actually working for it's intended purpose (increased security) When you have to constantly work through others (renting p2p or through other pool) it becomes less anon and more risky (scams) , rather than just set up some sites that eventually will run mostly automated and you are in control of everything yourself. As long as you have the skills to set up a site like that.

Why go through all that  trouble?  If you think its too much hassle or risk to pay Giga and a few other large miners once a week, then set up a pool (a real pool, running its own bitcoind) and pay your miners 150% PPS. Get hashes from anyone who wants to, and you get the purest cleanest self mined coins and its oh so much easier than what GPUmax does. There is not even any need to pay 150%, most miners will happily take 110 or 120%.

I do agree with the "team" thing tho. It does seem likely that whoever is paying for those shares is either really close to Pirate or Pirate himself. Thats the only reason I can think off why that person would not buy hashes any place else.

[Bigpiggy01]

Ummm,

https://bitcointalk.org/index.php?topic=77334.0 If you replace the ******** in that thread with Zhoutonged, you're essentially looking at a fairly easy way to make an awful lot of $ simply by holding enough btc and moving the market every once in a while particularly if you take bitcoinica leverage into consideration.

[coretechs]

Have you considered that a large number of loans through his network (directly or indirectly) are being used to fund and pay for mining equipment?  I would suggest that is helping bitcoin grow rather than hurting it.

If growth slows and things start looking unsustainable, whats to prevent him from simply lowering interest rates?  He's already done it once and I don't think anyone made a fuss about it.

[gamer4156]

1 Kilo of cocaine street price: $15,000
1 Kilo of Cocaine sold at SR: $125,000
Covering up your business with legitimate bitcoin ventures: Priceless


***100% speculation***

[copumpkin]

Blatant, brazen scam through and through. A rating on #bitcoin-otc is the perfect 'in' and the ratings would snowball from the participants. A lot probably know it deep down, but will defend it publicly until they're ready to take their principal + "gains" out (of course they never are). The participants in pyramid schemes are just as guilty and will get what they deserve. Fractional monetary expansion always collapses.

The lack of transparency is completely anti-thetical to the principals of bitcoin. I trust bitcoin because the blockchain is a fully visible ledger.

Despite so many people being convinced that he's a scam, the "yes" bin on betsofbitco.in is not growing any larger. You'd think people would want to profit on something they are so sure of

[N12]

Blatant, brazen scam through and through. A rating on #bitcoin-otc is the perfect 'in' and the ratings would snowball from the participants. A lot probably know it deep down, but will defend it publicly until they're ready to take their principal + "gains" out (of course they never are). The participants in pyramid schemes are just as guilty and will get what they deserve. Fractional monetary expansion always collapses.

The lack of transparency is completely anti-thetical to the principals of bitcoin. I trust bitcoin because the blockchain is a fully visible ledger.

Despite so many people being convinced that he's a scam, the "yes" bin on betsofbitco.in is not growing any larger. You'd think people would want to profit on something they are so sure of

This is quite honestly how we should be handling many things all the time. Here’s the link: http://betsofbitco.in/item?id=349

Pirate is ponzi? Make some free money on it!

[rjk]

Blatant, brazen scam through and through. A rating on #bitcoin-otc is the perfect 'in' and the ratings would snowball from the participants. A lot probably know it deep down, but will defend it publicly until they're ready to take their principal + "gains" out (of course they never are). The participants in pyramid schemes are just as guilty and will get what they deserve. Fractional monetary expansion always collapses.

The lack of transparency is completely anti-thetical to the principals of bitcoin. I trust bitcoin because the blockchain is a fully visible ledger.

Despite so many people being convinced that he's a scam, the "yes" bin on betsofbitco.in is not growing any larger. You'd think people would want to profit on something they are so sure of

This is quite honestly how we should be handling many things all the time. Here’s the link: http://betsofbitco.in/item?id=349

Pirate is ponzi? Make some free money on it!

I hedged that shit and put 1 BTC on both sides. 

[phelix]

it would be hilarious if the whole bitcoin community would be ripped off by someone called pirate  

seriously, that is one of the reasons I would never give him a coin. I could not stand the irony.

[JusticeForYou]

I think he could easily reduce the rate from 7% to 5% and still have enough in deposit to accomplish what he's doing. 5% interest a week is still far more than what other banks are paying. So why would he leave 2% on the table?

Market Share.

Im all for not accusing anyone of scamming without proof, but there is a sticky "Trust no one" on this forum for a reason. When something sounds too good to be true, its not unreasonable to contemplate the possibility it is indeed not true. Maybe there is a business model behind it that Im too stupid to figure out, but until someone gives me a credible explanation, Id rather distrust pirate then my own ability to reason.

This is sensible. You've weighed the risks and decided. On a percentage scale, How much do you 'trust' him? 0 -> 100%  Then invest as appropriate.

You know as well as I, before anyone gives him a signifiant amount of money, due diligence has been done. They know who he is and probably his and his families entire history. They know how he does it and the risks involved.

Your skepticism is healthy, voicing it is not always healthy.

Maybe there is a business model behind it that Im too stupid to figure out.

Don't be to hard on yourself. You're not stupid. ( I hate that term as it is subjective). I still can't figure out the Airline Industry business model, so lump me in with you.

But if you are really concerned about him, before you invest your money. The first question is: Who is Pirate?  Because do people really give large sums of money to pseudo-anonymous people on the internet. Answering that question will probably shed light on what is happening.

NDA's have probably been signed and it might take some work. But, Apple tried to hide its suppliers for the new Ipad but they forgot to include the dock workers on the loading docks.

Your skepticism does you service though. Run through the possibilities. The 'Trust No One' mantra is relevant as always. The nice thing is that you don't have to trust anyone. In my book, trust is earned through trials of fire, not whether someone charged you back or not.

Pirate does have a cloak of haze around him. As he grows, that will disappear as it did with Mark. Remember, there are sometimes real companies behind these businesses that have to live in the real world and interact with it.

Don't you find the challenge of figuring it out exciting though?  

I just find throwing out speculation as to his intent harmful rather than productive. Another post did a good job utilizing the percentages and leaving the speculating up to others.

So far, Pirate has done what he said he was going to do. Past performance doesn't guarantee future performance but it lets you judge risks.