thanks for that.  it was interesting.  the solution they're talking about is Bitcoin but just don't realize it.

let me say a few more things about Bitcoinica.  one of the indicators to follow when looking at financial stress of a bank is if the interest rates offered on CD's start to rise.  this indicates that a bank is low on reserves and is looking to add to deposits to strengthen its balance sheet.

soon after i signed off on debating Zhou i noticed he started offering interest payments for anyone willing to deposit new funds. if you recall, his business model before this did not include outside deposits or a money market acct which he constantly complained about.  instead his private "reserves" were in fact getting entirely lent out to speculators wishing to place leveraged bets.  which meant in fact he oftentimes had no reserves uncommitted as indicated by the starfish.  that is not a safe situation and basically meant he was an infinitely leveraged business.  by offering healthy interest rates he was able to lure in more BTC and USD the way i understand it.  ppl like Memory Dealers got sucked in.  did he in fact lend out those new monies as well?

bottom line as i see it, there was never a sustained period of time where his business model was stable and running smoothly.  another way of saying it was that it was an unstable business model that he kept tinkering with to show profits.  i wouldn't have touched it with a ten foot pole in terms of buying it until perhaps he showed a sustained level of profit for at least a year with a stable model.

i stopped following the minutia surrounding Bitcoinica sometime in January i think.  i had seen enough problems to make me sign off.  yes, what u say is possible altho a pessimist might argue the ponzi nature of the scheme coming to a boil could have logically led to staged hacks with a subsequent sale. 

how so?  just b/c some early adopters might own more Bitcoin than later adopters doesn't mean they could or would use their newfound wealth to exploit others.  many of us early adopters have a libertarian bent and would reject those type of behaviors i would hope.  but the most important reason i have against early adopter exploitation of others is that they cannot print more Bitcoin.  in that sense Bitcoin is very much democratic and fair than any other currency the world has ever seen including gold.  gold coins can be shaved, physically diluted with other metals, and weights can be obscured during tx's.  and from a more practical viewpoint of a gold standard, paper representations of gold would be absolutely required for everyone to participate in the system. and once that happens fraud is inevitable.

the reason Bitcoinica was so successful was that Zhou was so accessible.  he was everywhere on the Forums talking up the site, answering questions, and explaining what he was doing (superficially by my estimation).  his young age was intriguing and captivated the younger kid newbie traders here who defended him with a passion.  perhaps they saw themselves via his personna.  even the older devs were captivated by his charisma; look at Amir, Donald, and Patrick who bought the ponzi from him right at the wrong time.  personally, i think Zhou knew it was going to blow up and used his excuse for going to school as an out.  why give up a highly profitable business unless those profits were based on a ponzi?  no proof, just my intuition based on my interactions with him and the vulnerabilities in the site that i saw.

no, i only manipulated the market that one time.  i never deposited a cent onto Bitcoinica b/c i distrusted the site immensely.  i am not The Manipulator everyone talks about.  

he's a lawyer, not a mathematician.  just watch his billable hours if you hire him. 

glad to see your attitude towards Bitcoin has improved.  the change has been palpable.

given the negative impact of financial markets today on the common citizen, a small glimmer of hope provided by Bitcoin could easily turn into a Bright Shining Beacon.

yep, that's me!  smaaall, sleek, and faaast!

sunnankar, i see you won't respond to my questions about gold.  that's ok.  your non response is actually quite revealing to me as i would've expected a vociferous defense of gold like i get from miscreanity.  

GO BITCOIN!

you have no excuse.  i was warning everyone about these issues during that time.  i even talked about the double ramp back then, not just now.  you're taking it way too personally.  what i'm trying to do is educate so that the community never lets this type of shit happen again.  besides, i wasn't the one who brought up Bitcoinica in this thread just a few comments ago.  i was responding to silverbox.

the sooner you learn and characterize that it was "the Market" that took away your money and not ppl with more money than you, the better off you'll be.  the primary trend had changed from the collective wisdom of the Market.  it wasn't just me.  you as an individual failed to recognize that fact and paid dearly for it.  remember i said i piggybacked off some other bull's first ramp.  Zhou had been bragging that he only had to worry about a spike every such fraction of the total trades but he neglected to account for clever ppl figuring out the vulnerable hyperreactivity of his algo and taking advantage of it to piggyback off of others in a small relatively illiquid market to slaughter the other side of the trade.  get with it man.

were you not hootin' and hollerin' and partyin' and talking down with disdain at me and any other bull during that entire time?  oh i guess that's ok considerin' you claim you don't have alot of fiat.

the above discourse is all documented in my first two threads ever posted in the Spec Forum, "How many of you have been Zhoutonged" and "Warning:  How many of you have ever been the victim of a Short Squeeze" as well as in the original Bitcoinica threads.

oh yes, when Zhou started using the Starfish, i was the first to immediately relabel it as a "Big Red Bullseye" painted on the heads of anyone on the overpopulated side of the ship.  what a setup to get slaughtered.  amazing the immature moves Zhou made.

and even if that misguided prediction were to occur do you really want to risk ending up like Adam, left behind in the dust?  your timing would have to be perfect.

i just stated a fact.  no wonder you're on ignore.

and you were there.

during the 2 mo i pounded on Zhou's ass during Oct-Nov, i kept identifying red flags everywhere. the way he had set things up was flawed from the beginning.  i pointed out problems like "slippage" with mtgox.  anytime he had to hedge an already executed customers order and got delayed due to a bad connection with mtgox i'm sure it set him up for a catastrophic loss.  i told him i could set up accts at both places and short and buy simultaneously to "frontrun" his hedging.  i could tell by his lack of response or immature responses that he was thinking about what i was saying and then he would change his algorithm suddenly.  this was a huge red flag and from that point on i knew i had him. interspersed throughout this time, small outbursts and screams would occur from customers complaining about being Zhoutonged (another term i coined) from a malfunction of his algorithm. in response he would change the algorithm yet again, apologize, say a few nice things, and reimburse customers which again is a huge red flag of someone trying to perpetuate the ponzi.  Zhou kept changing his stories and explanations.  he writes a ton but says very little.  

then there was the time when Zhou publicly came out and tried to influence the market by stating that there were no more USD reserves and that it would be a good time to sell BTC.  oh i pounded his ass good for that one and he finally apologized.  what owner of an exchange attempts to influence the market direction unless it benefitted himself in some way?  i could tell that the whipsaws and volatility were costing him and customers money yet the Zhoutonging continued.  this was his way of stripping money at customers expense.  he actually had to to stay profitable.  

and then the culmination of my efforts came from the "double ramp" (my term) from $3.50-$4.90 in a couple of minutes that i personally orchestrated.  if you'll remember that down in the dumps of those times it had become fashionable to short every ramp with leverage from Zhou as inevitably the price would turn back down and go lower. the Bears were making money like crazy doing this and were partying it up.  I had already helped turn the tide @ $2 by being over a third of that bid wall and i could see the trend had changed to upwards but the Bears didn't see it and were still shorting each ramp.  so i waited for someone else to perform the first ramp from $2.90 to $3.90 or so (fuzzy on the exact start price).  the Bears predictably came in shorting with leverage and the price came back in to $3.50.  and then i hit the BUY button with a massive order.  i'm sorry but i smiled big as the price took off up to $4.90 and the screams from the Bears was loud, clear and palpable.  there was blood everywhere.  so many ppl got Zhoutonged from that one.  see the problem with his setup was that his algo, the way it was written, was  hyperreactive to those buying spikes madly trying to hedge while buyers madly tried to buy while shorts madly tried to cover while everyone else was being Zhoutonged. it was beautiful.

in the end, nobody listened and i gave up taking criticism from everyone for attacking a 17 yo, especially from the Bears defending Zhou.  God bless them. may they rest in peace.

Yes but the overshoot is going to exceed the previous highs by more than anyone can imagine before coming back to test 32.

pleased to announce i put on my first few shorts on Western Union a couple of days ago.  i think these bad boys are destined to go down: