Bitcoin Forum

It's simply a shame because I believe the point of bitcoin was to escape greed to a large degree, yet here we are...

Like many scams - the 'social' aspect played a huge part I believe.
Scammers & sociopaths tend to be friendly likeable people, and in this case he's made sure to really 'connect' with the community and build a buzz of discussion and enthusiasm - a long with a little 'intrigue' about exactly what his secret sauce is.

People felt they 'knew' pirate.  He's 'one of us' sort of thing.

The ad-hoc web of trust can be a great tool for business networking - but also a dangerous thing.   (Which has always made me somewhat suspicious of Ripple ever being practical!)

Look in the securities section, there is a lender that offers 1% a DAY.  Each day he posts his 1% payout.  It is a very effective way to market a scam because each time I see it bumped with a new payout I think I could have had that payout.  It makes me want to invest.

So, here you go, the "insider" information of somebody who "fall" for that. I'm not looking to justify anything, only to explain the other side of the medal for the OP. I made my move, I take my responsibilities and that's all.

Re: Ponzi....... What about 1 members deposited coins being paid out to GPUmax users? Sounds like a Ponzi to me.....

I know people always look to find some easy answer to explain complex situations (it's greed! it's a scam! they are scammers!), but no, there's no easy answer to all this. Here's my complex answer:

Why did I trusted pirate? Mmmm, let's see....

-One of the best rated on Bitcoin-OTC
-He's the owner of a service that has probably access to more hashpower than the biggest BTC pools around here.
-Was easily identifiable, more easily than 98% of the people around here
-The probable business model of BTCST is in some topic around here, and is not some crazy dream. It can certainly be made and copied. Search for it though, i'm sick of discussing it.
-Some big guys around here trusted him
-It was common knowledge that it wasn't going to last forever. I'm still looking for the quote (maybe it was on IRC), but I remember pirate said that it could maybe last for a couple of months into 2013.

Yeah, you can make a fixation on the "ohmygod7%aweek", but you're missing the big picture. The 7% rate was the top one, most people had 5% and pirate himself said that he averaged 5.98% at one point. It's still big, but compare on the lending forum, where you see that the average loaning rate is around 3%-4%/week, pirate is not really far off the reality of the current lending market in Bitcoin.

I made an exhaustive research on that topic, and all those elements convinced me to go in. Still, I was well aware of the risks. The risks were:
-Coins are 100% controlled by somebody else (pirate), so he can run away with them.
-He can screw up his business and not being able to pay back
-PPT operator also control the coins at a certain point, and can also steal them.

A Ponzi? Nah, until pirate himself say it was a ponzi, I don't believe it. Why? I'm exploring the "pirate" business model as we speak, and I think it can be a really lucrative market in the current Bitcoin situation, more than a simple ponzi. Maybe pirate went for the ponzi, but I think he went for the money. There are more profitable business than a ponzi right now that can be developed.

GPUMax is also THE thing that convinced me pirate could be the real deal and why I took the plunge with BTCST. GPUMax laundering money? Dude, you must be lacking imagination or something. GPUMax can be so much more profitable than a simple laundering machine, I really don't see the point of building all this to "launder" a couple of coins each day. I'm still hoping that this BTCST fiasco don't affect GPUMax.

So, here you go, the "insider" information of somebody who "fall" for that. I'm not looking to justify anything, only to explain the other side of the medal for the OP. I made my move, I take my responsibilities and that's all.

There was a post pirate made somewhere, iirc, where he said GPUmax and BCST are "completely separate but share wallets for security". Take that as you will.

If they shared wallets, BCST coins would naturally go out to pay miners. The only thing is that someone found a proven hash that showed GPUMax coins were going to this address. There were some 40k coins in there I think...so I don't know if that's linked.

+1 Brunic. It was not a ponzi, and Pirate wasn't a scammer.

Of course greed is the easy answer, but seriously, people who are intelligent enough to build and maintain mining rigs fall for the oldest trick in the book?

This is why people with poor business models like BFL can thrive in this environment. Obviously this community has a heavy dose of greedy folks.

It's simply a shame because I believe the point of bitcoin was to escape greed to a large degree, yet here we are...

Just a shame really.

So many people got involved because most of the major voices on this forum were supporting Pirate offer.  Anyone who tried to question the logic of it all got shouted down.

-The probable business model of BTCST is in some topic around here, and is not some crazy dream. It can certainly be made and copied. Search for it though, i'm sick of discussing it.

Please, give us a hint or link or something as to what you think Pirate's business model is.  Many different ones have been discussed and there's no way for any of us to find out which one is the one you think he used.

which link exactly? more then a dozen people came up with hypothetical ways for pirate to have a legit
business.

all of them fail when a tiny bit of logic is used against them.

probably the best way to defeat every single one is this:

if you can make so much money and afford such ridiculous interest rates per week why in the
world would you need lenders for so long? Use their money for the starting time frame until you
have enough profits to get rid of them so you can enjoy the profits yourself.

Basic common sense here. But nope! He kept taking in more and more new investors because that
is how a ponzi operates. When a rush of people wanted to do a withdrawal it totally collapsed as pirate
himself admitted.

it is pretty simple.

GPUMax is also THE thing that convinced me pirate could be the real deal and why I took the plunge with BTCST. GPUMax laundering money? Dude, you must be lacking imagination or something. GPUMax can be so much more profitable than a simple laundering machine, I really don't see the point of building all this to "launder" a couple of coins each day. I'm still hoping that this BTCST fiasco don't affect GPUMax.  

Why did you think that?

Please, give us a hint or link or something as to what you think Pirate's business model is.  Many different ones have been discussed and there's no way for any of us to find out which one is the one you think he used.

if you can make so much money and afford such ridiculous interest rates per week why in the
world would you need lenders for so long? Use their money for the starting time frame until you
have enough profits to get rid of them so you can enjoy the profits yourself.

How do you think pirate was able to end with 500k BTC in 9 months?

The ad-hoc web of trust can be a great tool for business networking - but also a dangerous thing.   (Which has always made me somewhat suspicious of Ripple ever being practical!)

Lack of wisdom. Perhaps inexperience.

This is why people with poor business models like BFL can thrive in this environment.

https://bitcointalk.org/index.php?topic=103623.msg1138804#msg1138804

Read that and the following messages.

Bitcoin attracted people looking to make money. Some people will risk everything to make a bit more and will totally ignore the risk involved. Happens in poker a lot.

Bitcoin attracted people looking to make money. Some people will risk everything to make a bit more and will totally ignore the risk involved. Happens in poker a lot.

Look at it from Pirate's perspective: in order to be a market he only needs a set amount of liquidity in a given week to match what business he does in that week.  Because he's borrowing that money he needs to keep the amount of liquidity on hand close to the amount he needs otherwise he's paying a very large interest expense for something that just cuts into his profitability and doesn't help his business at all.  Projecting how much he needs in a week + a bit of wiggle room is trivial for Pirate and if you or I were in Pirate's shoes we could do it in a few minutes in a spreadsheet.  Given that Pirate's rolling with hundreds of thousands of dollars a tiny bit of savings here translates into a huge profit.

Why didn't Pirate fiddle with interest rates or deposit amounts week to week?  Are you saying that his business grew proportionally to the amount of his deposits?  Imagine that Satoshi himself thought Pirate was legitimate and decided to deposit his secret stash of 100,000 BTC from the early days.  Pirate was accepting deposits from anyone and now has to pay the 7% a week to this huge amount of money that he didn't need.  Either Pirate's a terrible businessman who doesn't make simple calculations to maximize his own profit or he's running a scam.  Either way he's a terrible investment.

On the USD side where does he find these borrowers without advertising everywhere?  Remember that he's got to grow his business in proportion to the unchecked growth of his borrowing.  Yes, he's got a top otc rating but why would someone smart enough to accumulate tens of thousands of dollars for an investment of bitcoins sent it to a single individual with no registered business?  Why use PayPal instead of a registered check?  MtGox does a better job of giving an illusion of trustworthiness than Pirate does.

In the other thread you said you went around and talked to people to get a feel of how Pirate works.  That's how confidence scams work, Pirate gets people to believe in him and that starts a web of people who believe in him.  You need to work the math out yourself, you can't just trust other people (especially pirate lenders).  Sorry to hear you got scammed.

On the USD side where does he find these borrowers without advertising everywhere?

In the other thread you said you went around and talked to people to get a feel of how Pirate works.  That's how confidence scams work, Pirate gets people to believe in him and that starts a web of people who believe in him.

Bitcoin attracted people looking to make money.

"i'll invest $1 and in 7 years it'll be 49 billion!"

1.07^(52*7) = 49 billion

For an order of 500 000$, it's around 111k BTC. You CAN'T buy that amount of BTC without skyrocketing the price. These are not huge amount of money either. I mean, a real estate investor who decide to buy some BTC instead of a house can have orders of that magnitude.

-One of the best rated on Bitcoin-OTC
-He's the owner of a service that has probably access to more hashpower than the biggest BTC pools around here.
-Was easily identifiable, more easily than 98% of the people around here
-The probable business model of BTCST is in some topic around here, and is not some crazy dream. It can certainly be made and copied. Search for it though, i'm sick of discussing it.
-Some big guys around here trusted him

Yeah, you can make a fixation on the "ohmygod7%aweek", but you're missing the big picture. The 7% rate was the top one, most people had 5% and pirate himself said that he averaged 5.98% at one point. It's still big, but compare on the lending forum, where you see that the average loaning rate is around 3%-4%/week, pirate is not really far off the reality of the current lending market in Bitcoin.

It'll be interesting to see how many of those schemes can survive, because the rest of the Bitcoin lending market is nearly as shady as pirate.

This was quite clever actually.

I think that people wanted to belive that they where gonna earn a lot somehow.

Bitcoin services are so few and far between that it's easy for a scammer to insert themselves into an open market and make off with thousands.

....you don't say.....

Can you tell me more ?

The greater fool theory (also called survivor investing) is the belief held by one who makes a questionable investment, with the assumption that they will be able to sell it later to "a greater fool"; in other words, buying something not because you believe that it is worth the price, but rather because you believe that you will be able to sell it to someone else at an even higher price.

Well, Pirate has a problem then, doesnt he? Because if he gives the real estate guy 111K BTC, he still needs to get 111K BTC back for his lenders +7% per week.  To quote yourself: "you CAN'T buy that amount of BTC without skyrocketing the price."

It really wasn't. Tired of hearing that. Most reasonable people called bs&t for what it was the very first week it started taking deposits. Long-term members promoted it only for their own profit and should be ostracized for being the scamming trash they are. Brunic is one of the saddest shills on the forums. 2 years from now, with 0 payout, he will still be talking theories on how pirate was legit. The cancer needs chemo, not life support.

Yeah, but he don't have to give back the BTC immediately. Buying 111k BTC in 1 day or getting them back over a longer period is different.

. Pirate only took those coins at 10.50$, made a big bundle of them, and sold them at 12$ each to some big investor.

With this, I'm not interested in replying anymore. I've answered to you because you're a cool guy P4Man. But I'm sick of the personal attacks like 556j did. It seems I'm not worthy of having respect around here because I'm trying to explain a business model and how you could make money using it.

Im trying to explain the logical fallacy.  If nothing else, if you would come up with some workable miracle business model, ask yourself why no one else would have adopted it. Remember Pirate started small, much smaller than a lot of other BTC holders.

He got conned - or made a bad investment, the end result is the same, so the difference is moot - and he knows it. He accepts that, and is taking it quite well, considering how little lube was used.

No need to rub salt in the wound.

I have no desire to rub in any salt, but Brunic still seems convinced its possible, that makes him vulnerable to another scammer exploiting that. Also, if there really is such a business model that would allow him or me to earn 100's of 1000s of BTC, it certainly would be worth discussing :).

Had it worked, The potential pirate business model I posited above would have easily netted a nice big chunk of change.

I dont think so. Your model is essentially trying to crash the price by selling a ton of BTC, and then buying back cheaply.  Its been posted a million times, but that just doesnt work. If you have enough BTC, you can crash the price allright, but you cant possibly buy back a (much) bigger amount of BTC later without increasing the price well above where it was before you crashed it, because you will never be the only one buying up those cheap coins.

IF there was any way for something similar to be possible, you would need a very different mechanism to influence the price. Selling coins for cheap wont make it work.

I think its odd that so many people on here defend pirate.

Particularly Matthew Wright, who has always been quick to call everyone else a scammer who wasn't 100% transparent. He called bitscalper a scammer just for claiming 5% weekly returns based on arbitrage, but pirate claims 7% and he's willing to bet $100,000 that he's honest.

It seems to me that there are a lot of people here that are in on this with pirate. Matthew is definitely one of them. Hmmm...seems he was involved with another scammer just recently too.

He's just willing to spend a great deal of cash to shut people up for a little bit

It really wasn't. Tired of hearing that. Most reasonable people called bs&t for what it was the very first week it started taking deposits. Long-term members promoted it only for their own profit and should be ostracized for being the scamming trash they are.

He isnt going pay. I was going to offer a bet, but I see there is one already:
http://betsofbitco.in/item?id=588

You mean to some big idiot. Who else would pay 20% over market price for such volumes to get his investment faster? And again, this wouldnt be happening once, but constantly at an ever increasing volume.

If right now, if you buy 111k BTC from Mt. Gox, the price goes from 10.34$ to 14.99$. Better to go see pirate and buy all the bundle for 11.25$. Pirate is happy because he makes money, and the investor is happy because his volume doesn't increase the price like it should. He sign the check, give it to pirate for a price and that's it. 111k BTC in your wallet without risk.

OK, except now he's got all that USD, and interest totaling (at least) BTC7770 to pay out. Not to mention capital to replenish. Where is all that coming from?

It can come from many sources. He can buy back directly from big miners (hey, I buy all your bundle for 10.34$, no price decrease because you're selling me 5000 BTC). If he buy from Mt. Gox, like I said, spread through time while putting ask walls to counter his own pressure.

Pirate DON'T have to pay back the capital, only the interests. It's not a loan over 12 months. If he buy back only 25% of the loan, he's ok, since he don't have to pay back the capital. The more he gets back the capital though, the faster he can sell those coins again at a premium. So he buy back at around 10.20-10.50 for a couple of days, a customer comes by, he sells again, ask for more money from his lender to cover the sell, he start buying back again, another customer, he sells again, he buy back, pay the interests ONLY (no capital to pay, only the withdraws), and it goes on and goes on.

Withdraws are the capital going back out. It's in his best interest to have that available, since he does have to pay that back, when asked for it (he gave himself 2 weeks advance, clearly not enough). Whether my proposed business model, yours, or just a plain Ponzi, he got caught with his dick in his hand. 7% interest weekly should have been sufficient a signal to alert people that this is a high-risk investment. It looks like you pretty clearly understood that, though, and I respect the fact that you accept the consequences.

Arguing over the means that Pirate intended to make his money isn't very productive, though. Whether or not he gets labeled a scammer will depend on the results of the next week. We can stop rearranging the deck chairs, now.

How did people fall for this Pirate scam?

It was still a risky investment, no doubt about that. But it was only to explain the reason, and show that there is more to that than "lol greed!!11!1!". For that business to work, you need one of the most trust able guy around here, and few guys qualify for that. Pirate was one of them.

I don't think I'm completely burn yet, since pirate is still around and seems to be trying to work this out. But this fire who could burn all my money....I can almost touch it.

It is a shame. He had (and still has, so far) some serious positive rep going.

If you can get him to talk, directly, rather than through his lawyer, I'd be more than happy to broker an equitable deal, for a fraction of the cost of lawyering up yourself, check out the thread linked in my sig.

I hope this goes well for you regardless, you seem like a very nice person.

Of course greed is the easy answer, but seriously, people who are intelligent enough to build and maintain mining rigs fall for the oldest trick in the book?

This is why people with poor business models like BFL can thrive in this environment. Obviously this community has a heavy dose of greedy folks.

It's simply a shame because I believe the point of bitcoin was to escape greed to a large degree, yet here we are...

Just a shame really.

LOL..... Sometimes