Yes, we do know. You're playing "if the glove does not fit, you must acquit" where you stubbornly insist on focusing on the one thing you don't have while ignoring the many pieces of evidence you do have all the while sticking your fingers in your ears and shouting "LALALALALALALALA!".

What is the other possibility?

If you check your gas tank and it's low and then you check it the next day and it's full, how do you know someone put gas in it? Simple. Something must explain why there's more gas in now than before, and no explanation other than that someone put gas in it is plausible. Is it possible something else bizarre happened. Sure, maybe. I can't think of anything, but it's possible there might be some other way the gas in the tank seems to have filled it. Does that stop us from knowing that someone put gas in it? No. The standard for knowledge is reasonable and contextual, it doesn't require some kind of absolute metaphysical certainty.

Not sure why I'm responding to someone who has my on ignore, but I do agree that if breaching anonymity would harm collection efforts, that would justify preserving it. I would think the depositors deserve to be told specifically which loans are being kept anonymous for that reason, and if there wasn't reasonable progress towards collection on a reasonable schedule, anonymity should then be breached. Without being a jerk, the threat of publicized default can be leveraged to obtain collection. It's not that you're abusing this to pressure them to pay, it's just that realistically, those covering the default are entitled to either reasonable payments or knowing who defaulted on them.

The tricky case would be the guy who says something like, "Keep me anonymous, and I'll pay 35%. Tell anyone who I am, and I'll pay nothing."

The Statue of Liberty was originally going to be a gift for Egypt (controlled by England at the time) but due to circumstances that are still unclear at this time, the French wound up giving it to the United States instead.

If the price is high, that will encourage people to sell their Bitcoins there, bringing the price back down. If the price is low, that will encourage people to buy Bitcoins there, bringing the price back up.

If Bitcoins are selling for $11 at Gox and nobody is selling at some new exchange, I can list my coins for $15 at that exchange if I want, but nobody will buy. If I want to sell my coins (and if I didn't, why would I bother listing them), I'll have to at least roughly match the price at other exchanges.

Interestingly, price offsets between exchanges are a good measure of the health of exchanges. For example, say there are two roughly comparable exchanges, A and B. Their prices will track pretty well as arbitragers balance it out. But say exchange A has some kind of problem and isn't making payouts as quickly and reliably as B. The price at exchange A will increase as people are willing to sell coins for less at B just because they can get their money out more easily.

If you default on a loan, do you really have a right to hide your identity from the people who loaned you that money? Surely a promise of anonymity would be conditional on keeping the promise to pay. Even if not explicitly stated as such, if you promise to pay me $50/week and I promise to give you my car after 20 weeks, I sure as heck don't have to give you the car if you don't pay. And if they are kept anonymous, how can the people eating the default know that the default actually occurred?

Not quite. Patrick has posted and then unposted numbers. He hasn't, at least as far as I am aware, made a list of actual defaulted loans, even without their identity.

It's the difference between "Sorry, you lost 100 Bitcoins" and "Sorry, you lost 100 Bitcoins because I loaned 100 Bitcoins to Jeff in early December, transaction ID Y, and he made interest payments until last week, and has since been unable to pay principal." The former asks for a level of trust that would be unnecessary if he were telling the truth. It's roughly the difference between just telling someone else their property was stolen versus giving them a copy of the police report.

If there's more demand than supply, the price goes up until they match.

You missed the hardest requirement -- the calculation must secure the blockchain somehow. SHA256 hashes do this because they hash the block so you can't take a solution and apply it to a different block without redoing all the work that went into it.

The link will be at http://www.donkdown.com/radio/ eventually.

I think this is the link, but I haven't listened to it, so I'm not 100% sure.
http://www.donkdown.com/donkdown-radio-the-cold-call-show-kathy-liebert-crazier-mike/

There are no imaginable legitimate investments he could have made that would have explained his payouts. In any event, if he did in fact make legitimate investments, the burden is on him to justify his failure to make payouts on schedule.

If you have no particular reason to trust me but give me $100 to buy you groceries and I come back with no groceries and no $100, you can strongly suspect that I've just robbed you. But if you ask me what happened and I say, "No comment", then you can conclude that effectively you can act as though I've robbed you. Yes, it's possible that I got mugged. But if I did get mugged and lost your money, I have an absolute obligation to explain to you what happened. Otherwise, you absolutely should assume the worst.

This is even stronger than that because at least in the grocery example, we can imagine ways the money could have legitimately been lost. But Pirate didn't just lose money, he sustained a scheme where payouts were made as the profits from legitimate investments where no conceivable pattern of legitimate investments could explain those payouts. It's as if I said that aliens were going to give you not just ordinary groceries but the most delicious groceries imaginable, and then I took your $100 and never came back.

It sounds like, given the presence of number 2 above, you're responding to the argument that PPT operators scammed their investors. I don't think anyone's making that argument.

The argument is that PPT operators scammed other Pirate investors by paying Pirate to make their customers the recipients of transfers they should have known were fraudulent -- transfers where Pirate obtained the money by representing that the funds would in fact be invested and where they knew that transfers to PPT operators were certainly not a legitimate investment of any kind. PPT operators paid Pirate to operate a Ponzi scheme for the benefit of their customers, and they either knew or should have known that this was what they were doing.

Everyone knew Pirate's operation was almost certainly a scam. (And perfect certainty is never the standard.) No other possible business model was known and every previous such get rich quick scheme has proven to be a scam. Every single sign of a Ponzi scheme was present and there was never the slightest shred of any actual legitimate business activity. At least a dozen people were explaining on the forums why it had to be a scam. You can't stick your fingers in your ears and scream "LALALALALA!" while a dozen people are trying to tell you something and later claim you didn't know that.

Let's see if we really believe your argument though. Say another Pirate comes along with precisely the same pitch, the same vague business model, the same absence of any evidence of any actual investment activity. And say someone starts up a pass through to this new scheme, claiming they don't know it's a scam and they think it's legitimate for some reason. Because ... Bitcoin! Would you say they're doing anything wrong?

Any scheme that makes it impossible for anyone to know the order of magnitude of the amount of coins you have would do that. Ideally, one that would allow you to reveal only a portion of your coins.

With Bitcoin, if you offer an account to receive payments, anyone can tell at any time how many payments and how much you've received at that account. This means you either have to use a number of different accounts to receive payments or anyone who pays you can tell how much total you have received.

For example, any system that didn't reveal the destination address publicly would work. (I proposed such a system last year where each transaction is like a vault and each recipient tries their key on each vault to see if they can open it. There is no public record of the destination of any transaction and no way for a third party to tell which keys opened which vaults.)

No. There's a high risk of getting caught and losing your drugs and/or money. Also, the guy you invested with can get killed or busted and then you have to hire some bad people to get your money back. Also, the business can come to your doorstep any time. Drugs can be a good business if you want to be in that business actively but they're a *horrible* passive investment.

The same way you deposit dollars with them and use it to buy Bitcoins which you then withdraw, other people deposit Bitcoins with them and sell it for dollars which they then withdraw. It's basically just that simple.

When you buy Bitcoins, Gox transfers some of your dollars to the account of whoever was selling Bitcoins for the lowest price at that time. (Or whoever comes along later and offers to sell at your buy price.) When they withdraw dollars, Gox sends them a check (or wires them money or whatever).

They strictly act as a middleman.

It's usually a bit of both. For example, it's entirely possible that the top guys in a Ponzi scheme believe that if they can just accumulate enough money, they can corner the market, make a huge profit, and pay everyone off. It's a weird kind of split-brain psychology. On one level, you rationally know that it will blow up eventually and lots of people will lose money. But on another level, you want to delay that blow up as long as possible even if that means making it bigger and you can almost convince yourself that some magic might come along and save everyone. Of course, it never ends well.

Has he yet disclosed to his investors what obligations he has, what assets he will use to cover those obligations, and what losses are being passed on to them? If not, I'd say he's behaving at least a bit less than impeccably.

You may not care about his other investors, but he has to. And you can't just add new terms to an agreement and declare other parties to have forfeited their rights by refusing your new terms. That would be scamming, and that's precisely what didn't happen.

PPT customers had no agreement with Pirate and they certainly had no agreement that required them to do whatever Pirate asked them to do at any time.

I completely and totally don't agree, and I suspect a lot of other people don't either. In any event, other people will have different priorities from you.

He absolutely not only had the right to deprive you of that but the obligation to do so. You, on the other hand, have no right to negotiate with Pirate and deprive his other investors of their rightful share of any payout you might receive.

Fortunately, it didn't make any difference. Not surprisingly, there weren't any payouts regardless. So all he did was prevent Pirate from getting identities where we have no idea what he would have done with them.

It's kind of hard to understand if you haven't experienced the psychology. On one level, you know it's a scam but think that you'll be able to get out on time or withdraw your principle and only lose interest. But on another level, you manage to convince yourself that maybe it's the real deal and you are in on the secret to amazing wealth.

It's also important to understand that Ponzi operators are very concerned about being identified as operating Ponzi schemes so they will frequently take actions that are against their own interests (such as turning down deposits) just to look less like a Ponzi scheme. The key signs to identify a possible Ponzi scheme are:

* A promise of returns well above market rates. (If it sounds too good to be true, it probably is.)

* Consistent returns regardless of market conditions. (If it sounds too good to be true, it probably is.)

* No actual evidence of any legitimate investment activity.

* No actual known business model. Descriptions are usually vague and non-committal, sometimes contradictory. Operators will frequently say things like "you're getting the idea" or "something like that" as a way to allow people to convince themselves that they know what the business model is, with each investor having their own ideas.

* Testimonials from people who made money without any explanation of what the actual source of that money was.

* Pressure not to withdraw or encouragement to re-invest proceeds.

* Pressure to spread the word and recruit more investors.

* No plan in place for how losses, should they be incurred, will be proven to be legitimate investment losses or how they will be recovered.

* Long-term increases in the amount of money "invested" despite no known reason to need high-interest loans.

From what I've seen and heard, I believe he got away with somewhere between $1 million and $1.5 million. But I suppose it could be anywhere between zero and $5 million. There's only one way to find out and that's to track him down.

I agree. If losses are being passed on, then the depositors deserve a full statement of total obligations, total assets, the form of those assets, and any defaults that are being passed on. This serves two important purposes. First, it lets depositors know what they can reasonably expect. Second, it reassures depositors that they are not being scammed and in fact suffered legitimate losses.