This is assuming that Pirate isn't understating the total paper value of everyone's balances at BTCS&T. Some have theorized that the paper loss is much higher than that and that just the actual principle lost alone could reach 500,000 BTC. Maged seems to reckon based on blockchain analysis that Pirate alone made off with about 200,000 BTC from this, not counting the money paid out as interest, though sadly he doesn't seem to be able to publish details of that analysis.

I think I can safely say that, regardless of whether people can read the sarcasm in your rating, the WoT software that computes scores from it is entirely unable to comprehend sarcasm.

I should note that if you're not careful about how you register your domain, your full name and address will be publicly available to anyone who knows how to use whois. This probably isn't terribly desirable for obvious reasons.

Well, that's going to be a fun one. On the one hand, it is probably stolen money. On the other hand, one of the things that makes ponzi schemes particularly insidious - and proably one of the reasons JoelKatz has been banging on a lot about stolen money - is that they give canny investors who realise the whole shebang is a ponzi a financial incentive to insist as loudly and convincingly as possible that the scheme can't possibly be a ponzi, that they'll get their money back if they just wait, that anyone who claims otherwise is just trolling...

Under those circumstances, giving ponzi-suppoers the power to effectively impose a financial penalty on anyone who wants to point out that it is actually a ponzi is a pretty bad thing, and that's effectively what letting them pressuring Vandroiy into either taking this bet or shutting up only to try and take his winnings away as "stolen goods" after he wins is doing.

I don't think there's ever been a shortage of really stupid ponzi-scheme operators.

Oh, you definitely had to be a greedy fool or a scammer to buy into the idea that Pirate's scheme was somehow trustworthy, but his high OTC rating and flim-flammery gave the fools and the scammers a way to justify thinking he was on the up-and-up. Also, from what I can tell a scary proportion of Bitcoin users - including long-term, trusted members of the community - have invested their own money in BS&T without actually promoting it or even publicly mentioning that they had until the whole thing imploded. The loud-mouthed supporters are just the tip of the iceberg. Apparently greed is a really powerful motivation, especially when everyone around you is telling you that you're a fool for not going for it.

Keep them, presumably? After all, he risked - or at least tied up - a substantial chunk of his own money in order to convince others that yes, he genuinely did believe that BTCS&T was a ponzi scheme in the face of cries of "troll!" and "put your money where your mouth is or shut up!" from Pirate supporters. I think that more than pays off any ethical obligations he might have. Also, he kinda predicted this on about the second page:


Edit - and the fourth page:

And if you expect me to believe that Pirate's supporters would've let him back away from the bet being offered because of this, you have another thing coming.

The patch for this should be out now, I think.

Also, the changeset that introduced this vulnerability has a hilarious commit message: http://hg.openjdk.java.net/jdk7/jdk7/jdk/rev/e02f2d591cd5

This was quite clever actually. He built trust on #bitcoin-otc through a series of numerous relatively small BTC-USD trades, then leveraged that trust to convince people that he had a wildly profitable scheme doing the same thing on a much larger scale through RL contacts and that he needed BTC loans in order to make it work. From what I remember hearing, the first loans were relatively small and short-term, then he escalated to BTCS&T once he'd got everyone's trust.

It'll be interesting to see how many of those schemes can survive, because the rest of the Bitcoin lending market is nearly as shady as pirate. You remember Micon? His original thread wasn't just about BS&T but about all the similar investment opportunities in the Lending subform.

In a Ponzi, every cent of profit the "clever" people make is money that other investors lose. The people that invest in the scheme are guaranteed to lose money on average no matter how clever they all are, because it's a Red Queen's Race - the sooner everyone pulls out, the sooner the scheme collapses and the sooner they'd have had to have pulled out in order to avoid losing their shirts in the collapse.

That's why - if you're an utterly unethical, greedy scammer - it's to your benefit to convice as many of the other investors as possible that it's not a ponzi, that they're idiots who just don't understand the scheme if they think that it is, that anyone who claims otherwise is an evil troll slandering the good name of the scheme's operator, and so on and so forth. Sound familiar?

Not necessarily. What happens if someone reinvests their interest by buying further bonds with the interest payments? Those reinvestments would show up as an increase in the total bonds outstanding but (assuming this is a ponzi) they'd still be fantasy figures that never actually represented extra bitcoins in pirate's possession, in the same way that everyone else's reinvested interest never actually represented extra bitcoins invested.

Legitimate businesses can default sometimes, but ponzis always default. Oh, and legitimate businesses provide evidence that they've actually invested money where they claim they're going to and that it genuinely didn't work out in order to distinguish themselves from scammers who are pretending that their business just failed.

Of course, the large proportion of Bitcoin businesses that are actually Ponzi schemes - and the perhaps even larger proportion that are indistinguishable from Ponzis - would never cause anyone to conclude that the media is right. (Not to mention all the various self-described ponzis of varying degrees of honesty.)

I also notice that all the people who have been screaming "troll!", "liar!", "put your money where your mouth is or shut up", etc at anyone who points out just how shady all the investment schemes on here are somehow don't feature in your plea for civility. Funny that.

That's not exactly accurate - there have been Ponzi schemes out there that purport to tell investors where their money is going and where the profits are coming from. Madoff's ponzi was one to a certain extent, as was the Perma-Pave ponzi I mentioned earlier in the thread. One warning sign of a ponzi or other investment scam is that their claims as to where they're getting the money from don't stand up to scrutiny. There's no evidence that their customers have received the products they claim to be selling, or they'd have to have made more trades in a particular market than actually happened, or their sums don't add up, or...

That's only the case if the BTC price crashes. If it skyrockets whilst his funds are in USD instead, he's not just out part of his business value, there is no upper limit on his potential liability to his lenders. That's... probably something he would want to avoid.

Well, ponzi schemes tend to do that in their early stages. I'm sure everyone here has seen that webpage about Currin Trading by now? If he were to allow big investments early on, one big fish withdrawing would be enough to sink the scheme. It's not until later stages when the ponzi's demand for new money becomes voracious.

Suppose you're a ponzi operator and it's far too early to scuttle the scheme yet, but people have asked for withdrawals you can't afford to pay right now. What do you do? (See also page 8 of this document, from a proven Ponzi called Perma-Pave.)

More subtly, if he does receive 1000 BTC in bets he can just offer 500 BTC of that to someone that does actually have 10k BTC in exchange for them helping him to pretend that the 10k BTC is his. Additionally, if he doesn't have the 10k BTC then he's going to get marked as a scammer anyway for failing to pay out that bet and has no incentive to pay out a single satoshi of the bets as to whether he has 10k BTC. It would be incredibly foolish for anyone to take Matthew up on this bet.

People who've invested with BitcoinMax might want to bear in mind that according to payb.tc on one of the  other threads, if you don't see a single cent of your investment again it's not pirate's fault or his fault, it's your fault for investing in the scheme he was marketing suckers:

I can confirm that I've received my portion of this. Thank you!

Indeed, though there's probably not going to be any huge performance improvements from my end of things in the immediate future. The latest dcmwd4e bitstreams are already into ztex territory speed-wise, even though getting your rigs there requires more manual fiddling than it ought to.

I'm pretty sure that BS&T isn't the only investment scheme on these forums with suspiciously high returns and no evidence of actual investment, and it's definitely not going to be the last one.

There's a difference between skepticism and fake skepticism. You're asking for evidence which no-one would have even if BS&T was a ponzi, and so the lack of it gives no reason to doubt that BS&T is in fact one. We know this from previous ponzi schemes that have actually been investigated by law enforcement; the 100% proof isn't available until well after the scheme's collapsed, by which time it's a bit late to do anything about it.

(That's assuming people will believe they've been scammed then. I was looking into the whole Perma-Pave swindle the other day, and despite one of their investors filing a lawsuit with evidence that the payments to them had been made using the investments of others, goods they had been promised hadn't been delivered, and none of the customers the company claimed to have had actually received any goods from them either, there were still a whole bunch of people on forums who continued to insist that the company was above board and all the investors who'd not been paid the money they were promised were just a bunch of paranoid whingers.)

Extremely rough estimate based on the payout sizes people have reported, the number of people Pirate claims to have paid, and the transactions from the address he's been paying out. Could be wildly wrong - he could be lying or some of the payouts could be to stooges - but it's plausible.