Bitcoin Forum

Still hypothetically,  ;)  I hope the bitcoin community has considered the very real danger posed by an individual in control of 500K of BTC. Sure there are accounts with balances almost as high but what is to prevent Pirate or anyone else with so much BTC from cyclically crashing the market and buying up more coins?

Some might say that someone with so many coins wouldn't destroy the market as they are so invested in it, but what happens if their Buy/Sell cycle doesn't destroy bitcoin in the long run, but they are just taking a wager that they can pull it off enough times while bitcoin is small enough and then quit misbehaving when it's bigger?

Even if you can't regularly do $15 to $8, even 1-2$ in change often enough could eventually give you monopolistic power over the bitcoin system.

For bitcoin's sake- I hope Pirate Returns the money, and the community stays away from such "financial innovation" in the future, even if it's not a ponzi.

Still hypothetically,  ;)  I hope the bitcoin community has considered the very real danger posed by an individual in control of 500K of BTC. Sure there are accounts with balances almost as high but what is to prevent Pirate or anyone else with so much BTC from cyclically crashing the market and buying up more coins?

For bitcoin's sake- I hope Pirate Returns the money, and the community stays away from such "financial innovation" in the future, even if it's not a ponzi.

Even if you can't regularly do $15 to $8, even 1-2$ in change often enough could eventually give you monopolistic power over the bitcoin system.

btw, where's the confirmation that he controls 500k BTC?

It will cost him money because he will have to bear all the costs of manipulating the market himself and he will have to share the profits with anyone who chooses to follow along for the ride.

While he's pushing the price down to induce a panic sell, others are buying his Bitcoins for less than they are worth medium-term.  And then he has to compete with everyone else to buy any Bitcoins that are sold in panic as the market quickly rises.

While he's pushing the price up to sell above fair market value, others are selling him Bitcoins for more than they are worth medium-term. And then he has to compete with everyone else to sell Bitcoins at above fair market value to people who think the rise is real as the market quickly falls.

So long as there people who are anywhere close to equal to him in size in total, he will lose money every time he tries to manipulate the market. He can make Bitcoins unstable, but it will cost him to do it. People who have learned this lesson the hard way include Nelson Bunker Hunt and Allan A. Ryan.

[2012-08-17 16:15:10] <boonies4u> pirateat40: will you be daytrading with your own funds after this?
[2012-08-17 16:16:15] <pirateat40> boonies4u, Yes I hold personally over 30k BTC
[2012-08-17 16:16:45] <Azelphur> pirateat40: is that your personal or the total funds of BS&T?
[2012-08-17 16:17:57] <pirateat40> Azelphur, personally.  BST is over 500k BTC

https://bitcointalk.org/index.php?topic=101339.msg1111794#msg1111794

[2012-08-17 16:15:10] <boonies4u> pirateat40: will you be daytrading with your own funds after this?
[2012-08-17 16:16:15] <pirateat40> boonies4u, Yes I hold personally over 30k BTC
[2012-08-17 16:16:45] <Azelphur> pirateat40: is that your personal or the total funds of BS&T?
[2012-08-17 16:17:57] <pirateat40> Azelphur, personally.  BST is over 500k BTC

https://bitcointalk.org/index.php?topic=101339.msg1111794#msg1111794

Do you really think someone would do that? Just go on the internet and tell lies?

Oh god I laughed so hard. Everybody lies, even in real life.

No they don't.

Just to qualify my previous post, I don't have anything "invested" with pirate40, I was just saying if you steal that kind of money, people tend to kill you.

For bitcoin's sake- I hope Pirate Returns the money, and the community stays away from such "financial innovation" in the future, even if it's not a ponzi.

For bitcoin's sake, I hope Pirate doesn't return the money. Even if he pays out in full, anyone giving Pirate money took a huge risk. If that risk is rewarded, imagine how eager people will be to get in on the next big thing completely indistinguishable from a scam. It can only get worse if he pays out.

It's bad either way.  If he returns the money, the market gets flooded and the price plummets again like it did in 2011, and potential bitcoin users are turned off for a long time.  If he doesn't return the money then you've got a thief running around with 500k bitcoins which he could drop at any moment.

^^^
Word. Bitcoin truly need to be stress tested. Pirate is doing us all a favour.

If there is no punishment for theft, then there is no deterrent.

Still hypothetically,  ;)  I hope the bitcoin community has considered the very real danger posed by an individual in control of 500K of BTC. Sure there are accounts with balances almost as high but what is to prevent Pirate or anyone else with so much BTC from cyclically crashing the market and buying up more coins?

Some might say that someone with so many coins wouldn't destroy the market as they are so invested in it, but what happens if their Buy/Sell cycle doesn't destroy bitcoin in the long run, but they are just taking a wager that they can pull it off enough times while bitcoin is small enough and then quit misbehaving when it's bigger?

Even if you can't regularly do $15 to $8, even 1-2$ in change often enough could eventually give you monopolistic power over the bitcoin system.

For bitcoin's sake- I hope Pirate Returns the money, and the community stays away from such "financial innovation" in the future, even if it's not a ponzi.

What do you mean if he runs? Actually he won't need to run, he can stay right where he is, drop offline, and retire. There isn't one single f'n thing any of you can do about it either. This is the free market in all its glory. No regulations, no accountability, no recourse when you get fucked in the ass without any lube. Pirate will get away with this scot free. There will be all the hand wringing, all the apologists, and all the blaming of the victims. But in the end, it all comes down to there being zero accountability in this "free" market. If there is no punishment for theft, then there is no deterrent. Nobody has ever been prosecuted for a Bitcoin theft, and they never will be. So thieves and con men will continue to operate and win every single time. Pirate used the core greed that most people on this site have, and he used it to great effect. Nobody ever went broke underestimating the greed of Bitcoiners. In fact, a lot of people have gotten rich off of it.

So, how much have you contributed to Pirate's retirement fund?

If it can be killed someone will do it eventually, so might as well be now, we'll be better off. If not it will just prove that it's stronger than people think.


Oh god I laughed so hard. Everybody lies, even in real life.

Nothing wrong with blaming the victims in this case. They are the fucktards that allowed themselves to be taken advantage of. (...) Thieves and con men won't win if people aren't morons, they'll just waste their time.

If he runs we're going to find out how quickly he can be found with a 500K BTC price tag on his head, and when he is, will he still have the head?

I wonder, what is the effective price tag on the other famous pirate in the bitcoin ecosystem? Prob much higher than 5M USD.

Considering that said pirate is still cheerfully going about his business after a whole year of being declared public enemy by a US Senator, I doubt that "our" pirate will be found any time soon.

Has it ever accurred to you, that the two pirates may in fact be one?

THIS! Million fucking times THIS!
The best way to improve Bitcoin is to eradicate stupidity among its users.

If it can be killed someone will do it eventually, so might as well be now, we'll be better off. If not it will just prove that it's stronger than people think.


Oh god I laughed so hard. Everybody lies, even in real life.

Run, Pirate, Runnn!!!

It will cost him money because he will have to bear all the costs of manipulating the market himself and he will have to share the profits with anyone who chooses to follow along for the ride.

While he's pushing the price down to induce a panic sell, others are buying his Bitcoins for less than they are worth medium-term.  And then he has to compete with everyone else to buy any Bitcoins that are sold in panic as the market quickly rises.

While he's pushing the price up to sell above fair market value, others are selling him Bitcoins for more than they are worth medium-term. And then he has to compete with everyone else to sell Bitcoins at above fair market value to people who think the rise is real as the market quickly falls.

So long as there people who are anywhere close to equal to him in size in total, he will lose money every time he tries to manipulate the market. He can make Bitcoins unstable, but it will cost him to do it. People who have learned this lesson the hard way include Nelson Bunker Hunt and Allan A. Ryan.

[2012-08-17 16:15:10] <boonies4u> pirateat40: will you be daytrading with your own funds after this?
[2012-08-17 16:16:15] <pirateat40> boonies4u, Yes I hold personally over 30k BTC
[2012-08-17 16:16:45] <Azelphur> pirateat40: is that your personal or the total funds of BS&T?
[2012-08-17 16:17:57] <pirateat40> Azelphur, personally.  BST is over 500k BTC

https://bitcointalk.org/index.php?topic=101339.msg1111794#msg1111794

I heard he stored his 500k BTC on his Ellet.

So you're saying... he'll sell $1 of Bitcoin, sending the price down, then buy $1 of Bitcoin, sending the price up... and then he'll profit from that over and over?

Interesting business idea. Let me know how it goes.

There is zero danger of having one entity with 500k coins. The WORST outcome is if that person dumped all coins instantly. It would crash the price. Then what would happen? People like myself would buy up the cheap coins, the price would find some new stabilization level, and the "grave danger" would be gone. Someone with that many coins can crash the price, but only once. Problems solved.

It's a non issue.

For bitcoin's sake, I hope Pirate doesn't return the money. Even if he pays out in full, anyone giving Pirate money took a huge risk. If that risk is rewarded, imagine how eager people will be to get in on the next big thing completely indistinguishable from a scam. It can only get worse if he pays out.

Has anyone been paid back yet?

What do you think?  :)

There is zero danger of having one entity with 500k coins.

I know, I know.  BTW, has anyone looked in the lending forum?  If you happen to think Pirate will pay back, there are plenty of his lenders who seem to be less confident about that and are selling their accounts for super cheap.

People also tend to forget. So eventually it will be the same.

The only "danger" I see, is Pirate being "the government" or "the bank". A 51% attack on bitcoin to try to weaken or bring it down, would require too much funding. These operations though (all Pirate's operations), if shit hits the fan, could have a strong impact on people's trust on Bitcoin (usage, price, merchant adoption etc) providing at the same time a huge profit. No person could chase "the government" or "the bank" to "settle" the matter or even to just threaten them. Every time Bitcoin gains some popularity among users and merchants, a new Pirate appears... Repeat that for X number of times.

There's a pirate every minute. Tom Williams, too. Nothing to do with Bitcoin specifically. They are junk merchants, except they don't exploit opiate addicts but greedy and lazy people. Same principles.  Bitcoin works, in many ways better than centrally-issued fiat, and that's what matters. Hell, if it didn't work, scammers wouldn't be using it. If you are worried about Pirate, simply don't play along. If you do play along, don't pretend like you care about Bitcoin.

You're missing the point... Even if I, or you don't play along with Pirate(s), others will. It seems like greed is in human nature, others have it more others less. Nevertheless Bitcoin's reputation is damaged every time something like that happens. If the people that don't know a lot, or anything, about Bitcoin, all they hear about it is scam, scam, scam, they will never want to use it.
Agreed though, that everyone should be more careful of Pirate(s).

What if pirate sent 500, 000 BTC to an invalid address? It's got to be the most extreme volatility you could subject the system to with that amount of coins. I do get that the 20.5 million BTC left will be worth more eventually, but the immediate aftermath of such an event would be more violent than any pirate antics so far (and easily exploited if he only destroyed some coins, as it would still give him BTC volume to make the market dance with).

That would be an incredibly generous gift to everyone who currently holds BTC.

So you're saying... he'll sell $1 of Bitcoin, sending the price down, then buy $1 of Bitcoin, sending the price up... and then he'll profit from that over and over?

Interesting business idea. Let me know how it goes.

There is zero danger of having one entity with 500k coins. The WORST outcome is if that person dumped all coins instantly. It would crash the price. Then what would happen? People like myself would buy up the cheap coins, the price would find some new stabilization level, and the "grave danger" would be gone. Someone with that many coins can crash the price, but only once. Problems solved.

It's a non issue.

As much as I would like to follow you, let me try to challenge your dismissal of the attack. Let's say George Soros sets aside 10 M USD to pump and dump bitcoins.
He pumps 500k bitcoins over a period of time when the price rises from 8 to 12 USD (buying @10 USD on average, spending 5 M USD). Then he dumps from 12 USD to zero (selling @ 6 USD average, getting 3 M USD). This first move cost him 2 M USD but now he can pump cheap bitcoins (starting at virtually zero) with 8 M USD in a second move.. Assuming he buys back at 5 USD on average (buyers are cautious because he has burned some), the remaining 8 M USD now yield 1.6 million BTC. Had he spent the 10 M USD upfront , he would have gotten only 1 million BTC (@ 10 USD average)..

That assumes he's the only one buying, though. He may be able to do this once, but when he tries it again (say next weekend) he'd find it harder to get away with.

No, the only assumption is that he is able to drive the market up and down because of his clout and larger stash of cash.

No, the only implicit assumption I am making here is that he is able to drive the market up and down because of his clout and larger stash of cash. Each successful cycle would only increase his momentum. A failed cycle would signal the end of the attack. The key success factor is to start with a big enough cash reserve and solid nerves..

The problem is that anyone who understands this strategy can get the same profit he does without any of the expense.

Say the long-term, fair market value of bitcoins is around $10, and that's roughly where they would be if nobody manipulated them. To push coins above $10, you have to buy above $10. Anyone who understands your strategy can make you take a loss as you do this -- as big a loss as they want. To push coins below $10, you have to sell them below $10. Anyone who understands your strategy can make you take a loss as you do this -- as big a loss as they want.

Now, say you succeed. You push the price down to $7 and some people panic sell. Now, you have to compete with everyone who knows what you're doing for a share of the underpriced bitcoins. You have no special way to hog them. And say you push the price up to $13 and some people still buy. Now, you have to compete with everyone who knows what you're doing for a share of the better sale opportunity. You have no special advantage over everyone else.

Now, despite all this, you might still think you could make a profit. Maybe, because you know when and how much you're going to manipulate, that gives you an advantage. But the problem is this -- the further the price is from its natural price, the most it costs to move it and the easier it can return to its natural price. So while going from $10 to $11 might not be that expensive, going from $11 to $12 is much, much worse. Not only do you take twice as much loss on every bitcoin. But more people catch on that the price is significantly higher than it should be and more people are induced to sell. And the more easily it returns to its regular price.

I personally know several people who are just waiting for such a manipulation to be attempted and have the funds to profit from it. Any manipulator will have to make them as rich as he makes himself, and he will bear all the costs.

Many have tried this strategy. Billions have been lost.

Joel, you made my day using the Bitcoin Magazine cartoon of you as your avatar. ^5

He'll never reach zero. Firstly, not every bit of fiat on MtGox is on the order book. Secondly, there are exchanges beside MtGox. He'd have to do this across the board, and essentially own every BTC out there at one end of the swing, and own no BTC at the other, then somehow prevent others from jumping in and ruining his plans. Plus, he'd be paying quite a bit of money in fees to the exchanges as well.

If it was that simple, anyone could do it by taking over the stock exchange of a small country... say Bolivia. It can be done, the first time, and with the element of surprise on your side. The second time it becomes orders of magnitude harder. The third time is almost impossible.

There are arbitrage bots.

MtGox USD accounts for about 45% (MtGox USD is about 75% of all MtGox, and all MtGox makes up for about 60% of all exchange transactions) of the whole market volume in the main exchanges. Once the difference beats currency conversion commission and exchange fees, they will find the walls to be much taller than they look like. This doesn't happen if you just touch it, but if you try to go past it.

So you have to factor this, with immediate effect, and then people reloading if they see an opportunity with some delay.

Well, the saying in Spanish goes "There's no better blind person than he who doesn't want to see". But in case you do want to see, check out Joel's explanation above, as usual a lot more eloquent than mine.

i think the op has a good point but from a different angle:

what if "pirate" is just someone or an organization who wants to destroy bitcoin?

due to the stupidity of users, we _COULD_ end up in a situation where a huge percentage of the coin is essentially traded into the hands of... government, private interest (traditional banks) etc.

the message is the same: stop giving it up so cheaply, guys.

The problem is that anyone who understands this strategy can get the same profit he does without any of the expense.

Say the long-term, fair market value of bitcoins is around $10, and that's roughly where they would be if nobody manipulated them.

Nice try but unconvincing. There is no such things as "fair" market value, "rational" investor behavior or "efficient" markets. Please read Mandelbrot or Taleb on Finance to end the belief in Gaussian law applied to irrational behaviors.
It has been shown that, if we had "rational" markets", events like financial crises would happen every 500 000 years instead of every 10-15 years.
Hence you refutation does not hold.

If someone pushed BTC up to 12 from an average of 10, even rational actors have no way of knowing whether that was a new guy buying into BTC OR a manipulator moving temporarily out of BTC to change the price.

See even when the price was pushed to 15.40 recently by euphoria it was a very weak price and collapsed at a few sells - even if you had orchestrated that you would not have been able to sell that many coins at that price.

I don't know what you had for breakfast, but I hope you realize this doesn't make sense AT ALL.

Again, the future price is set by the wealthy influential investor not by "rational" investors.

If investors invest without complete, exhaustive, public information about what is it they are buying, they are NOT rational, by definition.

By the way, the pump and dump strategy is a known scheme that has worked many times (ever heard of Enron) even though it's considered a fraud in most jurisdiction.

Who's going to break the 1,000,000 BTC barrier??

I don't know what you had for breakfast, but I hope you realize this doesn't make sense AT ALL.

Again, the future price is set by the wealthy influential investor not by "rational" investors.

If investors invest without complete, exhaustive, public information about what is it they are buying, they are NOT rational, by definition.

By the way, the pump and dump strategy is a known scheme that has worked many times (ever heard of Enron) even though it's considered a fraud in most jurisdiction.

Who's going to break the 1,000,000 BTC barrier??

If I'm like "yo, give me your coins and I'll give you a magic cheeseburger" and you do, without ever seeing the magic cheeseburger, then you don't have to worry about wtf I'm going to do with the magic cheeseburger when I don't deliver it.