Bitcoin Forum

Update 26-Sep-2012: RustyRyan appears to be in default.
Update 28-Aug-2012: Added RustyRyan.  The rating is lower than some of the others because he is new and has a small deposit business, but this will improve over time.
Update 30-Aug-2012: Added vescudero.
Update 2-Sep-2012: Initial credit rating for Namworld and BTC-Bond added.

Disclaimers:
1: This OP is being updated as there are a large number of changes taking place with rates this month (August).
2: all reasonable care has been taken to extract valid information and present it fairly.  Issuers or eagle-eyed users can either post at the bottom of this thread or pm me to advise changes/corrections.  Being listed here is not an endorsement and depositors are expected to undertake their own due diligence before entrusting their coins with someone.

Deposit Takers

User_name	Weekly	Monthly	Since	Credit Rating	Notes	Link
RustyRyan	3.00%	-	28-Jul-12	A-	10 coin/4 week minimum, weekly payout	https://bitcointalk.org/index.php?topic=96163.0
smart/ziggy	-	11.1%	May-11	AA-	Bank book	https://bitcointalk.org/index.php?topic=81357.0
vescudero	1.50%	-	Jun-12	AA-	weekly payments, deposits up to 50BTC	https://bitcointalk.org/index.php?topic=89122.0
Chungenhung	1.36%	6.0%	Jan-12	AA	50 coin minimum	https://bitcointalk.org/index.php?topic=56853.0
Kluge	0.97%	4.25%	Mar-12	AAA	32 day deposit	https://bitcointalk.org/index.php?topic=67446.0

New Deposit Takers

User_name

Weekly

Monthly

Since

Credit Rating

Notes

Link

GLBSE fixed interest instruments  Information currently out of date - being updated 17-Aug-2012

__Issuer__	__Instrument__	Weekly	5-day price	Issued Volume	Verified	Notes	Link
Teek	TEEK.B	3.00%	0.0871	2,000	No	Fixed interest , not guaranteed	https://glbse.com/asset/view/TEEK.B
ChaangNoi	TYGRR.BOND-B	2.00%	0.0990	40,000	No	GLBSE has "blank" contract	https://glbse.com/asset/view/TYGRR.BOND-B
Teek	TEEK.A	0.30%	0.9440	10,000	No	Guaranteed	https://glbse.com/asset/view/TEEK.A
Namworld	BTC-Bond	0.50%	0.0100	12,400	Yes	Fixed interest - C.R. "A-"	https://glbse.com/asset/view/BTC-BOND

Other semi-fixed interest instruments

__Issuer__

__Instrument__

Weekly

Notes

Link

For an excellent table of GLBSE returns/yields, please refer to stochastic's thread in "securities" https://bitcointalk.org/index.php?topic=74711.0

---

Credit Rating Data
Please note the date on these ratings is quite old - you should make inquiries if they are still applicable as most of these people have significantly changed their businesses in the last two month.

.	.	Liabilities /	Business transaprancy	Liabilities /	Current_liabilities /	Business Size	Business Size	Time in	Weighted	.	.
Who	__When__	monthly income	Assessment	Assets	Liquid_Assets	Funds managed	Customers	"business"	Score	Modifiers	Overall
chungenhung	13-Aug-12	2.00	.	25.0%	80.0%	16000	20	8	.	+0	.
Rating	Scores	6	.	6	5	6	2	5	5	.	AA
Smart/ZiggyStar	13-Jul-12	11.60	Trading/opaque	70.2%	67.5%	8258	20?40	12	.	+2
Rating	Scores	3	2	5	5	5	2	6	4.0	+2	AA-
Ineedausername	22-Jul-12	1.08	.	18.2%	18.6%	35640	.	8	.	+1	.
Rating	Scores	6	.	6	6	6	.	5	5.8	+1	AA+
Kluge	22-Jul-12	7.12	.	45.0%	20.4%	8996	.	7	.	+3	.
Rating	Scores	4	.	6	6	5	.	5	5.2	+3	AAA
RustyRyan	29-Jul-12	1.17	Mining/loans	11.3%	3.8%	350	15	1	.	+2	.
Rating	Scores	6	3	6	6	1	1	0	3.29	+2	A-
vescudero	29-Jul-12	3.02	Opaque	20.7%	36.0%	2550	83	2	.	+2	.
Rating	Scores	5	2	6	6	4	4	1	4	-	AA-
BTC-Bond	02-Sep-12	0.43	Holdings disclosed	2.2%	0.3%	32	3.2	1	.	+2	.
Rating	Scores	6	5	6	6	0	0	0	3	+2	A-

---

Also reference https://bitcointalk.org/index.php?topic=81542.msg1100627#msg1100627 for some general guidance.
Notes: Some deposit takers use 30-days rather than one month.  The calculation convert weekly to monthly by [(1+r)^(52/12)-1] and similarly, monthly rates are converted back to weekly.

thanks for that :)
I was actually looking for all this info today

You could add Gamma Bitcoin Fund,
https://bitcointalk.org/index.php?topic=74975.0
And use the average profit to calculate the interest rate :)
//DeaDTerra

The initial intention was for straight deposit taking services providing a fixed return.  GBF is more an investment fund and as you note, returns are different each week, but I've had a request to look at GLBSE bonds too (like BDK paying 1%/wk) and I could add Leandro's fund from Brazil which I quite like.  It will take a bit of time to collate.

Okay, it would be great if you could add GBF, if you need any info that's not already public then just ask :) I would be more then happy to help you out!
//DeaDTerra

I'm actually not taking deposits currently..... I am 100% Debt-free/Deposit-Free at the moment.

Too busy trying to get my farm re-worked with all new hardware.

*edit* nvm. I can't read =)

Thanks for putting this together, Patrick.

I am planning to deposit 100+ BTC with someone in the next few months, so this is helpful.

It's hard to know who to go for - the higher rates obviously come with increased risks. I guess the best option is to spread the BTC around.

From my limited knowledge so far, I would feel more comfortable going with Patrick. If he offered an increased interest rate for longer-term deposits that would be great.

I'm interested in how difficult it is to get a Pirate referral - would someone give one to a stranger like me, for example?

I would be more then happy to take some of your Bitcoins, you should also support Patrick he is doing good things for the community :)
Gamma Bitcoin fund has a average profit of 3.4% per week but recent month we have had a profit of 5-8% per week, we spread out investments between a lot of different investments and markets hence we can keep the risks low and profits high.
//DeaDTerra

OP.
Not all of mine BTC are with pirate. I have it spreadout to multiple places.
Also, 8% is not my exact rate. It varies depending on each situation.

Hi Chungenhung, I understand that most people with BS&T exposure probably only have a proportion of funds there, and it's a tricky point building it into the table.  It might be useful to have a rough proportion to include, but I also appreciate that it changes (hence the difficulty constructing it in the first place and estimating the guarantee level which people are becoming more interested in.)

Also, I picked 8% as it seemed to be around the middle of what you were offering and I know you ran 10% for some deposits.  If you have a different value you would like me to use, please let me know.

When I thought of constructing this, I didn't know exactly how it would all come out.  I thought Starfish rates were better, but they are not.  I also suspect there is a market for differentiating deposits between BS&T pass-through and guaranteed or reserve backed products.

Actually I dont think that it matters where are you putting your funds, It all is about what guaranties you give to people. But in case of pirate it might me interesting to add a percentage of funds which are used for pirate deposits. So those who are 100% will be just passing through, everyone else just tell how they are depending on BS&T and what will happen if it disappears. This could be very interesting info. And by percentage I think that it should be the amount which everyone can get or we could write a range.
PS Pls add info about per week deposits, it starts from 2.5%(and in case of range it`s 12-18% month and 2.5-4% a week)

For some people it does matter where the money goes, but the guarantees also count, so it is a combination.  A percentage might be too detailed and likely to change too much.

Also, the table is a simple guide, not trying to capture all of the variations everyone has, mainly the better ones - like your 18%/4% special.  That's why I converted into a monthly rate as the base metric.

Based on a set of simple indicators, people can then go and do their detailed decision making.

Don't forget my Loyalty Rewards Program (https://bitcointalk.org/index.php?topic=75843.msg854449#msg854449).   ;)

Maybe I deliberately avoided it - it was complicated when I looked at it last time.  But, yes, nice loyalty rewards.

Hi Patrick, thanks for this - very useful, how about Smart who has been in operation on the German forum for a while now & recently started to offer on the English one too, no exposure to Pirate & deposited funds are guaranteed
https://bitcointalk.org/index.php?topic=81357.0

@Otoh , thanks.

The German Part of the Forum https://bitcointalk.org/index.php?topic=37320.0 .

The interest will chance every Sunday !
It is paid at the time of investment. Automaticly to your User Account.
After them you can get a reinvest or instant Payout.

http://i.imm.io/ptKh.png

English Part of the Webside is Https://Mybitcointrade.com/en/


Payouts are Guarantee
Greeting



EDIT  :
To see the correct amount of availability & rates after create a Account plz use this link = https://mybitcointrade.com/en/?content=/sparbuch/sparbuch

I just filled Smart's current availability of 76.67 coins, note that the rates shown on his home page are out of date, click on Savings to see correct current ones (which are those shown in his post above), his interest rates offered change every Sunday but obviously are fixed & locked in once you take out a saving's plan & the interest is added to your account & available to you at the end of the investment period

Thanks, and I have another one to add as well (a newish lender/deposit taker) - will update later today.

I can see how it could be complicated to a guy running a bank.   :P

Actually, I meant that it would be complicated to condense into one line.

No worries.  I was just giving you a hard time.  Keep up the great work.

As per this thread here https://bitcointalk.org/index.php?topic=82772.0, here is my current offer.


Rate will change as funds flow in. Eventually, it will probably be (if I don't close it to new investors):


It looks like I used a different calculation to determine rate per month. I've just listed compounded for 4 weeks, rather than allow for different length months.

Can you provide a link to the Nov2011 taking of deposits?

Ah, whoops. I misread that as age of deposit with Pirate for some reason.

I've been taking deposits since yesterday, so May 2012.

No problem, I added it as May so should be correct - if not, let me know.

i'm paying 6.9% per week... link is in my sig.

minimum account size: 10 btc
no minimum term

added the minimum in notes

Thanks, excellent overview!
Looks like you need to improve your rates though ;) - last place (even of the non-BS&T depositors)??

I'd like to echo this - only because I consider Patrick the most trustworthy and I would love to not be tempted by others higher rates!

Thank you for the feedback, but being in last place wasn't my intention.  The flip side is that I'm paying "lousy" rates to support some lower cost lending so borrowers can get funds at 2% per week and people investing/depositing can have a high measure of confidence that their funds are secure.  I'm aiming for sustainability and longevity.

I'm not about to ask the other deposit takers to drop their rates though, but I might keep the 1.5% rate running past the end of June (undecided).

hasking's changed his rates lately, btw

1.0% weekly interest rate(No commitment required)
4 Week deposit pays 1.15% Weekly
8 Week deposit pays 1.25% Weekly

Updated with the HK 1.15% rate (as it's closest to 1 month).  Removed the 14 week special.  Thanks for pointing out the change.

I thought hashking's 1.15%/wk deposits are not exposed to BTCST.

He runs different deposits for different people (most people do).  He does have BS&T exposure that he directly passes onto customers for that service.  For the lower rate stuff, that may have exposure to BS&T, but you can clarify (when I asked him originally, the answer was "yes", but that doesn't mean the structure hasn't changed.)

Ok, thanks for the clarification. I must've misread his thread.

Could a mod please sticky this thread? It is very useful.

+1

+1

+1. Important resource for those who're new to the lending subforum.

PM'd Maged (https://bitcointalk.org/index.php?action=profile;u=6347).

Stickied. This will take the place of any stickies for people who only take deposits, but aren't major lenders (my idea of the stickies here are that the stickies are for groups with ongoing business, but that there'd be too many if I stickied non-lenders).

Thank you Maged.  Looks like I'll need to keep a bit more of an eye on the growing credit business.

Patrick, I'll leave it to your judgement on who gets to be included in this sticky. Whether you want that to be everyone, or only people that you at least have a small amount of trust on, is your call.

Oh and PatrickHarnett, could you link to the individual threads in your OP? Thanks.

Pirate BS&T: https://bitcointalk.org/index.php?topic=50822.0
PayB.TC: https://bitcointalk.org/index.php?topic=83904.0
Brendio: Not accepting new deposits, the thread is: https://bitcointalk.org/index.php?topic=82772.0
notme: https://bitcointalk.org/index.php?topic=60405.0
ShadowAlexey: https://bitcointalk.org/index.php?topic=75738.0
OgNasty: https://bitcointalk.org/index.php?topic=75843.0
NCKRAZZE: https://bitcointalk.org/index.php?topic=81927.0
Chungenhung: I couldn't find one deposit thread.
smart1985: Same here. (I don't speak German either)
Starfish BCB: https://bitcointalk.org/index.php?topic=61262.0
HashKing: https://bitcointalk.org/index.php?topic=66802.0


Thank you!

Yes, links are going to need to be added, as well as a section for GLBSE offerings (like BDK's 1% bond) and those with some restrictions too (especially those with restricted capacity).

The basic structure I started with was posting approximate monthly rates for:
1: The big board: established deposit takers without restrictions on deposits.
2: The small board: For those that are new to deposit taking, less than 2 months and without history of paying back.

So now it will need:
3: Restricted schemes: limited availability like EIEIO.
4: GLBSE offerings: Bonds/deposit instruments like PPT.x or BDK.BND

What would be nice is an imbedded spreadsheet for the forums, for information like PatrickHarnett is doing. It would make things a lot easier.

Great job & great idea by the way.

You can use tables, although it's hard to visualize.

I saw someone use a table in a pm, so while cumbersome, I think I can set it up externally before importing it.

mem's newbie-friendly gambling list is probably a good example for people who want to see how tables are done in BB code. (just hit the quote button on his post to see the source).

watching

This thread is always one of my first stops. Thanks a lot for the effort - much appreciated!

Now you're making me feel bad I haven't had time to update it.  My lame excuse is that I'm doing paid work/day job instead of this.

where can we send you a coin or two? having this thread stickied and up-to-date is in my best interest my best interest my best interest :D sorry keyboard got stuck in a loop.

Actually, while I have other ideas for fee-for-service in the banking services arena to run via Starfish, I would prefer not to accept donations or payments for the time I put into this - it would give me a potential conflict of interest.

no problem, i'll retract the private key i sent you via pm ;) thanks heaps for the thread though.

Patrick is working on updating the OP with links, GLBSE assets, etc. but he hasn't gotten to it yet.

Where can I find Chungenhung's deposit thread/website? I can't find it anywhere

Edit: And same question for smart1985's thread/site :)

Thank you very much for composing this list. It's been a great help to get a clear view of the current lending scene. Keep up the good work!

Chungenhung's
https://bitcointalk.org/index.php?topic=56853.0

smart1985's
https://bitcointalk.org/index.php?topic=81357.0

Cheers

Thanks!

Bump - OP updated.  Interesting adding in the other pieces, but took a long time so not keen to build this from scratch again.  Most of the data is now in a handy spreadsheet that I can update and cut/paste into the OP when changes occur.

And the best value non-Pirate fixed interest thing today appears to be TEEK.B at 2.9% per week.

That looks much better. Nice job, Patrick.

patrick, your genius is showing.

Thank you Patrick!  :)

One thing though, there are some non-Pirate bonds/securities in the Pirate/pass-throughs section?

Not as far as I know - all the ones listed are pass-through in one form or another.  As I said in the OP, it's based on research and that might be wrong.

You're not confusing the GLBSE section (#4) as that has a mix.

Ah, yes, I read the table wrong, sorry. ;) My bad.

Thank you Patrick for listing me as a deposit taker.
I was going to ask you to include my 2% weekly deposit in your list, when I saw you already did it. As always, you've been amazingly fast!

Pirate says he has a dead man's switch.

As most of the bonds and the regular payouts of dividends are issued and maintained by individuals, a bond would become instantly worthless if operation cannot continue unexpectedly. Thus it would be nice if issuers could state if they have similar precautions and if that could be included in the overview.

Adding too many fields will make the table unwieldy, and that information (and other) would/should properly be disclosed in the linked thread.  My own "deadman" switch, for example is simple, but allows someone I trust to unwind the deposits and loans in a sensible fashion.

After completing the table yesterday (and yes it did take a long time) I was thinking about the real world requirements and some deposit takers meet some basic minimums and others do not.  However, if I placed an assessment of meeting a minimum requirement or a "credit rating" on them, that would require a lot more information than most people would be prepared to reveal - such as assets/liabilities. 

I have considered doing credit ratings before, but again, it is quite time consuming and like in the real world, for someone to gain a rating, it would cost.  I am also mindful that I am an issuer/deposit taker so may be viewed as biased.

Small change to Starfish BCB - testing a new minimum deposit size.

Thanks for the huge update, Patrick!  The OP really looks great.

I'm now offering 12-20% monthly interest.

Updated OP.

https://bitcointalk.org/index.php?topic=89191.msg987915#msg987915

Request for feedback regarding credit ratings.

Hey Patrick plz add our new loaning Bond.

https://mybitcointrade.com/?content=boerse/projekthandel&projektid=11

Forum Thread is the same one. https://bitcointalk.org/index.php?topic=81357.0

The Loaning Bond
Payout of the dividend (min 2% / week ) is every Sunday at 00:00 am automaticly. With the surplus, we pay out larger dividends or buy back shares to 0.5 BTC.
We buy your shares for at least 0,125 BTC while the running time (max. buybackrate is 0,20 BTC).

This will be a Middle Term investigation.

Payout are automaticly and 25% guaranteed !
Expected running time up to 9 months.

----

Offer will be chance attractive Tommorow.

I read this a while ago, thought about it, and now coming back for a second cut.

The current front-page table initially covered fixed interest deposit accounts, and then expanded to include BS&T pass through and GLBSE.  From what I read of your offer, it's a little bit different again including a "buy-back" and the notion of shares and run via it's own web.  The bonus payments also make it look more like an investment of some type of equity rather than a fixed interest instrument.  Alternatively, it might just be a longer term deposit - I would have to look again.

It was not my intention to list equities/shares even if they are paying a reasonable rate (mining shares arguably do that too, or any GLBSE asset with a decent dividend history).  It was also not my plan to scour the internet looking at schemes promising various rewards as there are some quite odd ones out there.  However, it is also not my intention to discriminate or dismiss ventures like this.

Pending feedback, I could add a miscellaneous section as a fifth table. 

I would also like to differentiate something that appears moderately solid from HYIP's and places like https://bitcointalk.org/index.php?topic=89635.0  Therefore, I will be progressively adding a credit rating/score indication during the next week as this has been requested by enough people to indicate that it is required.

I think both of those ideas are good. At your discretion, would you consider adding mining bonds to the table? Perhaps for the Miscellaneous section you could list the average price/share, and the average dividend/week, rather than just the variable interest rate.

Over in securities Stochastic does a very good table of weekly returns for all GLBSE offerings.  I would not want to duplicate his very excellent piece of work, but I'll add the link to the OP.

https://bitcointalk.org/index.php?topic=74711.0

The new investment would act as an expansion possibility. The calculation was set very low. We have long been on the market since early 2011. Offered by such https://bitcointalk.org/index.php?topic=89635.0 we have nothing with this!
For over 1.5 years, there were no complaints about us, and all users get their money back. The fund will be revised again as announced in the current form.

Edit: The history follows

Greeting
Smart

Hi Smart - you misunderstand - I was in no way linking your offering to the one listed in that other thread which looks very insecure.

My misunderstanding is potentially in the translation from your offering and another I am aware of (ZiggyStar) and I will pm you in the next few days for some clarification.

English is not my best language, really.
The translation takes about an employee.

But the offer had to be revised. It is this type but it remains under better conditions.
Yes please, that the somebody else.

It's taken longer than planned to get around to this, but it is a topic I have been asked about three times in the past week, in reference to alternatives and how trustworthy various deposits are.  Assessing Bitcoin-deposit takers and interest providers is quite different to the real world as many of the metrics do not apply very well, especially as there is unlikely to be interest and depreciation, or large operational income.  It is also desirable to keep things simple and brief where possible.  Therefore, I propose to use the  following metrics to form the basis of ratings:

Financial
Liquid Assets: Those able to be redeemed within 48 hours - includes cash held at an exchange.
Assets: Typically investments in fixed term deposits or extended as loans.
Investments: Stocks, bonds and investments in BTC enterprises that are not necessarily liquid.

Nett Income: Average monthly income for the last 3 months.
Bad debts: Total of bad debts to Assets for the last 3 months.  

Current Liabilities: Payable within 1 month.
Term liabilities: Payable later than one month.

Non-Financial
Identity verification (generally accepted people know who you are in real life)
Length of time in "business" (months)
Operation of limits on accounts.
Disaster recovery procedures (Y/N)
Prior late or missed payments.

Non-Financial
Identity verification (generally accepted people know who you are in real life)
Length of time in "business" (months)
Operation of limits on accounts.
Disaster recovery procedures (Y/N)
Prior late or missed payments within the last six months.

Ratios

-------------------------------	AAA	AA	A	BBB	BB	B	C
Liabilities / monthly income less than	3	6	9	12	18	24	-
Bad debt ratio less than	0	2	4	6	8	10	-
Current_liabilities_/_Liquid_Assets_less_than	1	1.5	2	2.5	3	5	-
Liabilities_/_Assets_less_than	0.5	0.75	0.9	1	1.1	1.25	-
Time in "business" months	12	6	5	4	3	2	1

Modifiers - to move from one category to another takes three points.
ID verified: +1
Account limits: If current limits maintain or improve ratios, +1, otherwise -1.
Disaster recovery: +1
Prior late/missed payments: -3 per event.


Example updated and is posted below.

Also as usual, comments welcome.

Oh, credit ratings. Very nice indeed. Great job, Patrick.

(fixing a couple of small formatting issues)


How about something like "XYZ would be useful" or "I'd like to know if someone has all my money tied up in an illiquid asset on GLBSE", or "wtf does income have to do with it?"

Maybe more interesting is how people might value or discount rated offerings and if other deposit takers actually want to disclose (even at an aggregated level), this information.

Patrick's list of ideas for credit scores is a good start. There are some more items that could be added along the lines of verifying that they are actually engaged in a business or are running a Ponzi. 

Some ideas:

-Shows signs of engaging in a business (ex. a lender that has threads on the forum vs one who has no evidence of lending out the money).  This item is critical.  Business model is described in detail.  (Ex. you lend out money, show us a volume of money that is lent out, the rates, and maybe even the approximate amount and term for each loan - without saying who it goes to).

-Business model does not involve "speculation". Speculation is a zero sum activity and will not produce a steady (or even positive) rate of return over the long run.

-Offers an unreasonable rate of return.  Offers a rate of return greater than other people in the industry (ex. someone who knows bitcoin mining should estimate the best rate of return currently available using GPU, FPGA, and BFL technology and the best pool (or GPUMax) - if someone claims they are mining with a bigger return rate then be suspicious.)

-Rate of return is more stable than you'd expect based on their business model (Bernie Madoff provided very stable returns).

-Comparison of the size of their previous business activities (which gained them trust) to the current scope of their operation.  Are they doing the long con?

-Ask the operator if they think BCST is engaged in a business/operation that makes money how Pirate says it does or is a Ponzi?  Ok, this is probably controversial and should just be rated as a "Y" or "N" or "I don't know" and not given a positive or negative score.  Personally I'd count it as evidence of engaging in a Ponzi, but someone could lie about it and other people who like Pirate's operation might feel favorable towards them.

-Business has exponential growth.  The business grows at a rate faster than the dividends/interest.  By contrast if someone has a one-time offer for business and then doesn't accept new funds, they might be running a scam, but it isn't a ponzi (unless they ask for funds at a later date).

Any other signs for detecting Ponzis? 

Thank you for the great reply.

There are a heap of things that could be asked, and that is part of a due diligence any investor should look at.  What I am most (and others should be) interested in is financial ability to repay.  A ponzi operator is unlikely to disclose sufficient information to get a rating (or a good one).  Growth metrics and disclosure are useful (I have some, as do some others) and these do not always indicate scamming behaviour.

Also, there is a nice underlying (implicit) point that lying on credit score information would be noted and would provide a huge red flag for any investor.

How someone makes their income/return is less of an issue if they have reserves, and I would expect someone investing purely on GLBSE capital gains to have a few extra problems over someone that regularly lends funds.

Size of the business doesn't necessarily lower risk, but it does have an impact.  For example, I have 150 addresses in my client list, so it could be based on number of client accounts and/or volume.

BTW for a good read, search for "Corporate credit criteria"  http://www.nafoa.org/pdf/CorprateCriteriaBook-2008.pdf

Thank you Patrick, your credit rating system is a neat idea.

Maybe another modifier I will take into account is regarding the true identity of the issuer.
I tend to trust much more in a person who is not afraid of revealing his/her identity in the real world ^TM.

In order to let my investors know that I am a trustworthy person in which they can trust, I provide them details of my identity as I am not going to risk my credibility and my own physical body running off with their deposits.

Some examples of the links some people tend to ask me before investing in my risk-free deposit at 2% 1.5%/w  (http://bit.ly/MAWOEv) are:

• LinkedIn profile (http://linkd.in/LyV15x)
• Personal Blog (http://www.vescudero.net/search/label/bitcoin)
• Secure Email (http://bit.ly/PrivBox)
• Twitter account (http://bit.ly/LWqRHx)
• Facebook account (http://on.fb.me/NPv4Zk)
• Bitcoin over-the-counter ratings (http://bit.ly/btc-otc)
• GPG Signatures from people that know me personally. (http://bit.ly/MKfopK)

These are some of the things I also asses before making a deal with other bitcoin traders although different people have different approaches and your mileage may vary.

^^^i think Neo is much more 'real' than Mr Anderson.

bitcoinmax minimum has been dropped to 5 btc.

Added Brendio's 32-day deposits

https://bitcointalk.org/index.php?topic=91536.0

I have done a little more work on credit ratings, and corrected an error I had in the above post.

The following sets out a sample calculation for Starfish BCB.

Base Data

Liabilities	Monthly Income	Bad Debts	Current Liab	Liquid Assets	Assets	Time in business
18426	2000	10	13759	11302	33825	7

Results

.	.	Liabilities /	Bad debt ratio	Liabilities /	Current_liabilities /	Time in	Weighted	.	.
Who	When	monthly income	Bad debt ratio	Assets	Liquid_Assets	"business"	Score	Modifiers	Overall
Starfish_BCB	13-Jul-12	9.21	0.5%	54.5%	121.7%	7	.	+3	.
Rating	Score	4	5	4	5	5	4.6	.	AA

A couple of credit ratings and other minor updates in the OP.

How are you justifying ziggistar's AAA rating?

He posted the mechanics of how he comes up with credit ratings earlier in this thread.

Currently it is a preliminary rating.  As set out in the mechanics and metrics which I am awaiting permission to publish.  There is an issue with the information that goes into the liquidity metric that I am waiting to sort out, until then it is just that, preliminary.

Essentially, they have relatively low liabilities to total assets, have been around a long time and haven't had many problems/issues.  They scored a base AA rating and get an additional two notches for ID and disaster recovery resulting in a preliminary "AAA-".

Thanks, I was just wondering since Ziggistar seemed to have popped up here on March ( https://bitcointalk.org/index.php?action=profile;u=54441;sa=showPosts;start=180 ) and I was wondering how he achieved a AAA if you say he has been around here a long time. For the second part when calculating assets and all that, do people just give you a list of numbers that you simply take as true or is there more diligence in making sure the numbers are realistic/truthful?

There is more to it than that.

Haha Pat, I would hope so :) Do you mind elaborating how that works exactly, or if you'd rather not make this set of criteria public for abuse, explain how you mitigate the possibility of someone sending you manipulated information that favorably fits your credit rating criteria?

+1

The basic mechanics are in: https://bitcointalk.org/index.php?topic=81542.msg1015968#msg1015968
I've sent ten or twelve requests out to the people that take deposits and have received back two and know a couple of others are in process.  I have even invited Pirate to fill one out, but that was more for fun to see if he would (especially now he's commented in the Dank Bank thread).

There is potential for abuse of the credit rating system, and for people to simply lie.  That wouldn't be a very smart thing to do as that would get them a simple "Z" rating.  There are also a number of other people who will be looking pretty carefully at the information provided and will be able to highlight discrepancies.  As well, over the past year  I've read a lot and done a lot of business, including keeping tabs on the actions of various people as they come into the deposit taking space.

I have been asked to rate issues as well as issuers, and there are some other metrics that might be useful such as size/diversity, but those are harder to account for.  Also, this is very early days for ratings and I've had feedback from one person that it's going to take a few days to clean up their records - a positive step and if someone doesn't know their position, they probably shouldn't have a rating.  As contract, if someone knows their position, that's a positive (fundamental) aspect of ability to take and repay deposits.

Most importantly, I have a lot of information in my possession and know a lot of stuff that I simply can not and will not disclose.

As for Starfish BCB, I know the ratios and rules and I follow them just like anyone else, and in another seven days I have a 10 BTC bad debt roll off and that will affect the numerical score for that item.

I'll try to get to this within the next month. Bigger fish to catch for the time being.

OP updated.  Some additions, some shuffling.  Newly published credit rating metrics for Ineedausername to go with his insured deposits and uninsured PPT.

^^ patrick, did you update it from an old copy? i'm fairly sure you had already adjusted my minimum to 5 BTC but now it shows as being back to 10 again.

Sorry, my mistake - re-fixed.  I have an off-line record that I use to generate the tables (otherwise they would look much worse) and didn't change it when I did the quick change last time.

Kluge credit rating added.  AA

Despite the (insert bad word) things that occurred today, BDK and Kluge still obtains a very respectable rating.

?

Check the BDK threads.  Kluge had his GLBSE account plundered/screwed despite changing a password - an open session from a hack resulted in some fraudulent trades.

Hi Patrick,

Are these lenders supplying you with identification (drivers license? etc ) to obtain these high credit ratings.

I understand the reluctance of wanting to give a "stranger" on the net a scan of my drivers license but on the flip side there must be some exchange of details when we are dealing with tens of thousands of dollars.

I feel identification should be a highly weighted metric contributing to their final credit rating.

Without the supply of this identification they are just facelesss names on the net and i would suggest that people are capped at a A rating or lower without supplying this identification.

I imagine you personally wont have a problem with it as your easily identifiable even to the point of your place of work.
Can we supply these same conditions to other lenders ?

I think it would go along way to increasing the profitability of their business to the level you are currently enjoying as depositors would feel allot more comfortable investing their dollars.


just my 0.2 cents ;)

Also... fwiw, you should add kludge to deposit takers as he also takes deposits.

Yes, I will update.  I see his revamped (rainbow) OP has his CDs listed again.

any comment on identification requirements patrick ?

Seeing as you are championing this thread, you would need to lead the call if you felt it would help secure lenders and borrowers.

I agree that ID requirements would be good, as would people providing additional information about their business models and supporting assets (credit ratings).  However, this is voluntary and I can not force anyone to do that.  However, if people make it clear to different deposit takers the level of disclosure they need, then that will improve this section.

In a similar vein, I am often asked for recommendations, but that is a bit more complicated.  Not sure what the general consensus is.

While working with RustyRyan today it became obvious that start-ups present an interesting issue: with no deposits or liabilities, they tend not to produce meaningful metrics.  Therefore, having a minimum size makes sense. 

This ties into some of the other size dimensions that are relevant here, and that is the size of the deposit-taking operation.  For example, you might be looking at a deposit, and someone with 100 coins from one person might have a different profile to someone with 100 deposits for the same value.  Similarly, someone with 5000 coins under management might be seen as having a more stable profile, maybe not. 

In any event, collecting data on the size of business (total and # of customers) is relevant for some people, just the same way bad-debts are not relevant for those that do not provide loans (and might artificially increase a rating). 

• Possible size breaks would be 100/500/1000/2500/5000/10000.
• Possible customer number levels could at 10 and double 10/20/40/80/160

This might change the ratings slightly, but the idea is posted for feed back from whichever side you're on.

And, to herald the other change - when this kicked off it was based around a deposit taking/lending coin model.  Obviously people are doing other things with coins on deposit, so the bad-debt metric is going to get replaced with something more closely related to the stated use of the coins, including how transparently that is disclosed.

+1

Some weeks ago I looked at an enhancement to the credit ratings I do because the range of businesses did not fit within the lend/borrow model it was initially designed for.  I have made changes to the routine and will be collecting/updating information as it becomes available.

• Possible size breaks would be 100/500/1000/2500/5000/10000.
• Possible customer number levels could at 10 and double 10/20/40/80/160

I have also made a couple of other minor changes to break points to better reflect the range of issuer data.

Hashking has reduced his 8 week deposit to  1.25%  weekly

Hmm.. I've been thinking about this quite a bit. A few tweaks I have in mind:

1) The ratio of "liquid reserves" only needs to match current accounts (ie accounts that can be withdrawn from at any time), and should be between 20-30%. The remainder should be in exclusively short-term assets.

2) For CDs (which have a more limited liquidity requirement), the more important metric is how well the asset maturities match the debt maturities. In other words, if a lender has 100BTC in 3 month CDs, they should have not more than 100BTC in loans/assets with 3 month maturities. Assuming they keep proper liquid reserves, it's less important whether the assets mature exactly when the CDs are due than whether liquid reserves are sufficient and kept replenished.

3) The amount of BTC the lender himself puts down (equity/deposits) should be counted separately, assuming the lender keeps a policy of insuring losses with their own money. This ratio should be ideally 100% or better.

4) Other security practices, like setting up dedicated receiving addresses with accounts and not allowing withdrawals to other addresses, should probably be added under the "non-financial" section. A significant fraction of major BTC losses are security related.

Some interesting points.  Not all of them are applicable to the people offering services.  Some comments/observations:

1: Having higher liquid reserves can be useful, but at a 20-30% level would leave small (by customer number) or poorly diversified operations exposed to contingent events.  Also, the short-term asset market is not as liquid as many people would like. 

2: Tracking maturities in a "point in time" system is not practical and some CD issuers manage this internally, but not visibly.  It is a cash-flow management issues and relates to solvency (paying debts as they fall due).

3: Surplus or net assets - covered.  Should it be greater than 100% is debatable - that goes to risk profile and the nature of the business.

4: If I wanted to look at security, I'd also look at the kind of websites and other things people do, but there are some clever thieves out there.  That is part of the due diligence anyone should do before investing.  That might also assume coins are sitting idle which is unlikely.

Not sure what sort of event would be made worse by having extra reserve cash sitting around. Thinking about it, though, the 1-month term for "current debts" is probably a good enough approximation for "short term".


Cash flow is a pretty fundamental part of credit analysis :\. It doesn't really need to be tracked exactly, just to make certain that loan/asset terms have similar (or greater) liquidity as the deposit terms.


The rule of thumb for non-financial businesses is 1:5 (20% debt) debt/asset ratio or lower preferred, and 1:3 (33%) is running on bankruptcy. For a financial business, higher ratios are acceptable, but the considerations are different. Frankly, if a business chooses a higher risk model, they probably should not have as high of a credit score, and higher leverage means lower ability to repay principle in the event of some unexpected adversity. It does depend on the nature of the business, though, since a mutual fund would have very different considerations (and expected higher leverage) than a more money-market oriented "bank".

There's also incentive to consider, ie a mutual fund owner who charges clients even when he makes a loss does not deserve a high rating.


I was thinking more along the lines of the recent forum hack whereby the hacker(s) gained access to other people's accounts and then made withdrawal request PMs to be delivered to a hostile address (client rather than server side compromise). On the other hand, security is probably beyond the scope of credit ratings anyway.

Again - thank you for your points and thinking (and your posts in various other threads).

One of the things to keep in mind is that the people taking deposits are a wide mix of operating models.  Some are more like banks or financial institutions, others more like start-ups seeking capital for expansion or working capital to do something (maybe mining, maybe trading).

Fundamental to the ratings is if there are assets to cover liabilities, and if things go wrong, how badly wrong does it go.

If I had one customer with a 10000coin on-call deposit, then redeeming that could give me quite a lot of difficulty.  If it is 100 customers of 100 each, that  is much easier.  That is why people should ask to see what the various metrics are.

Also, when I am choosing an investment, I definitely ask questions, including deposit and withdrawal addresses.  For example, with Starfish I run a modestly sized address book with details on 200 customers (receiving and sending) and expect people I deposit with to be able to track my funds.  There are people I am happy to invest with and others not (and there are size breaks too) thus I deposited 2000 coins with someone yesterday, and another person just 10 coins.

After talking with Patrick we thought it could be beneficial to some members of the community if credit ratings (C/B/BB/BBB/A/AA/AAA) were briefly summarized.

The general meaning of credit rating opinions is summarized below:


Note: Ratings may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.

What's with the first post? Why is it removed? Patrick?

A minor protest.

What are we protesting ?

The accusations and insults shooting all over the place these days, I think...

Ah, i could see how that would get under your skin. Patrick should know that success comes with its detractors.

You cant have a ying without a yang unfortunately.

Can you post some links for those of us who haven't seen any of that?

Maybe not conducive to your desire for more investors...

Well, if someone else wants to do this, now is your chance to get a sticky.

Wtf, a new forum?

Emphasis mine...

The bulk of the OP contents will be reinstated later today.  This has been a useful exercise demonstrating the bias of particular people against those actively working to improve the Bitcoin economy.

The OP will be restructured and include the following features:

• Only those with business models that are apparent or have been disclosed will be listed.
• To be listed, issuers will need to submit and agree to publication of their financial metrics (the credit rating system).

I know, I can still ask for an invite.

This.

Patrick - would you care to get into details about why you pulled the OP in the first place? You've been rather coy about your reasoning so far. For instance you at first said you removed it "in protest." In protest of WHAT exactly? I'm not getting your message, if you intended one.

That said, I think it's a great idea for us as depositors/lenders to demand more disclosure from those seeking to borrow such large sums of money. I welcome the changes you're implementing in the WPW listing and thank you for using the solid rep that you've earned to set a better example for the community.

So I get an invite?

A new invite-only forum (no troll attempt intended) would be useful for major Bitcoiners, but then no newbies could contribute without an invite. :(

Awesome! Finally, some accountability.

Basically there are some people that put a huge amount of effort into bitcoin.  The WPW thread and the work that goes on behind the scenes is one of those, and the tide of people accusing everyone in the lending scene is to a significant detriment to the forum and bitcoin as a whole.  The Starfish deposits system is around break-even and probably gets subsidised from the dividends and mining I do, but I consider it important to have space open for people wanting to park a few coins with low risk.  As for my own situation, personally, the idea of running away with $1M is silly - it's really not enough and I have other objectives.  (I think I'm close to that in my local currency, whatever 60k coins is - and I am well past the point where I have recovered all of my seed money).

I have noticed there are some accounts where the sole purpose is to cry "ponzi" and scam for months and sometime years on end (ages before Micon joined the party late).  This week I have been accused of being a scammer, "shit", a criminal and someone that deserved to be put in jail.  I get off lightly, but others are labelled shills, pirate prostitutes and many other things without proof.  (I still have the pm where I was offered 100BTC for a referral that I turned down.)

Maged, the moderator for this part of the forum, might be justifiably concerned about the impact of BS&T but has landed quite heavily on one side of the debate and this comes through in the treatment of those working to provide a range of services.  I have previously pointed out some basic ID details for him, and others late to the witch-hunt (and I am reminded on Joel's beautiful comment yesterday that is pure "group think" - "don't think outside the box") have not bothered to do their basic homework.  I was, however, pleased to note a quite rational post from Micon so obviously he is learning some stuff about bitcoin along the way.

There are some schemes where I have inside knowledge, provided on a confidential basis.  I also hold information on many users, also provided confidentially.  Myself, if you don't know who I am down the the colour of my house/car/cat you're not even trying (actually the cat could be tricky).  I am not going to "spill the beans", as my approach is more subtle.  That includes BS&T as I know (and have had confirmed) the mechanics that allow such fantastic returns and could implement it on a smaller scale, but there are actually better returns if you know how. 

Months ago I signalled to several people that the interest rates in this economy would fall.  Pirate has done exactly what many other have done and has begun his process, but he's certainly not the first to do that.  They will fall further, as will the rates Starfish and all other legitimate providers.  Bitcoin is a great example of an accelerated economic history, and a great textbook example to learn from.  As such, it is quite interesting working within an economics consultancy where I can discuss the evolving concepts in months rather than years/decades.  As such, I'll have a lot more work to do on this thread over the next year.

So for the detractors: I hope you do not get your wish in killing bitcoin, and I am pleased to provide and protect the intent behind PPT.x and a range of other things you consider criminal.
For the hundreds of people I deal with: I have two weeks away from my day job to work on my website, otherwise, you know how to contact me.

Did Madoff or the like reduce interest rates at any point?

oh god please I bed you all don't go and poison this thread as well with FUD and witch hunting enough is enough. This is like the only thread that's free of such things.
Bring it somewhere else please!
//DeaDTerra

It's just a question, I really don't know (or I'm too lazy to research), and it's in context here because @PatrickHarnett mentioned lowering interest rates.

It does not make direct sense for a Ponzi after all, only as a stunt to pretend legitimacy of the business. But even then, it's a dangerous endeavor, because it would cause many people to withdraw. A Ponzi operator may rather choose at that point in time to run away instead of lowering interest rates.

Come on, people, do you really think that in this world some one would ever pay you risk free over 1% a month?
Most of us dont have enough funds to live only on interest in common world, thats why we invest our money here. Most likely most of us wont be able to get even 20% a month on our funds doing business, which involves very high risk of loosing your funds.
So WHY are whine about all this shit? The mote you risk the more you get, thats how it works, there is no other way. Don`t wont your funds get stolen, go to the Bank, usual one, and may be you will get your funds back in a year(but u also take some risks). Look, in the real world Facebook investors have managed to loose 50% of their invested money, no one is saying that Mark is a scammer, this is how it all works. I`m really

ha, i should have kept my copy from when i did the same thing... i wonder if it was from the same person.

Don't know, nor particularly do I care.  In the local finance market it wasn't the collapse of companies that was worst, it was the simple lack of diversity of investments.  Retired people by their hundreds and thousands put 100% of their money into just one thing.  When they went pop - their retirement was ruined.

The point about interest rates is not one of a normal business or inflationary cycle, but one of moving from an accelerated economy to one that behaves more efficiently.

ok, he doesn't at last.  :D

I do know the US Federal Reserve reduced interest rates, and printed a whole lot of money.  I have also seen that with a positive birth-rate, the USA is one of the few countries that was considered to be able to breed their way out of debt (sorry, I can't find the reference).  Some great pyramid/ponzi characteristics there, but that's been done to death elsewhere. 

Back to the regular scheduled programme.

+1

Who pays what ?    Would be surprised if anybody pays anything if pirate ain´t paying ;)   or is everybody honoring his commitments without fingerpointing?

Speculative answers about independent trustworthyness would be very much appreciated

Cheers Zyk

I have received payments from the reliable people that I choose to invest with, and am still within limits on the deposits I manage (Starfish has about 17k paying 1%/wk).  What happens over the next week will be interesting.

Also - I'll be working on the OP today - it'll take a few hours.

Just wanted to say thanks a lot for this thread Patrick - as I'm sure you know, there are many of us who really appreciate all the effort you put into it so please don't let the shills get you down. The FUD slinging certainly did reach epic proportions lately but I have no doubt that the community will just strengthen and continue to get better thanks to committed members such as yourself.

+1

thanks Pattrick for your quick answer and visionary staying abilities and qualities in bitcoin community.
may i ask you what kind of reference you take into account for your ratings?

that gives me a real bad taste as it compares very much to the head of the crooks in dollar ponzi ( moodys, layman broke and fitch)
we all know what kind of conflicting interests arrouse from this.

as we are still a community i would love that the peer to peer spirit stays alive after the centralizing effects of BCST, Bitcoinmax,  PPTs are gone
for good now..

would you mind to explain your insights of pirate mechanics as to have a handle for the fallout?

Thanks Zyk

I would like to provide some insight into what was going on as I mapped out the mechanics of what I thought was going on to Pirate last week.  It had taken me a while to work out the money flows, and he confirmed that I had it pretty much straight.  For the doubters, they would say he was simply lying and stringing me along, but that could be said of most people on the forum. 

As for disclosing it, I do not consider it my place to do that.  It was something confidential I discussed with someone, and it stays that way until Pirate wishes to make it public.  There is nothing stopping me from duplicating it, and it's not illegal at all, but it would take a lot of time and effort.  I am sure Pirate is happy to be winding it up and being able to get away from it for a while.

Also, not all PPTs are gone, I still have one, just with zero volume until I work out a reincarnation for it.

Anyway, as I wasted most of yesterday, I didn't re-do the OP - I'll do some work on that now.

Are you suggesting that you might start a business similar to what Pirate was doing?

I don't have the right mix of contacts.  Plus there are some other things that enabled him to execute efficiently.  Even if my conclusions are wrong about what P@40 was doing, it doesn't prevent it from being done.

Anyway, back on topic, working my way through the lending section - deposit offerings are pretty scarce.

Like everyone else I will be looking to park my coins later today if Pirate pays out.

I am really hoping you will have some space in either your 1% offering or your Kraken fund.

Why isn't hashking listed?

Indeed.  Slim pickings at the moment, but these coins are going to be burning a hole in my pocket.   Roll on Kraken 2.

HK hasn't done a credit rating yet.

Seems to me that the best (i.e. highest yielding) choices out there now are Bitcoin Rain, Patrick's Kraken Fund (if you got in, if not then Kraken 2 is forthcoming), and Smart1985's mybitcointrade.com. Also, I believe DeaDTerra's Gamma Bitcoin Fund will be a strong offering once he finishes realigning the portfolio.

Thoughts?

I will be working on turning the portfolio around ;)
I am almost done liquidating all bad assets, I have a handfull left that I need to dump.
Then I am going to be looking for more liquid capital to put in our newly update arbitrage and margin bots.
//DeaDTerra

So you figured out his profit model? was it market arbitrage or private loans?  ::)



Don't you hate it when counting imaginary coins burns holes in your pocket.

Mr starfish, I'd just like to say that I have no intention of submitting myself to any lists or rating systems that might be imposed here but I'd love to lend you some coins or otherwise do business with you sometimes.

Thank for the offer for future business.  The ratings are not "imposed", they are voluntary. 

RustyRyan added to the OP. 

Most likely PH was either just lying to make other people feel it's safe to put more money into these schemes, or he explained his thoughts to Pirate, who said yes to what ever he said, and then PH would feel he was very clever who figured it out and tell everybody else there's no problem.

I highly doubt PH would risk is reputation to pump more money into them. 

WRONG. PH said this:


That is, PH figured out a way that Pirate could be using to make the money, and pirate confirmed it was accurate. That's all PH said and nothing more.

Now, I personally don't think Pirate is a fraud based on this information, but I also know it's possible that pirate may have lied to PH (or perhaps was honest but something went wrong with his high risk venture)... we'll all know soon. Therefore, Pat's reputation is not on the line here at all no matter what happens with Pirate. Pat never said Pirate wasn't risk free, in fact, he specifically marked his pirate pass-throughs as "high risk accounts" for a good reason!

Don't put words into people's mouths.

I certainly do not think I was lying or encouraging people to invest in BS&T.  Irrespective of if I worked out exactly what Pirate was doing, I have determined a way to consistently obtain HYIP style returns off bitcoin and it would run for about 12 months.  I would have to also comment that the process is favourable for bitcoin because it increases the price and adoption, but most people wouldn't like to know how controlled the bitcoin market would be.

I include the relevant piece from my last pm from Pirate for information.

---

So...you have had ZERO contact with him since the 15th ?

I can say with the utmost certainty, for those who did not do their due diligence early enough, the 'trail' seems to be getting shorter by the day, as I continue to come across information on the internet that has been removed, edited or obscured in some fashion, in some weak-sauce attempt for him to try and hide now.

What exactly does this type of behavior do for your confidence in him ?

Wouldn't he be better served in trying to return funds rather than trying to suppress as much public info about him and others as possible AFTER THE FACT ?

Are you guys keeping quiet because you are SCARED of him ? or TRUST him ?



I'm just asking questions....right ?

http://blogs.artvoice.com/avdaily/wp-content/uploads/2011/11/cartman.png

and . . . . . we're way off topic as usual

(as a boring BTW, I've only ever sent 37 and received 25 pm's to Pirate in total over the span of nine months - most were trivial like withdrawal request/confirmation pairs, or people pestering for referrals.  Most of my deposit customers never hear from me either so that is not a useful metric.)

Not really.

This thread is WHO PAYS WHAT ? .....and as it were, Pirate pays NOTHING.

Please respond to the above.

Hello Patrick,

Have you considered adding Vescudero to the list? From his thread:

I'm offended on Patrick's behalf (he probably won't be). He does not tell lies!

I actually tend to agree that the alternative explanation seems more likely.

Yes he did send data some time ago, and over the past day have updated for a couple of additional items - he is now listed in the OP.

Interesting that there's an exact negative correlation between credit score and interest rate: pick any two deposit takers with a different credit rating, and the one with the higher rating offers a lower interest rate.

It's entirely understandable though.

One could say that's the price you pay for peace of mind.
I'd much rather have my money with Patrick at 2/3 or even 1/3 the rate of other deposit takers because IMHO Patrick is the most trustworthy deposit taker on this forum.

Works this way everywhere. Bonds that have low credit scores are "junk bonds" and pay high interest, while AAA bonds pay interest lower than inflation.

Yeah I was looking at USD CD's lately...
5 year super-cd with a minimum of 100K...
wait for it...
1% APY

/facepalm

Hi Patrick,

As pirate filed for bancrupcy of BCST....and so has gotten away from it.......is it still necessary to keep his buiseness model secret?

You may safe the community from a lot of infighting, if releasing the information.

Thank you

Zyk

What about Ciuciu? Did he submit his credit data?

I realize that English may very well NOT be your first language, but could you at least try a bit harder ?

.....and for the record: Pirate has not filed for Bankruptcy. If he has, could you please reference IT with a link ?

PLEASE DO NOT ATTEMPT TO POST WITH AN EXPLANATION.

thank you,
bitlane

Ok, I've had enough and have to stop this nonsense also. 

1)  PatrickHarnett - you have given almost all the still-running Ponzi schemes A or AA or AA-  fake credit ratings based on nothing.  This thread is once again stickied, once again the mods are throwing weight behind your statments.

2)  but, these are all blatent scams.  And what the fuck is a "bank book" ?  oh only 11.1% per month prolly fine / AA- credit rating. Ship Tshirt for new investor.



I mean some of these guys aren't even trying anymore and even in the wake of BCST there are still tons of THE SAME EXACT SCAM running 7x in the newly FUDDED "Long-term offers" aka "total fucking scams"

ITS CLEAN UP TIME

Patrick provides a useful tool in comparing the different offers.

It's up to each individual to decide how much (if any) they want to risk.

Please stop trying to save everyone; let them make their own choices. There's more than enough dissenting opinion across the forum for people to make an informed choice.

What else are you claiming to have stopped?

To be fair to Lord Micon I think what he was trying to say (although it was lost in the douchebag=>english translation) is that it appears as though PH is giving very high credit ratings to people who in Lord Micon's opinion are scams.

Perhaps PH can clear up how the credit ratings were assigned for our lord.

Hmm... I wonder if that's what the table in the OP is for ???

Micon is entitled to express his opinion and I'll answer his question fairly.  This repeats a lot of material that has gone before.

The thread describes how the ratings are assigned, and the metrics used.  Information is provided by different people and I collate the information.  It is also very clear that people are expected to do their own due diligence on investments.  The ratings are not a personal endorsement of different schemes, and there are some listed that I personally would not invest in.

Further, the ratings are linked to the issuer rather than the issue.  Some of the Projects provided by Ziggy and Smart are extremely high risk, and it pays to read their guarantees and rates carefully.  The objective is to determine if the issuer has a track-record and ability to repay on the obligations they incur.  This is measured by some simple ratios and some other metrics.

1: Commencement - normally you don't get to stay in business a long time if you're stealing people's money.  Currently the longest established scheme is from Ziggy and Smart.  Pirate actually started sometime in 2011 as well, but he's not rated.  Personally, I kicked of lending and deposits back in January.

2: Liabilities divided by monthly income - Having income in bitcoinland is necessary to meet all of those interest payments.  This might be from mining (like EIEIO and Imsaguy), or something less obvious.  Some times it's diversified investments, loans, trading.  Despite what some people claim, arbitrage opportunities are still around for manual traders if they know how (the one I would do currently is about 10%).

3: Business transparency - not just what they're doing with your coins, but how open are they.  For example, the Moveto.Fund is pretty transparent, but others are not.  Some deposit takers are not prepared to even disclose their financial metrics (and so they don't get on the list).  Doesn't mean they are a poor risk, just a different level of risk.  As an example, I have 1000 coins with HashKing that I don't worry about, even though he's not in the OP.

4: Liabilities divided by assets - simple metric for indebtedness overall.

5: Current liabilities divided by current assets - an important liquidity measure.  Some deposits are on call, others are fixed term.  If you request a withdrawal, this helps indicate how likely you are to get your funds back quickly or not.  This is also linked to size (value/numbers) that follow.

6: Size of business - funds under management.  Some people will successfully accumulate large balance sheets but sustaining them given payouts helps weed out the more risky ones.  Also, managing a large number of coins takes a level of skill.  For smaller/start-ups, it simply highlights that they don't have the same level of exposure or depth.  There is a reason why some chose a big bank over a small one.

7: Size of business - number of customers.  Similar to #6, managing 10 customers versus 100 is quite different.  Indications are payb.tc had four or five hundred and he had a nice web site.  I do mine manually for about 200-ish accounts.  The numbers reflect the confidence and service levels.  Newer operators need to build that confidence and service, such as RustyRyan or ciuciu.  As they establish their track-record, people will be able to look at and ask about the service.

8: Time in business - This is actually quite an aggressive metric because being new means you're going to score badly.  Without the track record, you're a higher risk.  If you've been around for a year, not so much.

9: Disaster recovery/deadman switch - An adjustment to recognise that many deposit takers are individuals.  Provides an indication that if they die, someone can unwind the business.

10: ID - do you know who you are dealing with?  Doesn't stop anyone asking for that information directly, and if they are investing a decent amount of coin, they should.

11: Account Limits - Having an open ended appetite for deposits should be a concern.  Deposit takers need to be aware of their ability to provide returns and manage their position.  A relatively simple thing to do, but not everyone does.

Does all of the above provide certainty?  No, of course it doesn't.
Is the casual 10BTC depositor going to request and assess financial information from a dozen different sources and actually receive it?  Not likely.
Is having a starting point useful to the community when the alternative is to have nothing?  In my opinion, yes.

So, Micon can choose to ignore the collection of data listed in the OP and decide separately if and who the scams are, and who is on the more genuine end of the scale.  I will not be judging who is and isn't a scam in this thread because that would be unhelpful to those that wish to use it as a starting point for their own research. 

Quoting for when all of these fall apart. 

Patrick should not be giving credit ratings, and they certainly should not be stickied here.

I don't like when people push other people around especially when it's someone as trusted and respected as Patrick. Stop fucking about Micon and go back to your little ponzi/witch hunt thread where you belong, you are not wanted in these parts of the forums. Stop picking on Patrick, you will only find foes.
//DeaDTerra

DeaDTerra - I am not picking on Patrick.  Patrick made outrageous & misleading statements in this thread that are once again going to lead to a large number of BTC users scammed out of their coins.  On the heels of BCST I think you should listen to me, I make a very clear point:

Here is an actual credit ratings:



The fact that you give an "A-" rating to a guy in business for less than 2 months offering to borrow as much money as possible at 3% per week is offensive to any man of science  

Why the mods decide to sticky misinformation like this is beyond me.

Anyone else is free to provide a better or more complete system.  As for being stickied, I think Maged decided that.

For the example given, a 3.29 isn't that great of a score.

All hail Lord Micon for without him we would be lost. Our lord is a merciful lord who helps us my telling us where to invest, he helps us stay stong even when we don't want to hear it.

ALL HAIL LORD MICON

Could you add V.HRL to "Other semi-fixed interest instruments"?

You can have a look at: https://bitcointalk.org/index.php?topic=100800.msg1101204#msg1101204

Below the OP there are some details about the portfolio. Every coin went to GLBSE assets so far. My book will be transparent so lenders can have a look where the money goes, on what risk. The aim is to provide 3% each week as long  as GLBSE securities allow it. I will try to maintain a diversified portfolio to keep the risk as low as possible but keep the weekly 3% dividend perpetual. At the first 8 weeks all profit will be reinvested, after that just what necessary to keep the NAV slowly growing.

That's my plan briefly. Please have a look and consider to put it up on your list.

+1

I'm assuming these weighted scores are out of 100?

lol, no, 0 to 6.  Might change it given the obvious trouble a few people are having after three months of posting.

Considering how many people there are who falls for scams that seems unlikely, and there certainly wouldn't be if he followed your advice. When it comes to Patrick I can't quite decide if he's just ridiculously naive or a scammer. Having a ratings scheme which basically is there make more people give him money and where he gives himself top score for completely inverifiable information makes me lean towards a scam. It just seems strange that this many people want a loan that is 10 - 20 times more expensive than a credit card loan. On the other hand the supply of stupid Bitcoin users seems endless, so who knows?

everything depends on how pirate is getting away with this ;)

Cheers Zyk

The rates are pretty close to payday loans, actually some payday loans are higher by an order of magnitude (or several) than some of the credible lenders here. Have you ever been to Myrtle Beach, SC? I went there by mistake a couple months ago, there was 5+ payday/title loans places within view at all times. Who are the biggest users of payday loans? Drug users probably, what is one of the biggest markets with BTC? The more risk the higher the interest. The rates are not unheard of whatsoever.

Another thing you fail to mention is cost of getting the coins. If I want them instantly I have to pay at least 4%. I could take out a loan at 2.5%/w, buy coins at 0.2% fee a slower way (ACH, Cash in mail, SEPA, and so on), and get instant coins for 2.7% rather than ripoff fees from "instant" BTC companies.

Now what motive would Patrick Have to make credit ratings for other lenders? The one where you say he has to control to give himself a good (or best) rating is a valid point. But the rest doesn't really make sense to me. By giving other lenders a decent rating he's effectively helping his "competition" (assuming they are all scams) by giving gamblers confidence to deposit in other services to help mitigate risk of default. SO he hurts his own scheme. I guess you could argue that's all part of the plan, but then getting into tinfoil territory.

I will concede I think a few of the ones with good ratings are obvious scams. If you read what he does it's just black/white. He doesn't apply morality to anything. He goes off what the deposit taker gives him. Blaming him for good credit rating to a scam would be similar to blaming Nefario for a GLBSE scammer that supplied fake ID. You have more to go off than just his rating.

That qualifies you as the most honest major account - holder at BCST.

Kudos Zyk

english ok ? ;)

He wouldn't be considered very credible if he gave everybody but himself a poor rating. By making the others look fairly safe he can make himself look like the gold standard of Bitcoin investments. That's a much better approach than saying that all the others are probably scams, but even though my business appears exactly the same it's completely safe.

Right but what idiot would go "oh this guy gave himself a good rating, so I trust him" It just doesn't pass the common sense test, but neither did pirates thing so who knows.

I could take myself off the list, and it is indicated that there is a conflict of interest - that's not hidden. (and currently Starfish is running about an 4.86 average across the metrics).    Not only that, buy I'm in competition with the people I'm rating! 

I am inclined to take off the letter codes.  While there have been no complaints until a few days ago (but there was a useful post some weeks back), it's clear that some  people really don't understand what they mean.

The other change I've been considering is making it more explicit for disclosure of identity.  Having someone provide ID to Nefario, myself or someone else isn't much use, so having that more public is a good thing.

leave the letter ratings. Good for those only glancing.

You will never please everyone.

Agreed, but the scale needs to change.

It should be damn hard to get an A, and by these standards https://bitcointalk.org/index.php?topic=81542.msg1100627#msg1100627 I hardly think any of them are even BBB:

A               Strong capacity to meet financial commitments, but somewhat susceptible to adverse economic conditions and changes in circumstances.
BBB             Adequate capacity to meet financial commitments, but more subject to adverse economic conditions.

An 'A' rating should require a wallet address with a balance high enough to pay out all liabilities, either directly (provided by the borrower) or via insurance paid for by the borrower, where the insurance entity discloses such an agreement and THEIR wallet address with balance high enough to cover liabilities.  Such transparency should be front and center on the borrower's main post on their main thread.

RustyRyan - claims a 25% reserve but doesn't back it up.
smart/ziggy - mentions an offline wallet several times but doesn't back it up.
vescudero - no mention of reserve.  has no reserve?
Chungenhung - no mention of reserve.  has no reserve?
Starfish - mentions a reserve but doesn't say how much and doesn't back it up.
Kludge - nothing useful on the forum page, but links to a spreadsheet where we see he has ~184 BTC on hand, but does not back it up.

It would be easy for these people to post a wallet address.  They choose not to.  None of them deserve an 'A' rating IMHO.



 

While I trust PH very much I do tend to agree that an A should be the uber goal. A signed message from a reserve account is good.

Also aren't these credit ratings as opposed to risk ratings?

Totally concur with the A rating suggestion. Actually, I would use the following criteria to determine the rating, listed from highest to lowest weight:

Leverage ratio (how much is invested / how much is on hand in reserve)
Proof of reserves (whether the claimed reserves are stored in a public verifiable address)
Interest rate (higher rate = higher risk of default, so lower grade)
Delinquency rate (percentage of loans/investments that are delinquent or in default)
Weekly/monthly report of new deposits v.s. new revenues/profits (publicly verifiable if possible)
Business type (short-term loans, something else, or undisclosed)

Things like how long it's been going, or whether the people behind it are well known and have a reputation, are fairly useless, as demonstrated by pirate and Madoff. The earnings to liability ratios are also useless, if the earnings are just on paper as in a ponzi.
Someone who covers all 6 of the above should only get an A if their leverage ratio AND their interest rates are very low, since someone with even a 2:1 leverage ratio and 3% a week interest will get wiped out if Bitcoin jumps 50% in price too quickly and all the borrowers who were lent the investor's money to end up defaulting. A should mean a safe place to park your money in. Not a good quality casino.

A higher interest rate does NOT imply a higher risk of default. It is the other way around: A higher risk of default implies  ahigher interest rate.

So many people dont understand the difference between an equavalent (double implication) and n implication relationship while the difference is quite clear.

Exactly. The relationship is not directly causal, bi-conditionally.

For information: I asked Maged to "un-sticky" the thread. 

Actually it works both ways. Higher risk investments do mean that people would charge more for giving their money to it (higher interest rates), which is the standard understanding of interest rates (price charged for taking on risk, including time risk). However, at the same time, someone paying higher interest rates (especially fixed) is at a much higher risk of not being able to pay should anything happen. It does depend on average revenues for a set business, i.e. I would agree that default risk is low for companies paying 1% and 3% if average revenues are 5%, but Bitcoin doesn't exist in a vacuum, and does get affected by outside economies and exchange rates. So even if average revenues were 5% for these types of businesses in Bitcoinland, should something happen to bring the revenue rates down (Bitcoin price going up, or an unexpectedly high default rate), the business paying 1% will survive, while the business promising 3% could easily go in the red and fail.
Also, even if we stick to the "higher risk of default implies higher interest rate," one could argue that the reason these guys are offering such high interest rates is because they themselves are pricing in their high risk (though more accurately they're likely just chasing greed).

Hrm... I am not sure that is a good idea.  Well it may be confrontational, still provides a very valuable service in my humble opinion.  I think that people just don't understand how the ratings come about, and need to better understand exactly what they're looking at, it is not an endorsement by PH.

Most of them I'm aware of have no obligation to keep the same rates, Patrick for example lowered rates in August due to market or whatever reason. Most also claim to be dealing only (or mostly) in BTC so the price going up shouldn't be too much of a problem. Pirate was one of the few that claims to transition to real life ventures, it was a mistake because when the price kept spiking up from $5 slump it became ever more obvious he was full of it.

Don't forget that Pirate failed because him lowering rates signaled that his business was weaker, which initiated essentially a bank run. Other investments can fail the same way.
Also, there's still almost no such thing as dealing only in Bitcoin. Unless you buy and sell everything in Bitcoin (such as only earning money on Silk Road and paying your suppliers in Bitcoin), you're still affected by exchange rates.
The best explanation to date I've heard about how 3%/week is possible, is that people take out these loans instead of paying 4%+fees to BitInstant, and then pay the loans back once their money clears and they can buy the BTC back. However, if someone borrows BTC for the same amount of USD they are transferring to MtGox, and the price jumps %10 in a week, they will be 10% short on their loan once the week is up. Just borrowing Bitcoin and sitting on it won't make it grow either, and I can't think of ways for borrowers to increase their Bitcoin holdings 3% in a week without some input from fiat (can you?)

You might get close by shorting mining bonds :)

A bitcoin lender deals only in bitcoin. It's the final borrower that is the one that would have to deal with exchange rates. Trading on glbse as well, though I'm not familiar with that to speak much further about it. Lending to miners cuts out fiat completely. I've seen gigavps take out some of these loans, mention him because he's probably the biggest borrow (with the biggest farm). He needs some coins now for whatever opportunity, his rigs will make the coins in 2 weeks but that won't help if he needs them now.  Pay 6% to make 10% on some deal is a good deal for all involved. Or when there was good suspicion the market would tank when pirate closed up shop. Borrow 100 coins at 3%/week, sell off @ $15, buy back 2 weeks later at $10. I see lots of ways for the end borrower to make enough to justify taking loans at 3% a week. Especially if they need the coins NOW.

I do get suspicious of all the lenders now, since it's the only explanation I can think of I can think of that makes sense, it seems everyone is using that excuse. Some of the lenders have been around a long time though and I've seen their activity on the forums the entire time. So that I'm not shocked they can make 3%+ a week on small deposits. That's another important factor, the amount they are dealing with. If pirate said he could make 0.25% a week I'd still think he was full of shit simply because of the amount of coins he had ($12,500 USD profit a week)  ::) Some of these guys only need to make ~$400 usd/week or less to come out well ahead.

Um, let me rephrase what I said: Lending to borrowers exposes you to fiat risks taken on by those borrowers. If the BTC borrowers have to deal with fiat, since they are borrowers, any fiat risk they are exposed to (such as what I mentioned above) will directly impact the lenders.
Even if a BTC-only lender/HYIP lends only to other BTC-only lenders/HYIPs, eventually someone down the road will have to lend to someone who will be exposed to fiat risk, and that risk in turn will transfer up the entire chain of all the lenders (last fiat borrower defaults, his direct lender defaults, the next lender defaults,n and so on). I think the only way around this would be BTC-only lenders just lending to each other, but that would make high interest rates (or any above 0%) impossible.

Or miners like I mentioned. That's going to change soon with the ASIC thing but it's forecasted well in advance. If bitcoin went up 50%+ in a matter of days (and stayed there) though I do think these lenders would have big problems. The use of "guaranteed" is probably a buzzword that means pretty much nothing. And the risk disclosure is not where it needs to be. I appreciate the insight you and Joel are offering here and elsewhere. I just think you are trying to apply traditional fiat "rules" to something much different.

Aren't there ways to make money (mining, etc) without being exposed to fiat?

Well, let's check that.
Using info from https://en.bitcoin.it/wiki/Mining_hardware_comparison. Let's assume price of BTC is $10.50
For GPU mining, best card is AMD 5850. Lowest cost is $145 (Google shopping search). Hash/s 283. Wattage 92.25. Cost of electricity, 0.13 USD/KWh. Plug that into http://bitcoinx.com/profit/index.php and you get $27.46 USD profit in the first month. Divide by 4, that's $6.87 per week, or 4.7% profit a week. Sounds good, unless you include GPU depreciation, or extra cost of hardware.

Let's say the card you bought for $145 can only be resold for $120 after a month. Now your profit is $27.46 - ($145 - $120) = $2.46 a month, or $0.62 / 0.4% a week.

Or let's say there is no depreciation, but you ran out of PCI express ports, and need to buy another PC to stick your new GPU into. Let's be VERY  conservative and say a new PSU, MoBo, RAM, and CPU will cost you $150. Now your profit is $6.87 / ($145 + $150) =  2.3% per week.

Combine extra hardware with depreciation (and having a crappy, hard to resell PC), and you're even worse off. Since the large purchases are one-time costs, over a longer period of time they will pay off, of course. E.g. $2.46 / $145 = 1.7% profit per month. But also keep in mind that these components continue to depreciate, and even more importantly, the initial investment is now tied in hardware that may be difficult and time consuming to sell. This is why I think mining is OK for individuals (long time horizon, pay off GPUs over a few months, still have something to play games on), and is too risky to invest in. I definitely would not consider mining investments as something that can pay 2% to 3% a week though.

BTW, ran the numbers for FPGAs, and with what's available now, they are even worse short term.

did you try BFL singles?

The guys that bought them $630 each including shipping anytime up til now (now is too late) mine ~0.4btc/day for however many days. Resell for the $800+ they are going for now. Right now is the worst time to get into ming because of the ASIC uncertainty. Once that stuff settles down it may go back to the 6-10 month ROI then pure profit from then on.

But the idea was people that already have rigs and want to take loans, not people looking to buy mining as an investment. For example I want to speculate on the price drop due to pirate announcement, so I borrow what my rigs would produce in the next month to sell @ $15 before the drop. Or just to buy some drugs off SR. Any number of reasons, the point was USD/BTC exchange wouldn't effect my ability to pay back the loan.

Wasn't designed to be a confrontational move.   I certainly had not asked for this thread to be stickied, and after several months of relative inactivity, someone else is finally thinking about what might be involved in putting together a rating list or system.

There is also a small group of bullies that are looking to pin liability on me for daring to link other threads and make an assessment of what they have published.  Moodys don't have this problem, and their system is completely black box, at least with S&P you get to discuss things with their rating committee.

Definitely not trying to bully.  Just feels like in light of Pirate, we could probably make improvements and end up with something more friendly to the general public.

FPGA = BFL singles


In that case you are speculating, or just gambling, on the hopes that you'll win and won't default. Not quite the same as earning money to pay back the loan. I hope the people who borrow from HYIPs aren't doing that  :P

Mining is kind of an ugly business.  It's like farming in southern California.  There's a finite amount of water (bitcoins) and the more farmers (miners) try to farm, (mine) the worse off they all are until they're all just barely hanging on by a thread.  What looks like a 6 month payoff up front quickly turns into a 12 month payoff as difficulty increases, then 18 months later difficulty has increased beyond the point of covering the power bill and you do the math and you still haven't paid off the rig.  heh.  Only saving grace is that up until the FPGA/ASIC's, you could at least sell off the hardware.

I know that. I was asking because you said  they are worse off than gpu. But they are currently selling for more than they cost and mine in the meantime so it's not true.


You are still missing the point. Maybe I suck at explaining. But it doesn't matter if they lose all their coins. I even mentioned blowing it all on drugs. Because they have the equipment to produce more coins via electricity. It doesn't matter what the BTC/USD exchange rate is to their mining rigs (which was the original discussion) other than difficulty which may go up with the exchange rate. But it wouldn't be exponentially fast. End point is this: if I had mining equipment the exchange rate of bitcoin to USD does not effect my ability to repay the loan. If the price shot up a lot I would of course "lose" value. I might me more tempted to run off without paying back because I don't want to overpay. But that's morality and has no business in this discussion.

Unless you already have a whole lot of mining equipment, and are just feeling generous and allowing people to buy into your profits, the way that USD may come into play is if someone invests in you and you have to spend that investment on purchasing mining hardware. I'm assuming an extra $1,000USD worth of Bitcoin invested will require an extra $1,000USD worth of profit generating... something. You're right, the hardware can be bought with Bitcoin. But then the investment is still tied up in hardware. Depreciating hardware that may only be reselable in USD.

I'm an eagle-eyed investor. Please change all ratings to FFF, for the sake of accuracy.

Thank you Mosrite.  However, you're also to stupid to understand the rating metrics and grades used in the real world, let alone the ones used as general guidance here.  When you can provide some reasons for your recommendation, then someone might take you more seriously.

Let me give you some; AFAICT, you do zero verification of claims made by those lender. Most of them probably wouldnt let you, because then it would become quite clear what they are doing.  I do mean verify what they hold in their wallets, GLSBE portfolio, identity of their creditors  etc. Correct me if Im wrong, but you seem to give a rating based pretty much solely on what they  tell you.  Since most of them are scams, they will lie, and you are rating the lies, not the lenders. The  the only thing  that does is provide false credibility. If you can not verify their claims, an F is indeed what you should give. Its up to them to prove they are worthy of a better rating.

Credit ratings show your history, not your future. Some people are gonna choose to be scumbags in the future and default. In the real world it works the same way. How many people have had 800+ credit scores then defaulted? Credit ratings are basically indicators of good history, so please give Patrick a break. This is bitcoin land where risk is much higher by default. A AAA rating in bitcoin land is much higher risk also, but less than the lower rated individuals.

Im not asking Patrick to predict the future, but to verify claims made. If he cant do that (because the issuer of the security wont let him), then there is no reason to give a positive rating. None. A good history proves nothing, a scammer is not going to be stupid enough to scam twice with the same identity. Of course they all have an impeccable history.  Case in point, no one had a higher rating on OTC than pirate.  But because no one was allowed to verify his assets, holdings, income, his super secret business model or even his true identity, it was a text book example of an almost certain ponzi. An F, not a AAA+ asset.


There is no reason why this should be true. In bitcoin land its perfectly possible to open your books and  have someone verify your  claims, prove your identity, income and business model. Some things are even easier than outside bitcoin, we have a public blockchain after all. If what you said were true, it would be impossible for legitimate businesses to distinguish themselves from the scammers, except by not being able to promise similarly high returns. And if thats impossible, then what the point of having ratings at all?

The whole point of bitcoin land is to stay anonymous, and for things to be decentralized. The standards are different here. Even in the real world though i can get tens of thousands of USD from banks with nothing more than my credit history.

I'm really sick of the wanton calls of "Scam! Ponzi!" and the abrasive tone taken by many in that crowd.

That said, I have had many of the same questions raised in the above quote.

If someone claims to have BTC300 in reserves, do you, for instance, have them sign a message with a private key to prove control of the funds, or have them move a specified amount to demonstrate that they do control the coins? Things like that.

That may be the point for you, but its certainly not the case for many legitimate businesses.


Not without giving up your anonymity you dont.

That's why i said the standards are different. The real world example was meant to show that large amounts can be had with virtually no real proof that i won't steal that money. In bitcoin land people rely on things like post count and transaction history. The risk is higher, but people can make up there own minds. It's not fair to call everyone a scam. Now when i see someone that guarantees no losses and they default then i'll call it a scam.

Don't get me wrong. I'd like to see more information also, but i don't think it should be required. Plenty of people are gladly handing out coins to strangers, with no recourse. They should stop doing so if they want less secrecy.

Obviously I will be interested to see your collected assessments of the people in this section then.

Exactly.  PH's ratings certainly aren't the official forum's ratings or anything.  If someone has a better plan & the time to implement it, then no one is stopping them.

Yes, and also if anyone wants to take deposits and fully submit there identity they can do so also.

A good history is often a good predictor of the future. For instance, I've found Ebay seller ratings to be reliable (though I have never tried buying from someone with a low rating or a small number of ratings).

The big difference between Ebay and running a bank is that typically each Ebay sale is very small and thus the amount you can scam is small (unless you build up your rating with lots of tiny sales and then try to pull off a big scam).  Unfortunately with a bank or corporation/project that can run away with all the funds, there is a very high incentive to scam.

You mean all the 1% per week "securities"? I trust none of them, not one tiny bit. Nor should anyone as long as they do not open their books and wallets so to speak.

Now unlike me,  you have taken it upon yourself to rate them, and I actually think thats a good idea; I can imagine legitimate businesses not wanting to disclose everything to everyone, so there is a good argument to be made that someone like yourself, who  would need to be trusted by both parties, would obtain privileged access to information to make meaningful assessments, allowing legitimate businesses to prove themselves to be more trustworthy than the scammers. That means you would  judge the facts (or lack thereof), not the scammers lies.

ROFL. A bit late then, no?

Yes it's late, but it's also proof. You have the right to call them a scam at that point. Calling everyone a scammer because you don't like how they do business isn't proof. They don't have to prove anything if people are gonna keep giving them coins, with no recourse. People can choose how they want to use their coins, and the risks are more than clear enough. If you really hate all those 1% shops make a ton of fake accounts and claim they scammed you. You will achieve your goal much faster. Pre-crime isn't very effective if your just gonna accuse everyone of committing a crime, and hope you hit a target.

The point is not to prove they are scams. You cant prove that. Nor do you have to. The point is to rate businesses which can demonstrate they are (most likely) NOT scams, which can demonstrate reserves, income, identity etc above ones which can not demonstrate any of that at all.

As it is now, its trivially easy to set up a ponzi on GLSBE, and get Patrick to rate you AAA. What then is the meaning of it? Its meaningless. Dont even bother.

Only Patrick's money-backed ratings matter, really. That's the best way to do ratings that have meaning -- they're worth something.

omg invite only forum OMG.

GIVE ME INVITE NOW.
/rage

The way it is now is how people want it, except for that minority calling everyone a scam that offers 1%. They are slandering purely on the fact that they don't like how they do business. I don't agree with that, unless they have proof. I pretty much agree with most of what your proposing. Just not the part of forcing anyone to open their books, and the blind accusations without proof you won't get. When people stop giving them money things will change. I know i would probably invest large amounts if i had a concrete guarantee. Slander isn't the solution, and that's what makes team Ponzi just look like trolls. Things should change through competition not slander.

I'll add a small comment that I expect to be dismissed or ignored by critics that really don't understand this part of the bitcoin market. 

People pay 1% per week (and higher) on deposits because it their next cheapest source of funding - and that happens to be the market rate in this economy.  They happen to be able to generate higher returns, and thus leverage their positions.

It is a simple matter to observe large companies and banks making huge profits, but they still take more and more in deposits.  For US companies, the rate they pay is currently low, but the arguments in this forum suggest corporates shouldn't have any debt if profitable.  That, however, does not maximise returns.  Also, for those with short memories or a US centric view, around 1980, the standard bank benchmark rate was 15%.  In today's market for start-up companies, equity can cost between 30% and 50% per year and that was the expected level of return demanded by one of the investors in the electricity company I worked on (other investors only needed 20-30%).  Bitcoin is coming down to those levels as expected.

And off-topic for a moment, the arbitrage opportunities I'd play with would use the 10% differential that currently exists.  Those that claim it's not possible are obviously not looking.

There's no evidence that any of these deposit-takers can generate high returns. Just the monumental historical precedence of pirate. And it wasn't that long ago! Stop living in HYIP la-la land.

If you keep your eyes closed, you'll continue to avoid the evidence.  Haven't you noticed eight months of lending where people offer to pay superior rates, or the many posts from people confirming that they have paid much higher rates.  And the point I was making was about the cost of capital, rather than the returns.

Many ponzi schemes have gone on for years. Madoff, the Cuban brothers in Costa Rica, etc. No entity can ever pay consistent, market-crushing returns, without endgendering super high risk, or being an out and out scam.

BEST case scenario: these higher-than-normal market rates are only possible because Bitcoin is still a developing economy, akin to a rapidly growing start-up company. Eventually it will slow down to the pace of the overall global economy. Once that starts to happen, rates will start to go down. At that point, you better hope people are comfortable with rate decreases, because one too many "investors" pulling their money out to go invest with someone paying slightly higher will result in a bank run.

Only way I can think of avoiding this is
1) DO NOT promise fixed rates, and get people used to them fluctuating based on your returns (even if they vary by 0.01%). Not only will this make it easier to lower rates if you have to, but the changes in the rate will at least give "investor" some signal as to how your business is going
2) Be open about your holding as much as you can. At the least, tell people how much you have in reserves v.s. how much you have lent out. This will at least give them an idea of how risky you are should a bank run occur.

+1 (finally someone recognises the basics).

For the newbies trolling the lending section, they might be interested to know rates have roughly halved in the past six months.  Personally I've already done one reduction and was planning a second before deciding to change the future direction of StarfishBCB. 

+1000

This post is a must-read and have to go in the hall of fame of great post.

Don't forget that in the last 10 months, BTC went from 7.7 millions BTC to 9.8 millions. Also, the price is around 4 to 5 times the price in last November. In a moment of crazy growth, crazy things can happen.

It's also basically what some of us have been saying for quite some time now: Real businesses can't promise a permanent interest rate that is this good.  I guess it just had to be said by someone you hadn't already decided is stupid. Oh well, as long as you finally get a clue it's all good.

It is the way that it's said in that changes the meaning of it. We all agree that it's not sustainable forever but that doesn't mean it can be legit and not a ponzi right now. You might not be able to pay x% a week for ever because it's not sustainable but that doesn't meant that right now if you are doing it you are a ponzi. That's basically what 90% of the people that discuss this say, they have this weird argument that because it's not sustainable for all future it must be a ponzi, which is of course not always the case.
//DeaDTerra

It's not really the market expanding as just people willing to borrow. I haven't seen too much economic activity in Bitcoin to warrant a 3% /week investment rate ON TOP of the 8% a month deflation growth. If it's true that the reason people are borrowing is because they see Bitcoin going up, want to have it NOW, and prefer to borrow at 3% for a week while their money transfers instead of preying 4% to instant deposit places, then that's a pretty shaky business to be based on, since a reversal of Bitcoin growth or a new instant deposit service with lower fees will instantly kill borrowing incentive. Likewise, as I mentioned, a huge spike in Bitcoin prices will likely cause borrowers to default.
Due to all this, I would say the high rates are warranted, since high risk = high rates. This, however, does not mean that none of these HYIPs are NOT ponzis, either. We just don't know until they become more transparent. And in the end, the choice is really between a ponzi scam, and a 1980's style Savings and Trust, both of which have histories of great financial collapse.

so... ummm... Why is Kluge still rated AAA?

for that matter why is ziggy still AA?

If you bothered to read the OP, you'll see that those ratings are months old.  Enron had a good rating, until they crashed and burned.  So do various countries - ratings are (and always have been) a historical view at a point in time.  - and it was a simple 0-6 score, so those that want to compare RaboBank to Bitcoin are equally misguided.  Ziggy and co rated 5 out of 6 in bitcoin means they had reasonable capacity to pay at the time.  However, any half-arsed attempt at looking at what their "high risk" bonds (fonds) were doing would have avoided them for their lower risk offerings - they said they were investing in Pirate to achieve those results.

Lets look at it this way. You're just as good as those guys that gave Enron a good rating. Let's all gather and worship your mediocrity.

It's your duty as a rating agency to rate REAL risk, and you've clearly failed in doing so.

No, see you people are clearly to stupid too understand how rating works as outlined below.

Unfortunately, ZiggiStar failed to pay his guaranteed and low risk offerings too. His high risk and guaranteed offerings turned out to be equivalent.

If the person rating had to pay a massive fine to the community for getting it wrong things might be different imo.

Holy fuck.  What a piece of shit. 

Uhhhh yeah, that regularly happens in the real world when people give "financial advice" paid or not.  Criminal negligence is still a legal liability.

You have any examples?

Didn't Pat McStarfish charge Ponzi operators to go through their financials in order to determine their rating?  He is as guilty as the Ponzi operators because his ratings gave many in the community confidence.

no

USA: http://www.turnaround.org/Publications/Articles.aspx?objectID=2661
USA #2: http://manchester.patch.com/articles/glastonbury-financial-advisor-in-lawsuit-involving-former-mayor-found-liable-for-1-45-million
UK: http://www.chaselaw.co.uk/financial_advisers.html
NZ: http://www.stuff.co.nz/business/money/7498595/Adviser-liable-for-investors-Bridgecorp-loss

So it's not uncommon, nor is it just a USA thing.  There are real-world repercussions for dishing out negligent advice.

Isn't every financial ratings agency in the real world giving negligent advice? How the hell does the USA have a AAA rating, with unsustainable debt? They should have an F, and by micons standards it should be a F-. People need to stop trying to find new ways to blame patrick for there own stupidity. Either accept your losses for gambling, or go after whoever actually took your money.

Also, I was not providing advice - the OP was a collection of information and links to save some people the time and effort of sifting through all of the rubbish that was around some months ago.  It was stated again and again that people should do their own research. 

As a related note, I read with interest a recent rating for a local mobile carrier.  The parent company was rated badly (B-), and their US370M of bonds much worse (CCC+ down to CCC).  S&P had no qualms at downgrading something they had previously rated higher.