Bitcoin Forum

7% interest a week equals about 3300% a year.

Currently, there seems to be about 400K BTC invested in BTCST ¹.

In one year from now, this would be 400K x 34 = 13.6 million BTC ².

In one year from now, there will be a total of approximately 11.2 million BTC in existence ³.

Does not compute.


Explanation of figures:

(1) The 400K is a rough estimation extrapolated from the 26K~28K BTC weekly interest (https://bitcointalk.org/index.php?topic=98225.0), then again, that pretty much evens out vs the assumption that eventually 100% of all BTC in existence would be invested in BTCST.

(2) 1.07^365/7 > 34

(3) 365*24*6*(50*4+25*½)

Edit: Here's why BTCST won't last for one year at 7%.

Within three months, I bet the screamers of "PONZI!" will claim their education of the masses, that 7%/wk is unsustainable, is what led Pirate to lower rates.

Clearly, people are on to Pirate's scam, and so he's going to lower rates to build confidence... but then it's going to go BOOM, and all the idiots who invested in his scheme will have nothing, and I'll laugh. I'm thinking this scheme only has -1 or 1 week left, anyway. All the scammers in collusion probably left, so there're just the idiot know-nothings at the bottom left, waiting to have their savings ripped away from them.

Im confused kludge.

Arent you invested with pirate ?

Just to be clear: I'm NOT accusing pirate of running a scam or anything. So far he's done a great job on earning people lots of money. Kudos!

I just wanna emphasize that 7%/wk is not just extremely unlikely, it's simply NOT POSSIBLE to go on much longer.

Now, I hate to see lotsa people losing tons of money. Even if it's just the idiot know-nothings at the bottom. Perhaps they need to learn their lesson the hard way, sure, but 400K going BOOM may hurt the overall trust in Bitcoin. That would suck. Even though it makes no sense at all, a bunch of greedy fucktards trusting one anonymous guy obviously has nothing to do with the trustworthiness of Bitcoin itself. But that's how shit works, the overall trust in Bitcoin will be damaged.

People, please get your heads out of the sand. By all means, keep putting your savings in BTCST or any of the pass through constructions, trusts, bonds, whatever. Enjoy the ride (and the profits) but please keep in mind that it could be over any time. So be prepared, and don't whine or blame anyone but yourself when it happens.

Now, in the mean time I'm off buying some more pirate bonds, since this is just spare money that I can afford to take a risk with.

I was a bit confused too - I'm sure he's expressing the view of the sceptics, though it could have been clearer ;D

"I'm thinking this scheme only has -1 or 1 week left"

I guess the sarcasm was buried in 2 characters?

I'm seriously hoping the sarcasm generator on kluge's machine is malfunctioning. The comment was that he's gonna put 15-20% back into pirate after vegas happened.

I think it's functioning just fine. :)


Any ordinary investor already knows that before investing. Even if some small number of them might have missed it, this "maths education" has been given so many times in so many related and unrelated threads that I want to rip my eyes out. No offense, I wish everyone shared your humble style.

Its  pretty incredible that people are STILL investing when the numbers indicate that in 18 months or so Pirate
will have paid out all the bitcoins in existence ............including the ones that havent even been mined yet  ;D

Are you aware that interest rates are flexible?

SGI posted a quarterly %RoE of -61.72%. In less than a century, they will have consumed all of the financial world with losses! It'll be even BIGGER than the persistently-looming derivatives nightmare!

Over the past decade, the prime rate has decreased at a relative rate of around 10% per year, so pretty soon, we're going to start seeing negative interest rates for the common man, followed by a devastating deflationary spiral to collapse. Basically - by 2050, the interest rate on your mortgage will be -30.5% APY.

Woot

Are you aware hes also throwing out ADDITIONAL % bonus "incentives"  for people who keep their balance at a high level  and dont withdraw it ?

Yeah, he's offering bonuses for people that don't deposit more money.. totally ponzi!  ::)

Assuming that everyone reinvests all the interest and don't use it for other purposes.

It's obvious it won't carry on like it is now for another year.

As the amout of Bitcoin that Pirate controls becomes larger we would expect the price to rise. Eventually it would rise faster than Pirate can expand his business. He has said himself the only thing that could stop him would be a sharp rise in the Bitcoin price.

But that does not mean it must end in a catastrope or a default.

Pirate could simply pay a lower yield or stop accepting new deposits and alway pay out the interests.

LOL 1 YEAR?!?  Something like that wouldn't last 3 MONTHS hahah

FYI, it has been up and running for 8 (eight) months so far, sir.

It's not impossible for him to pay more BTC than exists over a long period of time. He could, for example, pay out 1 million BTC, buy that BTC back using USD, and repeat until he's paid the ~13 million BTC. Something like that could happen legitimately with a gigantic, extremely productive company (the company would buy the BTC back with its products instead of USD). MtGox has probably sent more BTC than exists.

Actually at least 10. He started in November in these forums last year.

He claims he actually started the business even a few months before that with his personal money and that of friends.

Everybody knows Mtgox is a ponzi as well  :P

ponzi no ,but manipulating prices with "glitches" ? maybe

He'd have to be making even more money than would be required to pay back the 7% weekly interest in order to manage that, though. Think about what someone buying up a substantial proportion of Mt Gox's normal annual volume would do to the Bitcoin price...

Buying/selling BTC at a 10% profit is very much a possibility. as seen in https://bitcointalk.org/index.php?topic=99286.0

just sayin..

Also see the prices the moneypak vendors on silk road sell for..

Pirate could very possibly be doing the same on a much larger scale, and it wouldn't show on the exchanges.

By making this claim you are saying that the offers that are publicly posted are a very small minority of all such transactions that take place at that valuation. As such, you are also claiming that many people exist that are directly using Pirate or there are a few mega-investors who give away 10% just because they can. Either way, not one single person has ever claimed to use Pirate's business. Additionally, if that is his business, why have none of his competitors who are doing these transactions more publicly not making this kind of money?

Seriously consider those thoughts. We can speculate what his business is all we want, but we need to wonder: why haven't we heard of a single customer?

Great point.

Why doesn't the mystery miner that controls an extreme amount of hash and shows up periodically ever surface making claims or even interact on this forum?

A lack of interaction on this forum certainly doesn't mean something doesn't exist.  Contrary to some opinions, this forum isn't the center of the bitcoin universe.

Theres only one entity that would waste 10% irrationally and thats the government.

 :)

He has surfaced. I talked to him on IRC, and even posted some screenshots of his alleged botnet on the forum somewhere.

But thats besides the point. Someone controlling a botnet has no reason to interact with the bitcoin community. Someone buying or selling coins on a massive scale and overpaying, literally, to the tune of hundreds of thousands of dollars, would have every interest in seeking competitive alternatives.

Or perhaps said buyer doesn't want to deal with the flakes on this forum, instead dealing with a specific person who might cater to their specific needs and doesn't ask a bunch of questions and therefor paying them well for it.

Even if that were true it's not plausible that Pirate would pay such a generous interest. His "benefactor" could have gotten him a fiat loan of $2 million at less than 3% annual interest rate and he's choosing to pay a thousand times that, in a currency that's continually appreciating against fiat.

That is irrational behaviour. Something only an entity that doesnt care about the cost would do such as the state.....

By saying this you are then claiming that Pirate's business is only used by a few very rich people, not many moderately rich people. I don't know about you, but whenever I've done business with just a few large customers, they very quickly pushed me into receiving lower and lower profit margins by percentage. In a real business, that's not that big of a deal since I'm still making more money in terms of amount I'm making, but Pirate needs to pay people back in terms of a percent. Now, again, in a normal business, that isn't a big deal because you advertise and find more customers, but there is no evidence that Pirate is doing that.

I'm not claiming that everything happens on this forum, but like with the mysteryminer example, I'm claiming that someone here would know something.

Not everyone has a big mouth and goes blabbing.. ::)  There's probably money to be had to keep one's mouth shut.

For a while there was a guy named rubberchicken on irc who claimed to control (and seemed to back it up) a large number of coins.  He was around a bunch and then disappeared.  There's nothing to say there aren't more of those types of guys out there.

Oh and if I had to guess just based on the estimated volume of pirate's business, I'd tend to say it was skewed towards fewer, larger persons, but I really have no idea.  If there were only a few, it would explain why there aren't people talking about it. 

Hey I remember him; he claimed to have purchased dollars.com for some exorbitant amount and was pretty awesome (and foul). Wonder where he went.

My thoughts exactly. It just isn't possible that he's dealing with many people. So, let's assume that he is dealing with 20 people. We know that Pirate needs to use most of his reserves, otherwise he wouldn't have borrowed anything. For simplicity, let's say that is 90% of his investments. My guess is that 90% is around 400k BTC right now. Let's assume that he charges 10% on all transactions within his business. Let's also assume that transactions are only done with people once a week.

That's 20k BTC that each person is transacting per week, or almost a quarter of a million dollars. Again, this is per person, per week.

Ok, so maybe this is happening more than once a week. In that case, he can get away with charging lower fees. However, he could also get away with having a lower reserve, so that means that far more money than that is going through him each week. You can see how quickly this gets insane

At one point, someone mentioned futures, or some twist of the concept, as a possible explanation.  That'd explain the reserve requirement.  He might not need to have them on a daily basis, but must have a large quantity on the off chance someone actually wants to take possession of said coins.