Bitcoin Forum

Mods, please move this post if its in the wrong section.  Thanks

Howdy Y'all

So there seems to be an ever-growing list of topics and links regarding information about what exactly I do to pay my lenders.  Most of the information seems to be fabricated by people wearing pointy foil hats.  On the other hand there are a few respected members of the community that seem to have fallen into the FUD world which has become... this forum.  As you can imagine, knowing what I know about what I do, it's been pretty entertaining to watch.  I must admit, I do enjoy the thrill of getting a reaction from some of these nuts, but there does come a time when you have to stop throwing fuel on the fire.

What do I do?  Lots, and you couldn't pay me enough to tell how I do it.  Why?  Cause, as most of you know I've made a lot of money doing this and I'm simply not going to kill a good thing for now.  Currently I don't have to fund any portion of BTCS&T due to my extensive list of lenders and like any professional would tell you... Don't tie up your cash unless you have to.  So if there was enough time-consuming BS going around that drove me to either disclose what I do exactly (and thus kill my profit margins) or fund the operation myself and increase my profit margin, you can imagine which one I'd choose.

At this time, I don't need to make that decision.  I know what I do and have every right to what I disclose about my process.  So, now lets get to the good stuff.

Q - Are you running a drug ring and laundering money for Silk Road?
A - Are you kidding me? I live in the US.  If anything I was doing was illegal, my CPA, attorneys, and scariest... my wife would have my head.  So to make it clear, nothing I'm associated with is illegal.

Q - Are you the mystery Bitcoinica investor?
A - No, although I thought about it early on when I was looking into the different sectors, but coming from forex trading there would be so much I would change that it would be much easier to build it from scratch.

Q - Did you hack Bitcoinica or help to launder the coins?
A - No, as some of you know I have an extensive list of certifications but all of them are networking and datacenter related.  I have business partners that handle all of the coding work and a few friends that fill in the gaps when needed.  Honestly I wouldn't know if stolen coins are being moved in and out of BTCS&T or GPUMAX. We don't have systems in place to check for them nor would I add them, due to the simple fact that I'm not here to police the market, nor do I condone the practice. If someone steals your cash out of your wallet and you have the serial numbers, do you think anyone would care?

Q - Is BTCS&T a Ponzi?
A - Although, theoretically I could have run a Ponzi scheme for a while early on, it just wasn't something I would ever want to be a part of.  If I wanted it to be one, it would have been at much lower rates and I'd be asking for everyone to join.

Q - What's up with the check warrant?
A - Those of you that have contacted me about this knew really early on about it.  The check is for a tiny amount at a Lowe's hardware store in a city I lived in for two years back in 2002-2003.  The check is for some company I have never heard of and haven't been able to find any information about.  My drivers license number was written on the top of the check so it was associated with me.  I didn't hear about this till years later when I was Googling myself and called to find out what it was and attempt to get it fixed.  I just wanted to pay it to clear my record but they required me to confirm some information on the check which I couldn't do and would have to file a police report as well as setup a court date to deal with it.  It just wasn't worth my time and could really care less about it.  If I'm ever out in the desert again and get pulled over, maybe then they'll let me pay it.

I hope this information helps, but I know its not what some of you wanted.  In the end, the only people I care about are my lenders and even then, they don't have to invest with me if they're worried about what I'm doing.

A big thanks to all of my lenders and those that support my projects.  I do sleep sometimes and can't always see everything that is said about me on the forums but I can tell you that it's a breath of fresh air to wake up and see how many of you have my back when I'm not around.  It doesn't go unnoticed and want you to know I'm here and plan to be for a while.

Now, on with the show.

EDIT: There are a couple of people that I know doing the exact same thing I do.  One in the states and one in the UK.  Early on they both contacted me within days of each other asking for some tips on how I handled the process.  Now this was after a very detailed description of what they thought I was doing.  Considering they're not in my area and we'd end up helping each other out, I decided I'd lend a hand in getting them off the ground.  We've keep in contact and to-date (based on how many of you have no idea what's going on) they've kept the information I've told them secret and I can't tell you what that means to me.

Now, I never expect anything in return and this is not a call for them to come forward in the least (they know that).  I simply wanted to mention it and say thanks.

You know we can't do that, pirate.

It depends on what show you're referring to.

The "Pirate Show" or the "Ninja Show".  I just wanted to clear up a few things and felt it was time to release a statement.  Believe it or not, either way I couldn't care less.  :P

It's good to see you finally deny some of the more serious allegations.

I'll give the PPTs more thought now.

I like Pirate for one, even if he is running a highly illegal and undercover operation for three reasons:

• He makes bank
• He pisses everyone else off in how he does it
• No one can stop him because people follow the money
• He doesn't constantly defend himself on a bullshit unrelated forum

What do they call this in the real world again? Oh yea, professionalism.

Speak up now, slanderers. Go and prove him wrong.

Or have the decency to apologize if you cannot.

Wait, aren't you the same person who on IRC was saying that the Bitcoinica hack was an inside job and that Zhou Tong was supposedly a mastermind behind all the hacks/stolen money in Bitcoinica and demanding proof otherwise and yet you're defending pirate without providing anything either?

You are a very talented mental acrobat.

(And if this is not the same person, my apologies).

I have never claimed any of these things.

Also, the burden of proof is on the ones making criminal accusations.

Pirateat40 is awesome as usual, also sub.

Just get to making rum already...    8)
 

fascinating.
Something legal in the US, or something that is not clearly illegal, that produces massive returns with lenders spread around the world and traded on an exchange managed by someone in China, using bitcoin as an intermediary.
He goes by the name of a pirate and has a personality too.
You just can't make this stuff up and few dare to believe it is actually possible.

I'd buy a bottle or two of a nice dark rum.

Earning 30% a week or what ever?

Yeah its possible in some instances for a short time, but HIGHLY unlikely to be rooted in the real world.

Investing in something not transparent is just stupid; its worse than gambling as you don't even know what game you are playing or the odds.

Even if pirate is not doing a ponzi scheme the kind of people he attracts are quite likely to fall for other ponzi schemes.


Bitcoin is completely revolutionary and super needed yet its value is only climbing with some 30% a YEAR, that should give you a hint.

To do even that on a regular basis you usually have to be facebook or asset strip companies.


Not revealing his secret formula? There's people on the internet earning money on fruit porn, unless he discovered alchemy I don't buy it.
Sounds SOO much like lehman brothers and the lot "we are so brilliant - two days later - your money is gone, bye!".

He doesn't have to run a Ponzi on his own - my guess is still that he "invests" in some Ponzi/pyramid game like MMM. If you read carefully, he never denied that, only that he doesn't Ponzi himself.

What on earth are you talking about? It's been way more than 30% in my world. it's even more than 1000%

Thank you Mr P for a nicely considered reply to some of the other threads.

It still amazes me that there are basically two groups of people, people who believe stuff can not be done (normally stupid), and those who go out and do it (a mix of smart and stupid people).  Mr P is in the second category and probably smart - and I have a friend  in the second category who is stupid and has $2M in the bank.

Ha ha ha (arrrgh - subbed)

subbing. Good to see some kind of statement :)

+1 pirateat40

Scammer and I have proof. I'm reporting you to the RIAA

Oh, one thing I forgot.  Just more thanks, no more info. :)

There are a couple of people that I know doing the exact same thing I do.  One in the states and one in the UK.  Early on they both contacted me within days of each other asking for some tips on how I handled the process.  Now this was after a very detailed description of what they thought I was doing.  Considering they're not in my area and we'd end up helping each other out, I decided I'd lend a hand in getting them off the ground.  We've keep in contact and to-date (based on how many of you have no idea what's going on) they've kept the information I've told them secret and I can't tell you what that means to me.

Now, I never expect anything in return and this is not a call for them to come forward in the least (they know that).  I simply wanted to mention it and say thanks.

Thanks,

Would you be willing to disclose anything about your actual profit margins over the 7% weekly you pay for the use of funds?

The only good thing about this ever ending is that I'll find out what the hell it is. I might be able to replicate it in a different context .... ;)

Sure, I net gross 10.65% per week and payout 5.98% on average and it really depends on how much I want to work.  The process has become pretty automated lately which is nice because I can spend more time on my other projects and with the family. :)

Thanks for your polite and non-divulging question. :)

And that is the whole Frigging Point of why you don't disclose Business Models if others can't figure them out.

NOW, ask very nicely and he might sell Franchises... lol

5 Million Up front, 7.1% royalties.  j/k

i learned a very simple thing: if something guarantees more than 7% per year it is likely not worth looking into it. they all blow up.

that said, i am incredibly eager to learn what your business really is, pirate. i bet it makes a great story..

When I can't make money doing it or just get tired of it, i'll let everyone know.  I promise you there will be a lot of people going "WTF, Damn, why didn't I think of that."

You can't tell me you haven't thought... If I had a Satoshi for every toothpick sold...

You sell toothpicks???

No, GPUMAX has it's own purchases and wallet.  Like BTCS&T, there seems to be a lot of people that don't know how you can make money paying much higher rates on GPUMAX, but people are catching on and updates coming soon will make it even more popular.  

On that note, the "Hot Wallet" for GPUMAX is emptied after payments come in and deposited into one of my operation wallets for security.  In my opinion, coins are coins regardless of where they come from so before each payment batch is run on GPUMAX the coins are sent from an operating wallet to the payment wallet of GPUMAX.  Accounting wise its pretty easy to manage but not what I want for the public release.  With all the recent hacks of popular sites, I want to make sure everything is perfect before I let "code" manage my wallets.

I hope this answers your question.

Lately, there has been an increased amount of pirate passthroughs offered.  Will increased capital make it harder for you to generate the same rate of return?

Good question.

Thanks for that. It's the first piece of useful information I've heard from you for weeks. I still have my doubts, but I'll refrain from expressing them any further... for awhile, anyway.

No, the system in place makes it pretty easy to for me to adapt to large deposits (going back to how much time I want to spend working).  From day one, it has been much easier to manage accounts that rarely move coins than accounts that are constantly moving coins in an out. So before, my limits were adjusted based on the accounts all making the same rate.  Now, the calculations are based on average balances, so those that never move and hold more coins are rewarded with higher returns.  There's also some changes coming soon that will give the approved bond issuers an additional incentive to manage the smaller and more active accounts.

I have a good question. Could whatever you are doing bring increased awareness to Bitcoin, or is it somewhat confined within the existing community?

I'm a firm believer in "See it before you believe it." and don't expect anyone, regardless of who they are or what their status is to think any differently.  All I ask is that when you finally understand what I stand for and what I'm trying to accomplish you honestly feel good about what you said and how you responded.

Only time will tell and until then find a comfortable spot on the fence. :)

You also never denied to being full of, well you get the idea.  A guess is not evidence, nor is it right for people to go running around saying things based on hunches.

Can you tell us if your business venture is converting the bitcoin you borrow to fiat or not? I'd like to invest in a PPT type thing but I wouldn't like to invest in a business that uses btc only as a transport mechanism for fiat. I'll understand if you think this would give away to much about your business model.

That's really a hard question to answer because you never really know how much you're actually doing to drive the market.  I can tell you that GPUMAX alone is used by people in over 80 counties and gamers from all over the world.  While BTCS&T moves more than 300,000 bitcoins a month.  

Now, I could stop for a month and see how the market reacts if you want to test it. :)

Thank you for the update.

Subbed!

I can't believe I missed this one.   None of my dealing have anything to do with, related to or managed by anyone running a Ponzi scheme.

P.S. I do like how you read between the lines though, you should be a lawyer or one of my public relations people. :)

Very interesting!

One day I hope to be as successful as you.

All things considered, Bitcoin is a very small market and has tons of room to grow.  Find it before I do and I'll pay you for the idea. :)

It's times like this that I am thankful that BTCS&T Accounts are by referral ONLY.....and you can bet that after many of us have had to sit here and read this bullshit day after day with envious people spreading FUD because they couldn't get on the 'Pirate Train' early on....that NO ONE will be inviting any new people to jump on it now or any time soon.

Pirate, I for one want to say THANKS.

I know I have said it before, but there's no point in me being shy about in this thread.

THANKS for EVERYTHING.
bitlane.

likewise, thanks, and +1 for weighing in on this:

WTF, Damn, why didn't I think of making a massive ponzi ???

Kidding.  Thank you pirate :)

That a clue? - Or maybe I misinterpret "gamers"  :P

Another solid response from pirate.  This guy is good at what he does, there is no denying that.

I'm curious about that gamers comment also.

Well I thank you very much for clarifying this. My initial thought remains you are factoring Bitcoin receivables. It is also very likely that you are paying USD for them. This explains the need to hedge the currency risk by borrowing BTC and the need for uneven amounts of BTC. It is a perfectly legitimate and legal business provided that the underlying receivable is for something that is legal. I must admit that because of the very high return Silk Road did come to mind; however given how small the Bitcoin market is and the fact that it is not that easy to short BTC in order to hedge this, I can see how you can pay these high returns even if the underlying receivable is for something that is perfectly legal.

Subscribing, finally, at one of these threads. The only one which isn't pure speculation...

Thank you.

Nope sorry, I don't spend time adding in hidden messages to my comments.  You would be surprise at how many users we gained from Twitter postings about GPUMAX that got circulated in the gaming community.  ie. Minecraft, WOW, COD

WHAT you bitcoin people think you're the only ones with nice video cards?  ;D

You'd get more gamers if you added a paypal cashout, like EMC.

xD

Well, the only reason Bitcoin is worth anything is due to it's value against fiat currencies.  At this point Bitcoin is a commodity and those that say otherwise have much more to learn.  I hope to be a part of what changes that and look to see Bitcoin as the currency others are based upon.  So to answer your question, I would say Yes, but it really depends on what you think Bitcoin is.

Paying out USD is a whole different ballgame, but I know what you mean.

;)

>> Don't tie up your cash unless you have to.

What are you doing with your cash/profits that is earning a greater than 7% return each week?

Do you have another project has an even greater return?  Or do you just like to spend money on consumer items?

I cannot think why you would put more into cash than enough to pay the minimum life essentials, if the alternative was to invest money at 7%/week.  I'd not solicit new funds, pay off the original investors, and use my own money.  

I don't know, my CPA should know, he should be making more than me right ???

No, in honesty.  Vegas, Fast Cars, Private Islands and Parties... what else?

Don't forget that you're also going to 51% the network and you are running a money laundering service. ;)

I want to fully believe in this so bad. After reading this thread I am one step closer. I am so torn. So torn.

It's easier just to watch.  Never trust a ...

fish

farmer

Starfish waves at the "Farmer"

Unfortunately I can't to do much more than just watch, so my thoughts on this are insignificant and do not need to be answered or acknowledged.

But what absolutely blows my mind is that the rate of return is so much higher than any other investment opportunity, since all those extra %s could just go straight into pirate's pocket. I have yet to make any sense of this.

Reading the threads and speculation about BTCST has been absolutely a blast.

Pirate, I'm trying to figure out what your game is... after some more research and consideration (and your statement to the contrary) I'm less convinced of drug-related activities.

Various previous comments imply comex experience, which is interesting... But your public record points more to business consulting...

Thanks for clarifying a little bit, and sorry if any of my past conjecture has raised the stress level of doing whatever it is you do. I'm really just curious =)

(sub)

-s

edit: I like the rum idea... maybe even a 'bitcoin, the early days' commemorative treasure chest with casascius coins and pirate rum bottles... ;)

Nice of you to think of getting me one :)

Do the goat hop!
http://dl.dropbox.com/u/9542654/the-goat-hop.gif

Maybe he found a way to game the system, somehow.


Could it have something to do with transaction fees?  Hmmm...

Does it have something to do with the price stability around 5$ what he's doing?  :o

Not putting all your money into Bitcoins spreads the risk.

I think that could actually be a very real posiblity (and is a rather simpler and less sinister explanation than most others). Anyone who has done options trading knows that volatility == great profits (and of course great risk).

I have watched the price move up and down > 10% in a single day on Mt. Gox - so if one was was careful (and it was mentioned about how much effort needed to be put in) to be buying and selling even only once per week it is still quite possible that a 10% return could in fact be made just doing this.

It would also make sense why the returns would only be in BTC and the preference would be for people to keep their main investment locked in as the basic idea would be to sell BTC at a high point (in USD most likely) then buy it back again at low point each day (or week I guess) removing the gains in BTC as they are made. It would also explain the desire to get more on board at a controlled rate as this could not scale up too dramatically without undoing itself (due to being the main buyer/seller in the market).

Although Bitcoinica has been credited much for the recent stability it could make just as much sense that a scheme doing exactly this would be keeping the price fairly stable (but not quite as stable as interestingly enough has actually occurred since Bitcoinica has ceased operations).

I had actually thought of doing the exact same thing but have so far been too lazy (and do think there would be a fairly big risk in leaving a large amount of funds on Mt. Gox although perhaps this could be minimised by keeping BTC offline in between the sell and buy cycle).

There is one problem in your thinking, if he used the coins invested to keep a 10c margin spread on the exchange and then profit of that(basicly controlling a single point of price control) he would have to trade the same volume(and profit on it at whatever he pays+profit).

By the looks of things he has more than 20K BTC invested with him, that means a minimum of 20K of sell and 20K of buy need to occur profitably everyday to cover the profit margins he offers. We rarely see days on mtgox totally >40k recently, the odd day here and there you would see 50-100k volume over the last month+ and all trading cant happen with himself since clearly he wont be making a profit then :)

There is no surefire way to make money buying "low" and selling "high" on an open market, anyone who claims otherwise is either a scammer or misguided.

Thats not to say he may not be trying, I have also wondered if there isnt a relationship and Pirate may have enough funds to manipulate the price, to a degree. Im not quite sure how one can profit from price stability, but even if one can, that doesnt make it guaranteed profitable, there are always limits. And if indeed Pirate is speculating on btc price somehow, then he is gambling with a lot of money that isnt his.

Which brings up the single most important issue Pirate hasnt addressed yet: what kind of risk is involved?

My understanding (which may be wrong as I haven't studied this that closely) was that profits were paid out per week rather than per day - so in that case one would not need to do that everyday.

The 7day sum volume in/out still needs to be invested funds * 2 , there simply isnt that volume on the market atm unless his sum volume is very low <10K BTC which I doubt by looking at all his investment/loans activity.

Sure - would have to agree with that (has zero risk been stated in regards to this scheme/system?).


Stability is of course *not* what you make the profit on - but compared to forex I think the fluctuations in the price of BTC are quite large.

Also to a fair extent any sort of investment that is not just putting money in the bank to get a fixed return is gambling isn't it?

You may be quite correct (I admit I have not done the math here) - this is simply my guess at how this could be working without involving any sort of illegal activity (or being any sort of ponzi scheme).

Perhaps, but if you invest in to something that you understand, at least you can gage risk/reward. Kinda hard to do here.

Agreed 100% (and note that I am not currently involved with this or any other schemes on this forum).

I think if I get some more free time I will have a play at what I'm suggesting (with much smaller amounts) to see how I can go (have already actually been doing something along the same lines but with vastly smaller sums successfully for a while now).

Of course in all likelihood the system being used would be more complicated than what I outlined (just saying even such a simple idea can at least in favorable circumstances meet the criteria of what is going on). I would assume such a more complex system would also have standing "positions" for both buying and selling to reduce the overall risk (i.e. hedging).

Yes I would like this question addressed too.

Just a little more to add about how the simplicity of buying and selling at the right time can make money.

1) In the stock market crash of 1989 a good friend of mine managed to double his entire investment virtually overnight (we were teenagers then so I didn't have any money involved).

2) Before the dot.com crash my friend and I managed to double our money buying and later selling shares in Sun Microsystems (turn around approx. 6 months).

3) During the years of the post 2000 property boom in Australia my friend and I easily doubled our money on most investments (and in fact quadrupled our money on plain land investments in a matter a months before the greatest part of the boom cycle ended).

4) During the time of the big influenza scare (2005) I was able to make around 300% in 3 months by buying and selling shares in a company called Biota.

5) The same friend predicted (almost to the month) when the GFC would happen and had moved most of his investments into gold and gold (and other mining) stocks prior to the crash (which basically doubled in value within 2 years).

I don't claim to be any financial guru but without a doubt "timing is everything".

:)

I don't believe any of this.  There is no evidence that pirate even exists yet alone runs a business.

I personally am on the waiting list for a GPUMAX invite and it has both cost me nothing and returned nothing.  It is completely risk free.

My guess is that pirate is an imaginary entity that does nothing and pays out nothing.

I am considering doing this myself.  It is completely risk free, takes a minimal amount of time, and as far as I know is devoid of any legal consequences.  Plus if my wife finds out I don't think she will care in the least.

Sam

So which is it? Is your "business" automated and scalable or does it really depend on "how much [you] want to work"?

pirateat40 is so full of shit and getting away with it (so far), I can actually respect it. Even the irony of his username, as another forum member mentioned in a previous thread.

But, a workable business model for a bitcoin-bank scheme actually occurred to me belatedly, when suckers were daring us nay-sayers in a previous thread, to put our money where our mouth is and bet on a default at betsofbitco.in.

Assume that pirateat40 were to bet his reserves on the bank NOT defaulting, and assume the bank didn't default. If he put enough reserves on there to push the odds to 10:1, or 20:1, with bets week-by-week, then the counter-bets would become the interest gains for depositors. The depositors themselves could place the counter-bets as insurance on their deposits (but that insurance paid would offset their interest gains, obviously). This would be a workable model for a ponzi-bank.

But unfortunately, with only about 40 BTC total in the betsofbitco.in pot (http://betsofbitco.in/item?id=349) and 3:1 odds against default, his claimed reserves are not in the pot so its not a bet worth making.

If you buy and sell anything with enough volume you are of course going to "manipulate" the market. There is nothing illegal about that.

As I said that is possible for a short time, but even BTC has slowed its growth now. Its been 30% a few months now.

If pirate is paying 7% a week, saw some article, that's ~44.000%/year.

In short it would have to be way bigger than bitcoin itself, yet no one knows what it even is and its all managed by one dude. Suure totally not a ponzi.

How in the world did you get ~44% annually out of 7% a week? 7% a week is 364% annually if it is not compounded or reinvested.

>>> 1.07**52
33.725347994710454

or 3300% if it is compounded

Yes, you're right, I was sloppy.

My point remains that it is crazy.

It would be compounded if someone where to reinvest their returns.

While you guys spend your time commenting on how crazy it is and impossible and blah blah blah, we're banking.

Thank you Pirate, for quadruplicating my initial deposit in the last 6 months! ;)

hmm what about all investors on the forum remove their coins for one day. with a ponzi this would be impossible.

Are you going to pay that day interest at 1%?
And how much will you pay Pirate for all the withdrawals he'll have to process?
How will you deal with those GLBSE bonds?
It's up to you to make it happen.

for an investor, its a ponzi as long as it doesnt break while youre in it

Ive been thinking the same. Organize a Pirate withdrawal day. Anyone convinced Pirate is running a legitimate business would have nothing to fear; give pirate a headsup so he can plan a few days of holiday.  Time it to match a betsofbitcoin bet :).

Of course this would only work if you could get a majority to participate, which seems unlikely, and therefore it might end up legitimizing his business regardless of merit.

Perhaps more doable is Pirate posting his wallet addresses; it wouldnt tell us all that much without knowing how much he owns his investors, but at least it might give some reassurance.

me? yo mad?  :D

though tempting I am not invested with pirate. I keep it with buffet: "Invest in what you understand"

Also as I have pointed out before I could not stand the irony of being scammed by someone called pirate.

1000!

I do not follow this "pirate" thing, nor do I know much about any GLBSE listed "assets".

However, please consider the following hypothetical GLBSE listed company.

Someone places BMMM IPO on GLBSE. The company does not disclose what they do, however they pay rather good dividends. Everyone is happy (for now).

What they do is the following, they convert BTC's into USD's and "invest" it into a piramide scheme http://en.wikipedia.org/wiki/MMM-2011 run by http://en.wikipedia.org/wiki/Sergei_Mavrodi that reportedly currently pays up to 50% per month of "dividends". BMMM pockets 30%, pays out 20% to their "investors". They also hope that with such "profitability" they will be able to accumulate enough money to buy out the shares once the "master ponzi" breaks down.

see also (google translate if needed) https://bitcointalk.org/index.php?topic=77316.0
and read up on to http://en.wikipedia.org/wiki/Stockholm_syndrome it might get applicable.

The above is a ponzi scheme by proxy which BTW is pretty close to what all the investment banks out there are doing with the central banks and ultimately the fed being the "master ponzi".

LOL, Irony...

Indecision may or may not be my problem. ~ Buffett

People who think too much before they act don't act too much. ~ Buffett

And I try to give the best bang for the buck. I love performing more than anything else. ~ Buffett

Indecision may or may not be my problem. ~ Buffett

It takes no more time to see the good side of life than it takes to see the bad. ~ Buffett

Older and wiser voices can help you find the right path, if you are only willing to listen. ~ Buffett

Quitting doesn't enter my mind. ~ Buffet

I sell escapism. ~ Buffet

Jimmy that is. :)

Not sure if this was a joke or not... and I haven't read the whole thread yet...

BUT DO THIS!

Let's try to bring it back on track a little. What bitcoin variables do you think can affect your operation, and in which way? Inflation, growth index? And how do you believe that your operation will be affected by the halving of subsidy in December?

Wow, a pawn ponzi inside of a master ponzi? This post opens my eye :o

There's already Pirate beer: https://i.imgur.com/mrv5C.jpg
Taken at the local booze store  :)

Use width= inside the img tag.

The only thing that would affect my profits would be a huge spike in price over a very short period of time.  At this point I really don't need to know when things will affect my operation because I'm able to hedge my risk with how it operates.  If I saw something coming that I felt would cost me more than I'm willing to lose, I would take the necessarily actions to limit the loss, but like I said... it's just a profit loss.  Like I've said before and my lenders know, if I had to take a large loss to cover coins... One, they wouldn't know about it (I still owe them the coins) and two it wouldn't be enough to put me in a pinch or cause me to run to Antarctica.  So as far as my lenders are concerned the only thing they need to trust is me.

Never trust a Pirate.

Trust the Pirate's Booty.

This is fun stuff. You couldn't make it up if you tried. lol

I joined the FPS&T, BTC S&T on the 1st of March 2012, it wasn't easy to get on board then either, I requested that my investment be rolled over for compound interest but this got missed on our communications which is fine by me, who on earth would be paying out interest if he could just keep it when up to anything dodgy, nearly 3 months down the line of receiving these payments that never even had to be made plus continual monitoring of the evolution of Pirate's offering & most of all this thread have convinced me to PM Pirate today to request doubling my previous investment much sooner that I was originally planning to do if he has that sufficient availability at present. <-- Edit, period added (((for the gramar Nazis, jk ;) )))

Congratulations! You managed to use five commas and zero periods.

vrag, is that you?

IC,IC. is correct. "How about IC,IC,ICDCDC,InterogatoryDC,DCRunON." ?

However he did not use any ellipses which makes him somewhat unique for punctuation over-users on this forum.

My idea exactly and similar to what I'd do if I wanted to create something like this - find a Ponzi that isn't going down yet (though MMM seems to me also burned out quite a bit) and that pays crazy enough rates that it's still possible to earn back the deposits + interest in a short time frame.

Pirate however said the following in this thread:

I even asked Nefario recently if it would be ok to list an open Ponzi on GLBSE (stating clearly in the contract that the shares have 0 value and the payouts come only from shares sold) and he declined, so to do something like this you'd really need to claim to have "insider knowledge" + "a perfect but proprietory idea" and disclose as little as possible. Also it might help NOT to pay out 20%. Better call it "mining bond" with 150% PPS returns or so and pay this out. Sounds less dodgy, you have more profits and you can "expand" from time to time to raise more capital.

thanks Pirate for reminding me that Bitcoin is a commodity and not a currency for now.

There's a discussion on another thread that may be related to this one.

https://bitcointalk.org/index.php?topic=80174.0;all (https://bitcointalk.org/index.php?topic=80174.0;all)

Before bitcoinica went down, you could have used bitcoinica to hedge your risk in case the value of bitcoin rises too much and wipe out your profit. What are you using now?

To those that wonder why pirate still needs to borrow coins from people and not use his own coins, I think I know why. It's true that if he uses his own coins, he can earn the full 10.65% he makes each week, but then he had to take on the risk of bitcoin failing. For example, if a flaw is found in bitcoin and the value drops to 0, he would lose all the money he held in bitcoin. Even if bitcoin doesn't fail, he may not want to have so much of his wealth tied to such a risky currency.

So instead of holding 10,000 of his own bitcoins to use in this business and earn 1065 btc each week (10.65% of 10k), he can just borrow 25,000 bitcoins from us and earn 1168 btc each week. (10.65% - 5.98% of 25k). Another way to look at it is, would you rather make 10.65% a week but have some risk of losing your capital if bitcoin fails OR would rather make only 4.67% a week using someone else's capital and have pretty much no risk whatsoever. I think pirate would be stupid to risk his own money. If you don't agree, ask yourself this: if you had a way to make 3% a week on your bitcoins with absolutely zero risk on your capital, would you still invest in pirate's program and make 7% a week but risk losing it all if it turns out to be a ponzi scheme?

Also you need to consider what would happen if there were a big decrease in price. He would then need to get more bitcoins from somewhere. If he already has a system set up with lenders and is trusted as a borrower he can easily get more bitcoins. If he were doing it alone though he would have a problem.

This scam looks like front-running. 

http://en.wikipedia.org/wiki/Front_running

He is probably front-running entire market for bitcoins.  For the past few months price has been strangled to $5. Front-running could explain why this is happening. With this type of scam every honest trader is losing money on the sell-side or buy-side.  It's like scalping or taxing every trade. 

What this means is that honest long bitcoin investors are losing potential profits that they are entitled to.  New players have been entering the the market increasing demand.  Investors long bitcoin should benefit from higher prices.  They aren't and the scam is why.  This wealth extraction is preventing bitcoin from trading higher.  There should be growth but we aren't seeing any.

To front-run he would needs two things to pull it off successfully:

1. Inside information possibly from the exchange itself.
2. A very large amount of capital at his disposal.  That capital could be leveraged up with borrowed money to get have more "powder" to pummel the market. 

He says he generates gross of 10.65% per week

10.65% per week is 1,9296.28% annualized. 

Let's say he started this scam with 10,000 coins or roughly $50,000 at current trading.  Under that scenario that amount would become $9,648,143 in a year. That's a significant sum of money.  That is enough to move the entire market.  Bitcoin market capitalization is ~ $45,000,000.  So $9.6 million scalped is like stealing 20% from everyone. 

Flatlining the price affects the way everyone perceives bitcoin.  Nearly every news article we read about bitcoin mentions the price.  The price is seen as a measure of bitcoin's vitality. Suppressing the price of bitcoin suppresses its image in the eyes of others.  If bitcoin was trending up every more people would want to get in and invest in the commodity currency.  Positive feedback loop.  Stagnant trading makes it look nothing is happening.  Outside observers will just assume that real growth is stagnant as well as the price.  Instead what is really happening is that wealth is being transferred to a few insiders. 

http://bitcoincharts.com/charts/mtgoxUSD#rg150zczsg2012-03-21zeg2012-05-24ztgSza1gSMAzm1g14zm2g25zv


Bitcoin is a commodity currency.  Prices for commodities tend to be volatile.  Bitcoin is a exotic commodity.  So you would expect to a volatile trading pattern short-term with an upward trend over the long term.  Not a flatline.  For most of bitcoin's history prices rose steadily long-term while extremely volatile short-term.  With somebody skimming off every rise and fall, we can't grow.  The scam is stunting the growth of bitcoin.

We need to stop this. One possible way was suggested by Pirate himself.   Pirate has said that he would be imperiled by a price spike. 

Pirate said :

Quote

So if that's the case a "money bomb" might work.  Coordinated mass buying.

http://en.wikipedia.org/wiki/Moneybomb

Lot of details would need to be worked out to make that effective. 


Front-running is covered in more detail in the following cross-post.


https://bitcointalk.org/index.php?topic=80174.msg911226#msg911226





When something sounds too good to be true it often is.

And price stability as a bad thing, why? You aren't entitled to see a market rise if you happen to be long on it. It seems to me that investing in Bitcoin is getting closer to real world investment returns instead of being a "too-good-to-be-true" investment that is making large returns.

Having huge spikes and dips does nothing for wider market adoption.

HFT isn't out of realm
but front-running with "inside information" is highly doubtful at best

When a merchant is more likely going to consider bitcoin as money: with crazy volatility, or with a stable price that allow him to predict future profit?

If you back and look at what he has posted it is consistent with HFT.  

Without the right information things will go awry fast.

the merchant is going to want a stable price.  he doesn't want something with crazy volatility. he has to run a business and bitcoin presents far too much currency risk

so he won't want to use bitcoin for day to day stuff like point of sale transactions.  even if price was stable confirmation times would be an issue.

bitcoin is a terrible currency for everyday use.  it won't succeed in that space... ever.  it will always be volatile despite attempts to manipuate it.  manipulation never works out long-term.

fiat money is stable.  merchants love it.   but fiat has some very serious problems that everyone on this forum is aware of.  

something else is needed.  that something else is not here yet


bitcoin is almost just like gold.

Since when do garbage collection specialists need a college degree?

Okay, not defending pirates business here, as I think its a ponzi, but:

1. Everyone withdrawing shows nothing. If I was running a legitimate business investing peoples money in wind turbines (serious pooling benefits) then I would not be able to pay out a dime or much anyway (edit: During a bank run).

... then again if I was doing that I would just show documents for turbine ownership.

2. The reason you invest other peoples money and not just your own is so you can scale up. I may only have a small amount, say 5K$, and even if I get the full return for that, taking 1-10% of other peoples return while investing 50-500K$ more still nets me extra income.

As others said it is also safer for me to "gamble" with other peoples money.

The benefit for my clients is that I would have the contacts, pooling benefits and save them time investing themselves.

So yeah pirate is likely running a ponzi, but the above are not suspicious signs.

Why do you think its a ponzi?

Good luck pirateat40 and thanks for all you do.

actually he's probably not running a ponzi.   what he is likely doing is very profitable. in this scam traders get burned.  his clients, his investors profit from that.  they do not get burned.  clients could get hurt if he is levered up ("scale up") with money he has borrowed from when his strategy eventually fails.  leverage works both ways.  risk/reward multiplier.   

the definition of ponzi has broadened but generally most say it is the type of scam that requires more new suckers coming in to pay off the old suckers.  it blows up when there aren't enough new suckers.  sometimes people misapply the word ponzi to any type of business fraud that happens to fail.  there's more ways to steal from people than simply running a ponzi scam.

his scam is more like penny shaving or salami slicing.

http://en.wikipedia.org/wiki/Salami_slicing

nothing new under the sun.  as old as time. 

the type of scam we see before us now ends when whatever market advantage he is exploiting disappears.  he has said that he has an advantage simply because he is a good trader.  the thing is there are a lot of smart talented traders how there.   even he found something they missed they will surely will find the same market inefficiency with haste.  they should have found it long before now once they exploit it his strategy the game is over.  there are many sharks out there and somehow he has managed to evade them for an improbable amount of time.   risk adjusted performance is way out there in the tail.  beyond six standard deviations. 

abnormal and extraordinary performance like this tell us that something is rotten in Denmark.  explanations like market manipulation, fraud, insider trading, and exchange collusion are no longer implausible.  they are the only theories that make sense.  Occam's Razor. 

Stability is NOT good

Since there is a limited number of bitcoins, if more people start using and buying them the price must rise.

If the price stay the same then it means that btc adoption is a bit slow. Wich is not a problem now, after all we still lack infrastructure, easier clients etcetc. But in the future if there will be more ppl using btc then the price must rise.

Stability is good if the price rise is extremely gradual. Bitcoin's deflation mechanism takes literally a century to play itself out.

Won't it go on forever if the amount of humans (or other future full members of our society) keeps growing?

You know this sounds like something familiar. Can't quite figure it.

Oh, a really good Broker on Wall Street. (Pirate = EF Hutton)

Don't give him ideas, he'll start charging commissions.

Yes, I was only specifically referring to the block reward halving.

All these attacks you talk about would require that Pirate has inside information from MtGox/Bitcoinica or some other source. Do you have anything to show that this is the case?

agree with you.   more people using them creates more demand which increases price. 

you can technical and apply MV=PQ

http://en.wikipedia.org/wiki/Quantity_theory_of_money

the end result is the same. the price of bitcoin should be increasing.  That's a good thing for the community and from those holding it as a store of value.   

All of us, this entire community, are losing from this.

Have you finished playing Wikipedia Accountant/Lawyer?

A century if the user base does not increase

But since user base is very small, it can quickly increase bringing great price rise

By your formula, the price only has to increase if velocity (V) remains constant... Take a look at this: http://blockchain.info/charts/n-transactions

Lack of transparency is a big part of the problem.  Without transparency people can get away with scams for a long time  We need full and accurate reporting from the exchange where this trading is occurring.  We don't have that.  

Exchanges we have in the United States such as NASDAQ and the NYSE are public institutions that are regulated by the Securities and Exchange Commission.  We can read public statements that they are required to file.  We can request irregular activity be investigated.

The exchanges themselves are accountable to the public

http://ir.nasdaq.com/history.cfm
http://ir.nasdaqomx.com/ourFinancial.cfm

A timely example is the recent IPO of Facebook which has raised serious concerns of "securities fraud."  FINRA and the SEC are investigating allegations that Morgan Stanley gave preferential treatment to insiders over the public.  In the Facebook case they had enough circumstantial evidence to launch a full investigation.   The SEC is on that case now.  The SEC has strong and extensive powers to investigate securities fraud.  They can enforce severe civil and criminal penalties.  In addition to that numerous lawsuits have been filed.

http://www.latimes.com/business/la-fi-0523-facebook-regrets-2-20120523,0,2596022.story


In this situation we  have more than enough evidence documented on forum threads by Pirate himself and others  to meet the "probable cause" standard sufficient to trigger a thorough investigation.  There are also the documents he provided to his investors.   If you study this case and study the Facebook case there is actually more irregular activity to cause concern in this case than the Facebook case.  

What we need now is accurate and full reporting from the exchange that controls ~ 80% of the market.  Mt. Gox has not provided that information thus far.   Mt. Gox is not a transparent exchange like the NASDAQ and the NYSE.  They are secretive and opaque.  Their reputation is still sullied from the June 2011 hacking incident.  They are not known for openness and candor.

We should lobby the SESC (Securities Exchange Surveillance Commission) to get involved.  The SESC is located in Japan and regulates Mt. Gox.  The SESC is similar to the Securities and Exchange Commision (SEC) in the USA.   The SESC can begin an investigation now into market manipulation with the information we have now.  The SESC could can enforce full transparency upon Mt. Gox through more regulation.  Contact the SESC at the link below.

http://www.fsa.go.jp/sesc/english/index.htm

No.  Bitcoins are only divisible to 8 decimals.  At some point, you can no longer split them without changing the rules of bitcoin.

I see that as a sure shot, like that will definitely happen if the value rises enough to warrant it. I would take the bet but I'm afraid I won't live long enough :(

Yeah, a saw that when bitcoinmedia ran a story on that not too long ago.  If you look at the graph it started to take off in May 2012.  But this invariable trading pattern has been going for much longer, when transaction history was stable.  The price hasn't changed from then to now.

So the problem here is how do you measure velocity?  You and I could set up bitcoin clients to trade back and forth very rapidly all the time.  The increased network transaction rate we produced wouldn't signify an increase in velocity because it doesn't represent increased economic activity.   Somebody could be spamming transactions just like people are e-mails.

Definitions of velocity can vary between different schools of thought.  I'm glad you brought this up.  We need to have a reliable measure of V.   I think the transaction chart from the block chain is the place to start but we need someway to filter out significant transactions from spam transactions and other transactions that are just noise.   Sounds like a potential block chain project.

I believe V can't be accurately measured.  Bitcoin days destroyed is the best metric I've seen for tracking how long funds sit idle, but it's still not really V.  As for spamming, it's much more expensive to spam transactions than emails.  Unless your funds have sat for a few days, you'll need to pay a transaction fee to get it processed.  Also, like I mentioned in the $5 thread, it's only holding steady against the USD.  Measured against most other currencies, Bitcoin is trending up.

I've said it all along and I will say it now.

I think all the people envying pirate are haters / jealous of his success.

Thanks for the clarification, pirate !

TL;DArrrgh

The simple truth is that if one can make 10% per week, one does not need any investments really. One can take some relatively small loan at the most horrible possible rates and simply give it some time until power of compound interest makes one unbelievably rich. 10% per week means that you double your money every 7 weeks. Remember that fable about chessboard and rice grains?

IMO it makes no biz sense whatsoever to seek outside investments and pay 10% per week dividend unless it is a ponzi scheme or some kind or quasi/secondary ponzi scheme or otherwise an extremely risky venture.

Is it that difficult to convert USD to BTC? Is it so difficult that one would prefer to pay 6000% annually for BTC instead of USD's horrible 40-70% loan shark interest or 15% on a credit card?

If so come to me and I'll sell you as many BTC as you need at 10$/BTC this would save you tons of money. Ohh wait, btcinstant or bit-pay will do that for only 3-4% not 100% as I just offered.

Does it increase risk 100-1000 times?

Could you clarify please. What would be an example of an operation where having USD liabilites as opposed BTC liabilities is by 2-3 orders of magnitude more risky?

Why those risks could not be hedged or otherwise mitigated cost efficiently?

Why would anyone want to invest any BTC on GLBSE into such a venture?

Ok lets say your business was in "pet rocks".  Now, there's a demand for them from an active but relatively small community (like Bitcoin) that believe these rocks are worth their weight in gold.  So you run to your bank and withdraw everything you can, hell you might even ask the banker for a loan.  You tell him it's for some home remodeling and because he's known you since grade school you get the loan.  With money in hand you run to the rock market and spend everything you got on certified "Pet Rocks". 

You get your business off the ground while paying off the loan but in the back of your mind you can't shake the thought of "What happens if people find out these are just rocks or if the rock market is overtaken by nano pets?".  You take the risk and keep building your business by reinvesting your profits back into buying more rocks.

You wake up one morning, roll over and look at your phone to see the current price of "pet rocks" to be worthless.  With a ill feeling creeping over your body you start to think about how many rocks you have in the warehouse and how much money you've actually creamed off the top.

Why didn't I just borrow the rocks from the rock community and pay them a portion of my profits?  That way if something was to happen, I made good money doing it and my long time friend (the banker) still likes me.

I don't know about you but that's what risk management means to me. :)

This does not explain desire to pay 2-3 order of magnitude higher interest. This also demonstrates that such GLBSE shares based on value of "pet rocks" would offload some unspecified but huge risks to "investors".

Also you completely ignored BTC risk mitigation options that ought to be by orders of magnitude less expensive than 6000% annual interest rate.

Basically you have failed to coherently answer the 3 questions which really make more sense in combination.

What you said is basically let's suppose BTC are as worthless as pet rocks and it makes sense for me to pay 6000% per annum on those pet rocks.

I am still at loss on why would one prefer to pay 2-3 orders of magnitude more interest only to mitigate currency exchange risk. Based on historical volatility of BTCUSD currency exchange risk is not that big. This in combination with biz prowess allowing one to generate such outlandish returns makes even less sense.

That's the beauty of what makes people different, you don't have to understand.  I do :)

Of course, I do not have to understand. But until I understand, Occam's razor suggests this https://bitcointalk.org/index.php?topic=82849.msg915121#msg915121 .

He he... see I knew this was coming but figured it would be from Vladimir.  I personally believe in Bitcoin and do hold a few of them but like I've said in the past, this is a small market and no one really knows where it's headed.  So until I do, this is my model for managing risk while being able to focus on my next move.

Ummm, what?

My point is very simple. When some company pays "investors" 10% per week when capital could be obtained otherwise at 2-50% per annum, no matter whether it is listed on NASDAQ or GLBSE or elsewhere, there are only two possibilities:

1. The issuer is acting irrationally.
2. The issuer is offloading to "investors" some enormous risks. As such these are not really "investors", but simply gamblers. And they should be really not so much concerned about return on capital as about return of capital.

CBH: What.

He believes in Bitcoin, but not enough to risk hundreds of thousands of USD on it.  Are you really going to question that decision?

Does the guy paying for Corn or Pork Bellies believe they will be successful? He hopes so, but is aware Soy Beans might displace the Corn. So he doesn't put the bank on Corn and mitigates risks.

What exactly do you think you are doing right now with holding bitcoins?  If no one wants them, you get no money for them.

I'm not paying interesting interest (see I'm just tired) in fiat, it's in Bitcoins.  My lenders do whatever they want with the profits I pay out.

Maybe I'm just tired, but this is the kind of stuff that makes me stop posting in the forums.

guys in all your risk management discussions corn vs beans you completely miss the point of 2-3 orders of magnitude higher cost of capital on one as compared to another. It all would be nice an dandy if we were talking about 2-3 times differences, but not 2-3 orders of magnitude.

as far as i can tell he is only risking his own money...

the pet rocks are borrowed and paid back as pet rocks
if pet rocks crash, pet rocks will be cheap for him to fix up his clients (accounts are in pet rocks)
if pet rocks surge upwards beyond what he can cover, then there would be a loss to him

pet rocks? lol

No, I'm not risking a lot of money.  It's Bitcoin!  My lenders know the risks of the market crashing and I hope you do to.

Oh there are doubts what you are paying interest in. Or more accurately that you prefer to have 2-3 orders of magnitude higher cost of capital when denominated in BTC as compared to cost of capital denominated in USD. This much is clear and really indisputable.

My statement is still not refuted:


Is there a third possibility? If yes what it is? If not, is it 1 or 2?

P.S. I am aware of only one biz model where 10% per month cost of capital would make sense. It is a ponzi scheme.

Is Bitcoin fundamental for the continuity of your business? Or it's just a weird way you found to raise capital?

Regular bitcoin interest rates in the lending sub forums are 10-15% a MONTH. This is because of bitcoins unknown future. So your 2-3 orders of magnitude arguments is kind of nulled because if you need more bitcoins and you don't want to buy them, you will be paying these rates. So pirate is really only paying 2x normal BITCOIN interest rates.

Edit:

Here is a link to the lending subforum for those who may have missed it.

https://bitcointalk.org/index.php?board=65.0

I'm not asking you to understand what I do or why I do it.  I explained my reasoning, which is more than I'd normally speak about publicly and the endless questions followed.

And with that, I'll be headin' aft t' me ship, good night.

3. The issuer does not want to risk having to default on a USD loan, and makes the assumption bitcoin can drop to 0.01.  If he borrows $10k and buys 2000BTC@$5.  A week later BTCs drop to 0.01, his 2200 BTC (1 week @ 10%) can now be sold for $22, and he has a deficit of $9978, assuming no interest on the USD loan.  Now, there are a lot of people who are already taking the risk that bitcoin will not fall, and he gives them a chance to put their money to work.  He pays slightly better than the going rate of lending and can still turn a profit.  The above average rate is justified by his admittance of exposure to a large, quick upmove.  If you want to break pirate, spend enough USD to make us all rich :).  Until then, quit with the FUD.

gigavps, hmm, interesting, thanks.

However, I might be especially slow today, but again why would anyone in his right mind borrow at 1.5% a day? Except to invest into some ponzi scheme or just because of being completely irrational?

So I am happy to admit that there is

3. The issuer acts as a proxy and simply a conduit of some set of other irrational actors passing some huge risks to investors/gamblers. This is pretty close to 2. just one more proxy on top of it.

Any risks of Bitcoin going to 0 tomorrow do not really justify 1.5% a day or 10% a week interest rates. The only justification of that would be huge risk of default. Of course those could be diversified over a large number of borrowers and as such mitigated to some degree.

So pirate, are you paying 10% weekly dividend to lend it out? This would make sense potentially. However, doing it without disclosing the risks to investors is not nice, IMO.

You are quite welcome. These facts are well known to bitcoin lenders. I will even save you the scolding for banishing yourself from the bitcointalk forums.  ;)

Lending bitcoins is quite a profitable business. There are a number of big lenders who have distinguished themselves and are doing quite well.

This is what I think:

Step 1) Borrow Massive Bitcoin by offering way above market interest rate.
Step 2) If no major downturn in market, borrow more bitcoin a la Ponzi if possible.
     Step 2a) If borrowing is no longer possible, then go bust. Assume new identity, go to step 1.
Step 3) If major downturn in market, sell off massive bitcoin in attempt to set off panic. Pocket massive dollars.
Step 4) If panic ensues, purchase nearly free bitcoin to pay back investors.
Step 5) If no panic ensues, then go to step 2.

Good thing most of the forum has you on ignore.

OK, cool, here is new version of how one can invest into a ponzi scheme on GLBSE:

consider the following hypothetical GLBSE listed company.

Someone places BMMM IPO on GLBSE. The company does not disclose what they do, however they pay rather good dividends. Everyone is happy (for now).

What they do is the following, BMMM loans BTC to a number of effectively anonymous identities on the internet, these anonymous borrowers convert BTC's into USD's and "invest" it into a ponzi scheme http://en.wikipedia.org/wiki/MMM-2011 run by http://en.wikipedia.org/wiki/Sergei_Mavrodi that reportedly currently pays up to 50% per month of "dividends". BMMM pockets 30%, pays out 20% to their "investors". They also hope that with such "profitability" they will be able to accumulate enough money to buy out the shares once the "master ponzi" breaks down.

see also (google translate if needed) https://bitcointalk.org/index.php?topic=77316.0
and read up on to http://en.wikipedia.org/wiki/Stockholm_syndrome it might get applicable.

The above is a ponzi scheme by proxy which BTW is pretty close to what all the investment banks out there are doing with the central banks and ultimately the fed being the "master ponzi".

Note that I have added to previously posted scheme only what is highlighted above in bold. If so this is still a ponzi scheme by proxy or two. Kind of p2p version of ponzi scheming where some can claim that they have no effective knowledge of any wrongdoing and therefore avoid any liability.

If this is true, the end result is the same. Just wait until MMM collapses and see how all the bitcoin lenders go under overnight.

I do a little lending, and selling.  Most of the last six months I have been making 10% to 15% per month.  My borrowers have been willing counter-parties and buyers similarly willing to pay (sometimes) $1/BTC above market rates.  Why, because there are other fees/costs that make this affordable.

I must be doing something right because demand has remained strong and my rate of defaults is quite low.  I even provide an on-call deposit service, much smaller than Pirate, and paying much lower rates, and you could say my guarantee to repay is worthless too if you wanted.

If you think the interest rates are wrong, I expect you have never lived in a high inflation or volatile economy, and are just very limited in life experience.  I still remember the days (in an OECD country) offering 22% deposit rates.

Per week per month or per year? Do you remember the days (in an OECD country) offering 6000% annual deposit rates?

BTW I am not saying that lenders or you specifically are doing something badly wrong. I am saying that it is very possible that a significant part of borrowed money ultimately ends up in a ponzi scheme and once that implodes you will face defaults.


Most of last six month MMM "investors" have been making a killing too.

Maybe it's Alaskan King Crabs instead of MMM. http://en.wikipedia.org/wiki/Alaskan_king_crab_fishing

Is it a Derby or Quota? maybe both or neither.

ohh sure it could be whatever, there are loads of various hypes, or let's say a portfolio of HYPE's. Invariably the point still stands, our hypotetical GLBSE investors of BMMM invest by proxy into unknown risks that are 2-3 orders of magnitude higher than investing into some kind of MBS (morgage backed securities).

I'm really not sure what's so hard to understand. His business requires holding on to a ton of bitcoins. It's more bitcoins then he's comfortable risking in his own portfolio. So he would want to offload that risk to people and share the profits with them. So it's a win-win situation.

So why does he prefer to borrow btc at such a high rate versus borrowing usd at a lower rate? notme answered it pretty well. Borrowing btc means he returns btc and borrowing usd means he returns usd. So there's no currency risk involved in holding the capital. (They is still currency risk involved if bitcoin price shoots up when he's trying to exchange usd back to bitcoins.)

Now think of it in reverse. If you had amazing business idea that can for sure make 10% a week on an almost unlimited amount of usd capital, would you want a usd loan that costs 5% a week? Or would you want a btc loan that costs 5% a month. Sure you would make a lot more with the btc loan. But what happens when btc prices shoots up to $30? You're left holding usd that you need to convert back to btc to return to your lenders. You would have to have increased your capital 6x in order to return that loan. Now that's a risky loan for the lenders!

So the smart thing for pirate to do is to take however many bitcoins he feels comfortable owning and put that into his business. As his business demands more bitcoins than he has, he should borrow the rest. It's true that he won't make as much from the bitcoins he borrows, but then he has no risk on them either.

I used to question why pirate would need to borrow so many bitcoins and not use his own. But now that I understand why, I believe that pirate's lending is legit and not a ponzi scheme. Well the only other thing is I think he may be paying too much (7% a week) to his lenders when most other people are only paying half as much. He could probably reduce it to 5% a week and still be able to get as many lenders as he needs. But maybe he is not greedy and want to share the wealth.

I could go and find other examples - I picked on one I was familiar with.

Perhaps in another time, we would all have been complaining about the "gods", or that it was witchcraft.  The cry of the moment is that IT MUST BE A PONZI because people can't work out what's going on.  I find that tiresome, repetitive and rather unintelligent.

I'll go back to my nice stable financing business (where I'm charging 280% per year and have good customers and low default risk).

OK you have convinced me. Will launch FF+tor and set's up a proper anonymous identity (or use a previously prepared one), will borrow at 280% per year (or more) and will invest into MMM at 50%-60% per month. Looking forward to paying up interest up until the death of MMM, let us all pray it will last a few more years. But biz model is very sound. Once MMM fails will set up a new identity or ten and invest into MMM III. Rinse and repeat.

Disclaimer: no I am not going to do that, just kidding. But others will, I bet.

... the same thing, but with bitcoins?

teflone will visit your house.

Or Uncle Vinny *shudder*

Well when I have done loans on the forum. The only 'collateral' I used was 'Trust' specifically using the WoT. I offered a rate on the forum far below what others charge. 1-3%/mo.  

If you don't pay back the loan, nothing happens to you from my stand point. But this is what happens because you didn't, you will have trouble getting other loans and other people borrowing rates will increase to counteract your bad debt.

So when people get mad at lenders like Patrick and others, they are misplacing their anger. It should be directed at the people that didn't payback their loans.

I don't bemoan others rates, especially for short term loans. Would I like to see rates come down? Sure. Will they? That depends on whether people payback the loans.

Coincidently, you can give Fiat(USD) loans with BTC as collateral if you wish. You could have a completely parallel market with BTC as an underlying security and no one would even have to know.

It is a truly unique concept that hasn't been around for a long time.

Another question. Does anyone know now many BTC denominated loans that were made slightly more than one year ago below 1$ have not been defaulted on (or restructured to be USD denominated)? Care to guess? 100%?  50%? 10% maybe.

What will happen with all these loan portfolios if (when actually) BTC exchange rate jumps 40-50% in one month?

If you were running pirate's business, where would you go to mitigate exchange rate risk cost effectively?

As far as I know, they would all involve counterparty risk. How would pirate be feeling right now if he had used solely Bitcoinica to hedge? Pirate has absolutely no counterparty risk. Investors need to trust him. He doesn't need to trust anyone else to make good on an option contract.

Now, I'm not saying whether the avoidance of this counterparty risk is worth the amount pirate is paying. In fact, I have said before he could easily lower his rates and still get a good deal of funds.

Any idea when this spike will happen ? :)

I dunno what Pirate is doing. I have formed my opinion from a question I asked in public a long time ago, knowing what I know about markets and his overall idea. Basically, I have formed my own opinion and believe I know exactly what he is doing.

Here is my problem: If you figure out a correlation, you don't tell anybody otherwise it doesn't work anymore. Or if it does, it does so less profitably.

I propose 'what ifs' that are not negative or nefarious in nature where others simply go to the negative. Sometimes, if it walks like a Duck, quacks like a Duck, it's a Goose.

I try to defend those that are getting attacked without evidence. Lynch Mobs run rampant around here. Sometimes it turns out they were right so people use that to squash others.

Why is Pirate being attacked? Because he is making an impact on the market and the way it operates and people can't figure out how it is being done. They are not attacking the HYIP guy that stopped paying people because he didn't affect the market in a big way so they don't care.

Vlad brought up Occam's Razor which most take to mean: "other things being equal, a simpler explanation is better than a more complex one." not only is this incorrect it definitely wouldn't apply to finance if it was correct. Imagine apply it to CDS', etc...

In practice, the application of the principle often shifts the burden of proof in a discussion.[1] The razor asserts that one should proceed to simpler theories until simplicity can be traded for greater explanatory power. The simplest available theory need not be most accurate. Philosophers point out also that the exact meaning of simplest may be nuanced. ~wikipedia

BTW: IF I was to set up a business model, I would design it so 'others' would come to false conclusions by utilizing reliance on the above in order to protect the model and market share.

That special low rate involved escrowed equipment with high resale value - if you want me to fund your purchase, I'll have it held until fully paid off - and yes, that's 2%/week.  If you default, I resell it for full price.  :)

I can answer that one too: I don't care.  I transact in bitcoins independent of other currencies.  I gave up worrying about price movements long ago, because 10%/day wasn't high enough for me to worry about.  (I used to trade electricity on my own account as a commodity and have yet to find anything as volatile.)

I have done some large loans and seen the price increase/fall 50% - I tended not to notice.

I think the most likely and simplest explanation, given pirate's know proclivities, is that he has a time machine, goes back in time to the 18th Century and captains a privateer. He needs investor money not just to to enable the purchase and maintenance of the privateer and the hideous expense of time travel, but also when he and his crew face life and death every day he'll want to have been prepared as much as possible, using as much money as he could.

However, he can afford to repay at such a high interest rate because he can attack the same Spanish Galleons again and again, and sell the same gold over and over. Such is the beauty of time travel.

I think others have brought up similar reasons for the necessity of investors when the profits are so large; I think mine is the simplest and most realistic by far.

ObPlug: http://bitcoin-otc.com/

lol, someone in a time machine going somewhere else than 2009 with future mining technology and constantly keeping just under most users radar (zomg, mysteryminer is a time travelling pirate manipulator?)

Well, I agree that that would be logical, but not if you're "a pirate 200 years late". In 2009, opprtunities to make people walk the plank and say things like "Argh! Ye lubber etc" were severely limited.

And with his sister added, you'll be begging for them to take your money.  ;D

I guess "somewhere else than 2009" did seem a bit exclusive, but not really what i meant, just that the bitcoin profits wouldn't come from piracy, chances are he's running the same program with pirate booty, the original guy fawkes was him in a v for vendetta mask(just to claim 'first') and he was there the night satoshi drowned

Id say its primarily because of the huge risk for the borrower to get scammed and never see his coins back.

While we're brainstorming here, drakahn, and still keeping in mind Occam's razor, he could have invested in steam devices with his pirate booty, and developed the first difference engine rather early. From there it's only a matter of years before he introduces coal-coin mining on distributed steam powered difference engines and corners the market on cryptocurrency. Without the ability to reign in his expanding wealth, he soon controls the world.

You really want to contribute coins to Pirate's quest for world domination?

Yes, this is correct. If not, everyone who plans to hold coins long-term would be lending them out. Clearly, they are not. A large fraction of loan requests are complete or partial scams (e.g. the borrower gambles and defaults if the bet fails to pay out). Thus the high interest rate.

more than ev'yarrgh

Now this all suddenly makes a lot of sense!

You mean the lender....

do you see something like a lending bubble, have the rates increased since pirate started his business?

how to mess with bitcoin if you are say, a bank consortium:

1. amass a large amount of coins (do it cheap by means of a ponzi scheme)
2. get control over a large amount of hashing power (pay more than average pool)
3. screw bitcoin

I am not saying pirate is doing this but I would not know the difference.

the exact opposite could also be true

how to massively support bitcoin if you are say, someone who uses bitcoin.

1. amass a large amount of coins because coins rock
2. get control over a large amount of hashing power to protect the network
3. yay bitcoin

I am not saying pirate is doing this but I would not know the difference.

both have in common that it undermines decentralization either way  :-\

Oh, a bitcoin payment processing service with such huge volume but nobody has heard of it? LOL!

Occam's Razor: ponzi scam.

And the obvious purpose of him starting this thread was just to suck in more bag-holders until he's ready to cash out.

Not enough technical-security skills to steal bitcoins by hacking. But certainly good social engineering.

Let's assume a few things here:

<assumptions>
1) It's not a ponzi (or a proxy to a ponzi). The definition of which is a little tenuous since if you say you're running a ponzi, and you notify all of your "investors" that that's what you're doing, then are you actually a ponzi? <sarcasm> If the government says it's a ponzi, then it must be a ponzi</sarcasm>. Don't believe everything you hear, just follow the money or the deal.

At the moment we know little of Pirate's business plan, and if we knew more, and there were more competitors, then the interest rates would likely drop and likely without an additional decrease in risk exposure. That being the case, I'd just as soon he keep the secret. In fact, even if Pirate were to tell me right now, not only would I keep the secret, I probably wouldn't even try to compete with him, since I value my time differently than he does (or anybody else for that matter). It would have to be really really simple to get my attention and deal with all of the FUD that's spewed around here.

2) It's not drugs (or a proxy to drugs). I assume that would be both the legal and illegal kind. However, if it includes the "illegal" kind, that's just a matter of jurisdictional geography and you're legal again. Now I'm just rambling on, but whatever.

3) It's not insider currency exchange knowledge (or a proxy to insiders). Given the lack of transparency of the exchanges due to the psuedo-anonymous nature of bitcoin and the current lack of much regulation, this is possible. I'm sure others could address this issue better than I, so I'll leave it to them to work the numbers. Notwithstanding, I could really care less (nobody forced you to trade USD/BTC). Besides, if our benevolent Pirate "manipulator" can maintain some degree of stability (which we've had a little more of lately; correlation perhaps?), and make some money on the side, then more power to him. I value stability more than speculation anyway. Given his price-spike comment, so does he.

And even if stability isn't the desired side effect, and controlled volatility is (or some kind of bid-ask sniping, arbitrage, or algorithmic HFTs), then speculators can continue day-trading the market by predicting trends. Either way, most exchanges don't promise transparency anyway (maybe none?). If that's what you want, then make a better exchange (perhaps an OSS exchange) and convince people to join you. That way you could get transparency and decentralization in one fell swoop, yayyy!! Whatever floats yer boat I guess.
</assumptions>

Now that I've got all that out of the way, that narrows the playing field significantly. Nevertheless, I personally know of at least a half-dozen ways to make the kind of returns Pirate does, and they're relatively simple too (I'm busy and lazy), and I only spent about a week or two thinking about it (surfing the net helps). I however will not enumerate nor describe them here, since by divulging, it would likely make it more difficult for me to try them myself should I be so inclined. In any case, I'm sure if any of you had half a brain (an imagination helps), you could probably come up with a similar subset, and then some, given the nature of the financial "black box" Pirate operates within.

The only unknown I can't put a finger on is why use bitcoin when for the most part you can use fiat? To that, I can only venture to guess that bitcoin transactions are nearly frictionless (borderless) in the sense that there is less regulation, more anonymity, fewer adjudicated encumbrances leading to cheaper insurance costs -lowering operational overhead-, limited or advantaged market "commodity/currency" exposure, diminished creditor recourse (both good and bad), and perhaps a great disdain for government largesse and general interference. Besides, promoting bitcoin isn't such a bad idea anyway, right? That being the case, and a little bit of altruism (karma whore?), it's not impossible to imagine why Pirate might part with as much bitcoin as he does when he could likely keep more of it to himself. Be glad you're on the money train, and if you're not, stop the hating/FUDding/whining, or use pass-thrus. We're all "adults" here right?

All you should be concerned about is the "promise" and any nuanced contractual details.

On a side note: thanks Pirate for your patience and professionality. Seemingly a rare trait around here.

Oh really? You do know how to make 6000% annual return! Cool beans! I bet you then could get Warren Buffet out of biz by the end of 2013 (if only you were not that lazy, of course).

I wish I was half that smart.

P.S. Or is it by any chance you just have no idea how to calculate compound interest?

My thought exactly.

Oh, and by the way - this should work with tens of thousands of BTC over months consistently, not a single transaction/deal once in a while that is especially profitable...

Even without compound interest, 7% a week is ~360% a year.


If I had even one idea that can make 3.6x times my capital in a year, I sure as hell won't be too lazy to explore it. Let alone 33x if you consider compounding interest.

All the proof we need.

I'm a lazy starfish, and I know where my talents are.  And while I know of ways to use bitcoin to make higher returns, that's simply not my best field of operation.  I'll stick to 200% to 300% per year.

I am in complete agreeement with Patrick. The bitcoin lending scene is highly profitable.

I'm curious who takes on BTC debt? Obviously Pirate does, but who else, and for what purposes?

Mostly miners who have incomes denominated in bitcoin.

And any BTC business, surely. Taking a debt in BTC would make sense to anybody who expects a predictable return on BTC...

I am in complete agreement with both of you too. With one caveat: past performance does not guarantee future results

Let's just wait and see how this market will react on demise of MMM and on BTC volatility, specifically on upside.

Well, looking at current interest rates, it would seem some of this is priced in. A month is a long time in BTC land. Not that long ago we were having 20% moves in a single day

As for your MMM theories, put you coin where you mouth is -> http://betsofbitco.in/item?id=349

What's MMM? Don't know, don't care. 

I have most funds/loans related to physical goods and services, and the volatility in the market (even last year) was prosaic.  The business being established independent of gambling/ponzi/random chance.

Is it so hard to understand if you want to go down the BTC route, you don't care about volatility because there is none - it is always 1 BTC to 1 bitcoin.  How much do you take notice of EUR/GBP/JPY/UDS volatility?  I tend to worry about that a little more, and that's why I track cross rates every day - but normally ignore BTC/USD rates.

What is so difficult to understand here?

Your borrowers whatever they say to you could simply funnel borrowed money to a ponzi scheme. You do not need to know about it, and your borrowers would not tell you. Once the master ponzi implodes they default on your loans. Do defaults concern you?

More importantly, the higher your interest rates the less chances that they funnel it to anything else but a ponzi scheme.

BTC rises, your borrowers who converted BTC into USD are unable to pay off your loans they default. This does not concerns you too apparently.

And note that I am not really talking about specifically your borrowers and your business, more about the whole BTC lending marketplace.

With all this Ponzi talk, you make me want to start one.  Who's up for a pirate style Ponzi?

Thank you all and sorry for annoying you guys. It was fun.  ;D

I now will be leaving this thread until "I told you so" moment arrives. Take care.

it is bound to happen.

I do not think default would be a concern if one had already earn their investment back in interest payments.

lol - I don't expect you to understand my business, and I don't need you to.  It's not too different to the other main lenders either.  What's most entertaining is the assumption that I indirectly fund ponzis when the evidence is to the contrary.  As an example:

1: I send coins to member B.
2: Member B sends GPUs to member G.
3: Member G pays me.
4: Despite this transaction, someone assumes member G is using coins they never touch to invest in a ponzi.

I have had loans where the BTC has doubled during the course of the loan.  The borrower was repaying in BTC from income generated in bitcoin.  The sooner people start working in one currency, the easier it is to understand.  If you keep worrying about BTC/GBP or BTC/USD prices, you'll inhibit your own activity and bitcoin in general.

If people can't understand something this simple and transparent, there is no way they are going to follow what Pirate is doing.  As for the "told you so" moment, at that stage I'll wipe a few thousand coins off my balance (currently 20% of my holdings are in BS&T).

Arrrrgh - the lazy Starfish

Why not?

Plus, how can it compound if you keep your interest payments? ;)

ok so the debate gone a little off topic i suggest someone will make a vote poll and people should vote if pirateat40 sells drugs, launders money ponzy schemes etc or its just a clever dude.

lets see what the voters opinion

Who cares? The majority of the people aren't very bright so voting will never lead to an optimal solution. That's why our retarded implementation o the democracy doesn't work as well :)

 ;D nice1  well we cut 10% from all voters

You do concerns, right? Don't you want to be a 100% winner?

Yes, as profitable as LB and BS were before the financial crisis started in the summer of 2007.

+1

OK so you dared me to throw down. Here's an easy idea I was personally aware of due to my friendship with my boss. He ran an outbound call center for a few years. One of his really good money makers was political campaign polling.

Problem was he couldn't predict how much calling he was going to do in time to go live before the evening news. He couldn't hire employees to match demand either because he tended to overshoot. This required him to hire temps. The pay always seemed to be out of sync with the pollster companies.

He had to pay his temps when he let them go so it left him short changed. In comes the bailout. You cover the payroll and take a cut. I was privy to several double digit percentage gains. The time frames for these deals ranged between 1 to 2 weeks. Do the math.

https://bitcointalk.org/index.php?topic=83566.0 :)

Anyone wonders why bitcoin is a scammers paradise?
Right there is the answer my friends...

I already talked to Nefario about this (an open Ponzi on GLBSE) and he declined and said it would be taken down. My conclusion: If you want to Ponzi on GLBSE, claim some "proprietory business idea that noone should know about, not even investors!" and do it this way. Out in the open is a no-go, even for penny stock (as I intended).

Are you talking about >$100,000 capital and you can make ~$10,000 for each deal? And could you do this week in and week out for the whole year? If you answer yes to both questions, then why are you not doing that as a full time job? (You'd make half a mil a year) If either of your answers is no, then this is not close to the same as what pirate claims to have.

Pirate didn't start out that big either, and yes, it does scale quite nicely. Political campaign polling was one of many types of calling campaigns that functioned in the way I described (predictable, short-term and asynchronous). As you may already know, the outbound and inbound calling business is a billion dollar industry, and while not all campaigns are as profitable, most are quite predictable (nice multiples) if you set them up properly, or can semi-automate your agents. Bidding magazine subscriptions contracts was another one since it needed quick bridge financing to demonstrate operational status to potential clientele.

The industry may in fact be quite a bit larger than what Pirate does (short-term loan floating). I was a script programmer and sysadmin (among other various and sundry things) for the guy until he got a bigger deal somewhere else. He moved, then I moved, and we fell out of contact for awhile. At the time I didn't consider the idea as a viable one because I didn't think that way. You might say I didn't have much of a financial imagination.

Scammers paradise ?

Where is that !?

 :D

it's right here  ;D  yupieeee

Planet earth?

You need more than that to make your 1/2 mill per year.  You also people that can do that kind of business - hunter/gathers.  Most people are farmers, doing something easy and lower risk.

Of course he said no. Please tell me the value for bitcoin economy of a ponzi?

That would make it no more scamming than options markets since both are zero-sum games with a clearly defined rules.

Pirate, please excuse me If this question has been asked. Do you run a currency exchange operation?

Regards,

I also have an additional question:

Do you have an idea or estimate how long you think it is likely your business moat will be sufficient to continue to achieve the returns you are making right now? Will this be in the order of magnitude of months or years for instance?

Right, read 275+ comments and scroll through 14 pages to find the answer to a question. I am going outside now.

Maybe he has access to suppliers of GPU's at factory prices and simply sells them to gamers and miners for profit which he uses to source bitcoins to lend out. Like NIKE getting shoes for $5 and selling them for $200 in the US.

Well, you can always click "all" next to all the page numbers you see and then you only have to read 275+ comments on one page!   ;D

The all link eventually disappears on longer threads, although it is still visible on this one.

I wasn't aware and nor was anyone else. Thank you for the observation. Have a cupcake, and a tampon.



Hehe thanks. Pirate, return please!

Why isn't there more concern about the Pirate investment bonds being offered on GLBSE? I'm certainly not accusing anyone, especially since the Pirate bonds being offered on GLBSE are from regular community members. But the latest fad on GLBSE are these Pirate bonds, and I'm sure it's tempting for someone who has a BS&T account to raise several thousand BTC on GLBSE, get some reputation for paying interest one time, and eventually run off with the principal. As an example of the popularity - the PPT bonds managed to raise over 10K BTC in about a month, but I'm sure none of those guys would risk their reputation on a scheme like that though.

On the same note, since Pirate just admitted that he's helped two other people start up similar businesses, how long before people start asking for loans for mysterious "Pirate-like" investments??

Same? Don't make me laugh.

Absolutely. IMO, that's the fun part about bitcoin - you can invest a relatively small amount (willing to lose) and still reap high ROIs. That usually doesn't happen in most markets because of government intervention and market manipulations by the big players.

Glad to see so much speculation in the bitcoin discussion sub forum.

Apparently, pirateat14 and you, ARE Bitcoin.  ???

Now that's just silly.

Does anyone suspect that Clipse (https://bitcointalk.org/index.php?topic=60717.msg707753#msg707753) and pirateat40 might have the same business model? They both sell bitcoins locally, and they both pay extra for people to mine for them. Neither of them give away much more information than that (understandably).

Hmm.... :)

Ever considered that Clipse's so-called "pool" ( not a pool 100% because all normal pools publish found blocks - it is a proxy like ABCPool ) is just diverting to GPUMAX and he is taking a big fat 30% cut from everybody ?

No wonder you cannot use GPUMAX through his pool ...

The myth of selling BTC to fools locally is laughable. Nobody is stupid to pay more for BTC than market rate I would believe.

I'm pretty sure it is, although I wasn't going to call it. He's in South Africa, and Pirateat40 is in Texas, so their markets don't really overlap when selling to local people on the ground.

As to why the buyers will pay such a premium - well I still haven't figured that out.

When you can't get privacy for free and yet you value it that much, why not pay a premium for it?

I get that, but I can't figure out the massive market density around these people. Unless folks travel far and wide to meet them.

I've done just that, might only have been a few thousand dollars worth, but a 10-20% premium was still worth having.

Did you find a fool, or someone using the coins for illicit means?

I think the latter most likely ;)

Buying coins on MtGox requires you to be AML and follow the law and submit documents.

Trading BTC person to person requires none such things and it is understandable why the 20% premiums demanded by the seller. Especially if in high quantities.

BTC buyer hands over money to be laundered -> BTC seller gives "untainted" BTC -> BTC buyer then goes and gets his "clean" USD through exchange as BTC can't be traced etc.  

I don't think pirate is doing this BTW. Just my observations / possible explanation why somebody would be selling BTC at a high premium locally.

For many people actually buying BTC is a huge pain in the ass. If you were only buying a couple hundred dollars worth of BTC it might be worth your time to just pay someone $40 extra to get you the BTC, especially if it also saves you a few bucks in exchange fees.

I don't like those words. :)

I wonder if and how Bitinstant's cash deposits are affecting Pirate's operation.

The way I reckon, that view is a much more responsible one than most here are assuming. To put it as Jim Sinclair might say, the days of colonial style wealth extraction that only benefit those at the top are over.

Sure, the concentration of wealth from a successful venture might be extreme at the top, but it leads to impoverishment and resentment of those involved, whether directly or indirectly. A rising tide raises all ships, but wealth extraction holds many underwater.

Instead of hoarding his shiny Bitcoins and his proprietary venture a la Facebook, Pirate is granting access to a potentially risky investment. Doing so means that no other business doing the same can offer as high a rate of return without copying his profit-sharing model.

As for his risk, it is not so much that Bitcoin might fail, but that those whom he is obligated to might come after him with pitchforks, demanding blood. To lessen or eliminate the latter, he is sharing access to his operation - in the event of failure, he'll step down as Captain of the ship rather than be forced to walk the plank like Jamie Dimon.

In light of that, lead on, Captain Pirate!

It's possible that the risk may be outside of the Bitcoin environment. Assuming small operations doesn't give enough perspective because small fry generally have an eye on growth, not preservation.

Since Pirate's business is geographically dependent, I'll outline one possible perspective. When looking to preserve wealth, there are a few options that high net worth entities have always been able to rely upon:

• Precious Metals (esp. Gold & Silver)
• Land & Real Estate
• Fine/Rare Artwork
• Gemstones

Not every HNW entity is at the high end of the spectrum, so ownership of any of the above might not be held in ideal locations, or liquidation may not be easy. Asset seizure or account freezing can be far more devastating to HNW entities than it might be for middle and lower class individuals. Risk of confiscation is a 100% loss consideration; without much to confiscate, the financial loss isn't as great. If there happens to be another form of wealth preservation that's even more difficult to attack than the above list, you can be certain that it will garner attention. Even a handful of Euro or USD millionaires could easily take a sizable stake without breaking a sweat, yet still look at their purchase as insurance.

Example:

Assume my net worth is USD$10,000,000 and I want to protect as much as I can. Keep in mind that nothing is truly free. With the absolute worst-case scenario of 100% loss due to some form of loss, theft, or destruction, I elect to protect 25% in total, so $2,500,000 is reserved.

All of the above are physical items that could be somehow taken. Astute HNW individuals often keep their eyes open for investments or ways of protecting their assets. Let's say I've been hearing about this 'Bitcoin' thing from another HNW associate. I observe for a while and learn what I can about the system. At the same time, I'm well aware of increasing threats from government that may seriously jeopardize the safety of my accumulated wealth. Not only would my savings be at risk, but also my livelihood. It would be folly to think that HNW persons are incapable of sensing when sentiment toward their social class is negative.

My decisions on wealth preservation lead me to conclude that equities are too risky given recent events, and the banking system is too dangerous for wealth storage. Not counting fees, I decide to allocate my security assets as so:

$1,000,000 is put into gold.
$500,000 is put into property.
$400,000 is put into art.
$400,000 is put into gemstones.
$200,000 is put into Bitcoin.

In the event that Bitcoin fails, I'm only out 2% of my net worth and less than 10% of my preservation fund. If it takes off, I could easily become a Bitcoin Billionaire. If it remains about where it is, no harm has been done and my wealth has been preserved.

How much would I be willing to pay for that protection? There are many who spend a good percentage of their net worth on security. I certainly don't want to cause any serious disturbances for whatever I'm putting my wealth into unless there's an impending threat and time is of the essence. If I have to pay 50-100% on top of the going rate to acquire an asset without drawing attention to myself, so be it. It's often a small price to pay for peace of mind.

Other cases can be made from a low net worth individual or business perspective, but they mostly fall under the trade-off in perceived risk between classes, not so much speculation or growth within a single asset class.

A Pecuniary Pirate's Path to Profit: use the little straw to sip from a big jug.

It boils down to finding a niche, and in retrospect people say: "Why didn't I think of that?"

Are you sure the exchanges reflect Bitcoin's real value? Do you have access to dark pools? Are there other assets less desirable or risky than Bitcoin... ?

The way Pirate has things structured, a sudden failure is much less likely than a gradual evaporation. Unless, as he said, the price appreciates sharply.


There may be defaults in extreme cases. Pirate may have to either keep a large reserve of BTC, halt/reduce interest payments, or acquire quietly by using USD from the other side of his business so as not to further displace price. That isn't to say 40-50% change is even enough to cause such stresses; the number may be 400-500% or more.

This is basically what we're seeing in traditional financial markets, only in the opposite direction. In the case of lenders, halting interest payments is a very powerful tool that actually indicates positive growth, whereas in traditionally mature markets it's indicative of negative potential.

Of course, the ride will end sometime; the interest rates will decline and competition will increase. However, until the 21mm unit asymptote is approached, there's still room for expansion.

I just discovered that beer actually has an aftertaste (afterscent?) when it goes out through the nose. Also, remember to turn your head away from the screen...

https://i.imgur.com/QV2zR.png

Reading posts like this makes me smile.  There're still smart people in this community and it's those people I've learned to surround myself with.

"Surround yourself with like-minded people who want to see you successful." - Robert Kiyosaki

:)

Or maybe you just like the feel of a nose placed firmly against your cheeks.

LOL, if i wanted that.  I'd pay for it. :P

I thought pimps don't have to pay?

Don't be jealous you got discarded like yesterday's deuce.

Awww see, now I have to hide from the forums for another week.  GRRRRRR

Ummmm no, that's call embezzling.

STOP talking with yourselves. :P

One sec let me switch to my other identity to respond.

  If the pirate's view is to bring everyone along for the ride then that would include glbse dont you think ?

 The pie gets bigger for everyone :)

ok, is this better?

I'd rather value a business that builds its own credibility than one that strives for an expedient route to legitimacy, or approval from a direction that isn't valid in the first place. Trust is only good if it isn't abused.

• Deposit 2000BTC
• Earn 2000BTC from interest
• Withdraw 2000 of total 4000BTC

Your initial investment is doubled and returned, and everything from there on out with the remaining 2000BTC is pure pirate profit :)

In late 2010, one of my silver trades did very well. So well, in fact, that it gained almost 5,000% (yes, 50x initial capital). Regrettably, on that particular trade, I tripped myself up and lost most of it (still kicking myself - I really wanted that island (http://www.privateislandsonline.com/turtle-island-oz.htm)). What I didn't lose was my initial investment, having pulled that out shortly after doubling. The rest was play money.

Or how about this?

Me too?

urmom.

I dunno. He might fit in a suitcase.

Actually, I don't think they were a fool, and I tried to get them to use an exchange, pay real prices and basically stop bugging me.  It was just easier for them to send me funds and for me to send them coins.

Clearly you missed the part of this thread where we went off topic.  Catch up already!

Shhhhh, me... That's all part of my plan to make the rest think my sock puppets are real people. blah blah

I was actually doing some day-job work stuff. 

(and some bitcoin business)

Pirate, here's a serious question. Even though you are not a corporation like BitInstant or MtGox, doesn't what you do still fall under AML laws? As far as I know, AML laws state that you are not allowed to facilitate the laundering of money. Strictly speaking, converting cash to bitcoins can be a form of money laundering since your clients are converting cash (possibly gained from illegal transactions) to clean bitcoins. As an individual and not a corporation, can you really just say that you are not aware of any illegal activity and that you are just trading bitcoins for profit?

BitInstant, as far as I know, doesn't exchange BTC for USD but USD for BTC. MTGOX does both. There is a difference and it's big.

Does BitInstant require you to show ID or can you stop by WalMart (?) with a ton of cash and anonymously convert them to bitcoins with a fee?

Good question, I deal with very few people unlike the others and everything from the ground up is covered by people paid to make sure of it.  Now, paying interest in USD would change that but right now it's not something I have to worry about since I don't.

BitInstant doesn't exchange anything at all. They just move USD into the exchanges.

http://www.mrbitcoins.com/  this one doesnt.

Does Wal-Mart require you to show ID when you buy tons of Game Credits on those cards?  That would be the question.

Anyone who believes this guy is a complete idiot. End of Story.

We knew that already.

I guess it's still good most of the forums has you on ignore...

You are also either a scammer or an idiot.

Haven't you heard that it takes one to recognize one?

Awww damn! Now you quoted cunicula so i can see what he posted.

I guess he must be right. I'm a scammer AND an idiot! Quick, run and hide.

cuntnicula still posting even though he is an idiot? Sorry to those that don't have his ass ignored.

Who needs to worry about the job pirate is who entrusted money to the pirate or himself, right?!  8)
So ...?! ??? blablabla ... blablabla ....  :P
BAH!  :o

The second layer of the pyramid defends the integrity of the first layer. Surprise, surprise. As fellow scammers you are quite concerned with protecting your bosses' rep. After all, keeping a steady stream of fish flowing in is how you make money. I see that some of you have reduced your cut over time. Not surprising, since you will need more and more inflows over time to support the pyramid. Can't wait till this blows up.

How much bitcoin is tied up with the scam, anyways? The blow up will negatively affect bitcoin prices if the scam is large scale and some of the fish have taken on bank debt in order to participate. Bitcoin debt crisis causes bitcoin price collapse. Fun times!

I tried to quote you, but all that came up was:

Congrats, you're my first!

Cunicula popped BTCurious' ignore cherry!

Some one night stand that was. We never spoke again afterwards.

edited out some unnecessary stuff

I'm interested in your motivation - is it just to stir shit, you want to see those that can't afford to lose their bitcoin suffer, or do you want to gloat when it fails.  Your posts do not appear to be genuine in warning (and has the impression of some religious crusade against evil).

(and while starfish are often idiots, this one expects some sort of disruption to the economy when BS&T finally closes it's doors)

Is that actually in the cards, or do you not think it can last long either?

Believe it or not, but I buy and sell toothpicks, albeit in the form of century old musty smelling barn wood, and my profit margin is a hell of lot better than 7%. I pass daily on only a 20% margin. I've even invested in a couple of my pickers where they now have pickers picking for them to sell more to me. Yes, they could even do the same exact thing as I do, but unfortunately their regular treks to the local pub, among other drama in their lives, gets in the way for many of them. I could easily lay out my exact strategy on this board and still not worry about losing buying or selling volume. I've even toyed with paying out 20% bonus if my pickers accept Bitcoin, but less than half have smartphones, let alone the ones that do know its full potential. Hell, I myself just recently purchased, again, a smartphone, but my learning curve isn't/won't be as steep as for those who pick for me.

But I digress, for I need to read the rest of this thread to get up to speed.

~Bruno~

Example: One 10' board (12" wide) off this barn fiches $20 USD for me, but I rarely pay $3.00 USD for it, and it comes in by the trailer load daily.

http://img.ehowcdn.com/article-new/ehow/images/a07/l2/50/barn-siding-crafts-800x800.jpg

I don't know.

My approach for a long time has been to diversify my portfolio (a point Colbee seems to think is a stupid approach in another thread), so I have lots of different investments (active and passive) around bitcoin-land.  Current BS&T exposure is 20%.

One of the things I do look at what is going on, and trying to sift the envy-crap out of different threads, track the evolution of the economy and how it relates to real world processes.  What has been great (from an economics point of view) is how the bitcoin-land economy has developed so rapidly, and you can watch the whole thing unfold in fast-forward.  An incorrect (that's my disclaimer) assessment is:

pre-2011 - early adopters do some cool stuff
early 2011 - trading starts to gain traction
June 2011 - trading bubble (and yes some sold a lot at $30+
2nd half 2011 - time of trading - great arbitrage opportunities, high volatility, good pickings on exchanges.
Q1 2012 - rise of lending/lending scams - decent returns but high risks, exchange rates become more stable
Q2 2012 - rise of the stock/bond exchange.  Lending calms down, price flat, speculative GLBSE bubbles.

2nd half 2012 - my personal expectation is for a few less well funded people to default of various projects, interest rates will come down, stock/bond issues will be more stable.  Price might drift along as people work out how to use BTC properly and speculative trading will be for the hard core.

Note that the money is at the higher risk, leading edge, and more stable returns in the wake.

and the 64000BTC question - will Pirate default and we find out he has been running a ponzi?  On the balance of probabilities, I'd say "no".  I bet my BS&T account on it (and I do every day).  I do, however, think it will evolve over the next six months, and that it will ultimately wind up.

Anyone who doesn't believe so is blinded. Looking just at the financial sector of Bitcoin, BS&T has worked its way into almost all of the items which pay interest. As the current market stands, there could be other interest-bearing investments in the financial section; however, they have a hard time competing for customer dollars with the payout that BS&T has. Once BS&T ceases operation, whenever that may be, there's a giant void to fill there.

My personal estimation is that it may wind down, perhaps in the distant future, but I have faith in Pirate never defaulting against his creditors.

You misunderstood me. I don't think diversifying is stupid. I actually fully diversify mine also.

I was just saying that your exposure to PPT is the same as your exposure to BS&T, because the risk scenario is the same. If pirate defaults, you lose both your BS&T deposits and your PPT insurance fund. So if for example your exposure to PPT is also 20%, effectively 40% of your portfolio is at risk of pirate defaulting.

Assuming, of course, that PPT is equal in size to his other investments.

I did say for example. I don't know what his exposure to PPT is. From what I remember, he said that he wouldn't take the money he has in PPT insurance fund and put it in BS&T because he likes to diversify his portfolio. And my reply just stated that it's not really diversifying.

Here's the actual quote:

I apologise for mis-representing your comment.  I also know that you diversify your own funds.

My exposure to PPT is probably just 640 coins that I have lodged in the insurance fund, so that would take me to maybe 25% if I wanted to count it up.
What I was saying is that my decision would be to not invest that additional block of coins directly in Pirate's BS&T, because even thought it might return the same percentage, it needs to have some other elements factored into it.

I suppose the other issue is if you believe all of BS&T deposits are equal.

Everyone assumes there's a risk of default because of paying out 7%.
If the deposits are 10000 bitcoins, then that would be only 700 bitcoins. There are plenty who make a lot more than that pr week. People speak of how much it is pr year, compounded - but that's assuming that he takes on deposits all the time. Even if he does increase his operation, it might be by less or more than these 7%, so there's no backing for such an argument, unless you know the numbers involved.

Just the passthrough listings on GLBSE are around 50k bitcoins. That doesn't include the Pirate passthroughs in the lending section, or people who actually have deposited directly with Pirate.

But 50k BTC is only a few kilos of coke - I believe the weekly consumption is far, far larger all around the world.
And then add all the other drugs that need to be bought in bulk and re-distributed in retail... 50k BTC is probably still too short to cover all the needs of the business :)
And don't worry: the big drug business is pretty much owned by CIA, so it does have a future... :)

I find it funny when people are sure that pirate must be doing something illegal (drug money laundering and ponzi being the two most popular).

I have some questions for you to ask yourself on any theory you, or anyone else, has on pirates operation:

Why doesn't pirate try to hide is real identity?
Because other than the general 'crazies on the internet' problem, he doesn't need to.

Why doesn't he move OUTSIDE the USA?
I would venture to say that since 9/11 the US is probably one of the most monetary hostile countries one could do business in.  With all the AML laws and such they can come in and shut you down in a heartbeat.  If they can link it to terrorism (which isn't hard if they want to) then you don't even get due process.

Why would he risk running such an illegal operation with that risk?  Look at what they did to the BetOnSports guy.... diverted his plane INTO the US then arrested him. 

Why does he limit deposits? 
*If* he were running a ponzi then the more depositors the better.
And as piotr_n pointed out *If* it were drugs then pirate is probably not anywhere near capacity.

"Well if you are so smart then what do *you* think pirate does?"
Honestly I don't know.  And I don't have a problem saying I don't know.  But here is what I believe to be true:

• He has Forex experience
• At least some portion of his business requires locality and face-to-face type transactions
• Despite what others say I don't believe his actions fit a ponzi
• If he were really doing something massively illegal the US could, and would, come in and snatch him in a heartbeat
• He is not thinking 'inside the box'
• He is not alone in what he does, as a few others that he is aware of have also started similar operations
• Maybe the next PetRock ?

I believe that the biggest threat to BS&T is the US GOVT, but not because pirate is doing anything illegal.  We all know that they are not happy with bitcoins worth and growth.  Given the major playor that pirate is in the bitcoin economy I believe they will, when they are ready, sweep in and take it down to 1) attempt disruption and 2) make an example out of pirate.

It would be funny if pirate setup an automated system offshore that would auto cash-out all of the accounts in the event he gets arrested, but that would probably make point #2 harder on him :(

As I posted in another thread, I believe this is correct as well. However what I haven't figured out is how there is so much local volume. If there are many users, how are they so conveniently near him? And, if only one or 2 users, what are they doing with so much money?

He is in Texas. My completely facetious and equally valid opinion is that BP is recovering the oil from the Deepwater Horizon spill and selling it, but using Pirate to launder the money to prevent public backlash and avoid having to pay it towards environmental reclamation.

He might as well be flying around the country to meet his clients, this way there would be no locality issue.

He could be simply staying at home, using the internet/phone to conduct business with his clients.

As I said in another thread I suspect that Pirate's clients might have spread the word around in their business circles about Bitcoin's usefulness. That would explain the local concentration of them.

I don't really want this to turn into a scooby-doo thread, but:

The reason I say locality is because pirate has stated before that others have approached him with the same/similar idea of what he is doing and because they are in differing areas they would not affect each other.  A mystery fur-sure but I don't think it helps.

Hm?
Why isnt he just revealing it?


Does he really? There are a gazillion pass through bonds and other schemes that funnel money to Pirate. Ive not seen any one of those refusing new deposits. It doesnt look to me like he is reducing his holdings. BTW, Madoff also tried hard to give the impression of not wanting to accept everyone's money and making it look like a privilege.


Surely not as much Madoff.


Thats what he says. If you were running a ponzi, it makes perfect sense to spread that kind of disinformation.


Took a while before they snatched Madoff. That said, Im not even sure if it would be illegal with bitcoins.


So he says. Ive yet to see anyone step forward and say they do the same independently . Most other high yielding investments seem to be all about funneling money to pirate.

On the other hand, if you need thousands of bitcoins for a week or so to conduct some kind of business, and you don't want, or can't, buy them on the market - where are you going to get them from? Borrowing is the only option. And borrowing of course means: paying interests.

Which in your opinion is the proper level of interest for lending bitcoins?
You think that 10%/week is too much and there are no people who would be willing to borrow at such a high interest... right?
The thing is that nobody cares what you think in this matter, because it's not you, but the economy (demand & supply of the credit) that drives the interest rates.

Look around. There is an open offer in the lending section Offering relatively large, short loans at 1.5% interest per day (https://bitcointalk.org/index.php?topic=56007.0).
After one guy commented sarcastically "Generous of you to offer 23,000% APR loans...", the answer was simple: "Such is the state of bitcoin lending".

Since I don't know the pirate in person, I cannot be 100% convinced that he doesn't run a ponzi.
But I strongly believe that such a level of interest rates is indeed the current state of bitcoin lending.
And if what I believe is true, why would he need/want to run a ponzi? It would be just dangerous for him, and simply stupid.
I mean, after all they arrested and sentenced Madoff for 150 year of jail, haven't they?

Not to be rude to a senior forum member, but.....

Just saying "I think he is running a ponzi because if I twist all of these statements around in this way then he *could* be doing it...."

Also comparing his knowledge of forex to madoff is like saying: "A local plumber brutally killed his wife today, therefore the police are arresting all plumbers because they might be murders"

Also if I said limiting deposits I meant to say limiting DEPOSITORS.  And yes he is... I know of someone with a large amount of coin that has been looking for an invite, and yet more stories of people who have given out invites to people who have still not gotten in.

I am not defending pirate, what I am saying is that it is unfair to take things and twist them to how they are not to come up with some big conspiracy scheme.

P4Man wasn't implying Pirate is running a Ponzi, he was merely refuting the arguments given by ErebusBat with counter examples.

I'm not saying Pirate is running a Ponzi either. In fact, a large portion of my Bitcoin holdings a re on the line stating otherwise. However, I cannot be certain he isn't running a Ponzi scheme based on the information he has released. In the end it all boils done to trust and the risk/reward ratio.

This discussion is really sounding like a broken record though ;)

Im not saying these are proof of pirate running a ponzi, but you were posting those reasons why you think its NOT a ponzi. At least let me show why none of those reasons have any value.  You might as well have listed "Pirate says its not a Ponzi".


Like I said, Madoff did the EXACT same thing. You couldnt get in without "invite".
That he refuses to accept new depositors also makes complete sense, it makes life easier for him, but its not like his is limiting the inflow of coins, which is the only thing that matters for a ponzi.


There is nothing unfair about it.  Extraordinary claims require extraordinary evidence. Being able to generate to 3300 or whatever % interest per year on an arbitrary amount of money certainly qualifies as extraordinary in my book.  But if Pirate is legit, why would he even care, Im sure he would be getting a good laugh out of these threads.

Depends entirely on the risk. But thats not the point here. If pirate can consistently turn 10 BTC in to more than 330BTC per year, then why does he need to keep lending?  It would make sense in the beginning, but by now he should be filthy rich and sitting on a gigantic mountain of bitcoins and so youd expect him at the very least to decrease his debt and therefore lending costs, but he is only increasing it further.

My guess here would be that his customers need more than 330 BTC ;)
In other words: the demand for credit is probably growing.

Give us your best guess of how many BTC pirate currently owes.

As a gentlemen I wont discuss how much money other people own.

Though, in the BS&T deposits, considering the transaction volume ever Monday when the interests are paid, my wild guess would be that there are 100-200k BTC.

That's a smart correlation.

I said owes. Not owns.
Lets assume your lowest number is correct. That means he would currently be paying over 20 million dollar per year in interests. Let that sink in for a moment.
Now I dont know about you, but if I had some  business model that was somehow that incredibly profitable, and yet I needed to loan even and ever more, Id talk to a bank or anyone willing to fund me at slightly less insane interest rates.

Invites are very apt for a Ponzi too in the beginning. You want to make sure that your friends and inner circle profit before they back out, right?

In Bitcoins? Good luck finding a bank. Or in fiat? Volatility might take your entire profit. This way (if this is true of course) he makes less money but the income is far more certain.

Not rally. Not everyone uses the automatic interest payments and the transaction volume sums up the payments and the change.
That's why I said "a wild guess".
But on the GLBSE's PPT bonds alone you have over 50k so I would say that there should be at least another 50k on top of it, outside GLBSE.

Sorry - English is not my native language :)

AFAIK, the business has been running sine November and the initial rates were lower.
Analyzing it in a few years span is purely theoreticall.
A ponzi or a legit - the interest rate that we are getting now is obviously temporary.
That's the economy: you need more credits - you rise interest rates. You don't need more credits or have a competition that takes your customers away - you lower the rates.
As one of the guys said: this may be just one in a life time chance, which wont last forever - so risk to pick it up or keep doubting... the choice is only yours.

Interest rates were higher in November (3% per 3 days 3546% interest per year compounded) versus 7% per week now (3273% per year  compounded).

So its been running for 8 months. Is analyzing over the next 6 month reasonable then? Because even if he stopped accepting funds all of a sudden, that would put the number at "only" $10M for the next 6 months.


I heard that 8 months ago.

Oh, ok - so another reason to assume that they will be going down in a future...

It was a decent theory, but Monday transaction volumes are the lowest of each week:
http://blockchain.info/charts/estimated-transaction-volume?timespan=30days&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

Well, then all I can tell you, is that you should have invested your capital in BS&T 8 month ago, compound the interests and thus multiply the initial capital few times by now.
And then withdraw it all today - yet before the ponzi collapses :P

No risk - no gain. Suit yourself. :)

P4man your arguments are like a broken record. If I were not so lazy I would copy paste a rebuttal from one of the previous threads. The facts speak for themselves now. BTCST has been operating for almost 8 months without a hitch. At what point will you admit that you are wrong? 12 months? 2 Years? Or Never?

I'm going with never.   But I'm also going to add a "who gives a crap what he thinks" into the mix.

http://tmblr.co/ZMIp3vNthL_Q    :D

Still to my knowledge nobody has (publicly) tried to combine pirate's addresses and check out what he might actually do with that money. Does it end up at MtGox after 2-3 hops? At silkroad? Is it transferred in huge batches or only in 0.1 BTC transactions? ALL the information is already out there, in the block chain + in the clients of pirate's customers (who know which addresses are his). We even know quite on time when he pays the interest on Monday, so even without any account holder cooperating we could still get out quite a bit of information there.

Something like http://toolongdidntread.com/category/bitcoin/ developed a bit further could really come in handy...

Operating for 8 months means nothing as long as there are 7% or more per week flowing in (he gives an estimate of ~10% in total per week here in this thread). So far, with all the "pass through" operations, people seem eager so far to throw money at him, so probably he still grows exponentially.

He doesnt even need such inflow rate, since most people are reinvesting their profits. If everyone does that, pirate could keep a ponzi going as long as more new funds flow in than people withdraw, and that seems a certainty at this point.

The real test will still be when (if?!) he decides to lower interest and some big accounts might drop out + withdraw. This will happen this year or latest next year - after that there won't be enough BTC mined to pay for his interest and it would be obvious that he pays it from deposits. So for coin_toss: in ~2 years we'll see who was right, if there is a "bank run" after lowered interest rates.

Since we dont know how many btcs are deposited, theoretically a ponzi could go on even if pirate owes more btc than there are in existence.

Yes, but by then it'd be obvious.