It's only a matter of time before we start getting people selling massive lists of email addresses "for marketing purposes" around here

I wonder how many other unsavory markets we can start using bitcoins for. We already have drugs, spam/SEO, and someone tried to commission some violence the other day. When can I start buying some botnet DDOS power?

No, 3,500 bogus accounts created for SEO/spam purposes will be following you

When the third concurrent loan request popped up without paying off the first two, that sounded warning bells to me. The fact that he's now received a fourth loan from ineededausername that's large enough to pay back some of his other lenders also has me pretty worried, even if he does manage to pay off TheHarbinger etc.

I don't particularly care to use this tool. I just wanted to point it out to other users who might not know how to program and would take someone else's word for the source code's legitimacy. There's also http://en.wikipedia.org/wiki/Underhanded_C_Contest to keep in mind.

I would just like to point out that checking the source code doesn't really tell you much, because there's no guarantee that the included source is what produced the executable.

You're asking people to take a $25 risk for no return, provide no information about yourself or why you need a loan, and expect people to give you one in a timely fashion?

You can already buy options at http://polimedia.us/bitcoin/options.php. No selling, unfortunately, except for ones you bought from the guy

Fair enough. There's really no way to prove you _aren't_ a ponzi scheme without having everyone withdraw at once, and even then the scammer could just pay out all withdrawals, build confidence by doing so, and then steal money later. Anecdotal withdrawal evidence doesn't show anything, as the withdrawals are easily paid with other deposits.

Given that there's no way someone can be as profitable as pirateat40 while also being transparent, either we can assume he's a scammer and not invest with him, refuse to lend unless he becomes more transparent (thus curbing earning potential if he isn't a scammer), or just deal with the risk and accept the exceptional potential profits for what is certainly a risky business. I choose the last of those three, and so do many other people.

Bitcoin is an economy like we've never seen before. It's volatile, highly (pseudo/ano)nymous, and completely unregulated. This leads to lots of scams, but can also give us crazy profits. But you can't try to force it into standard expectations from real-world companies. Transparency is optional here, and the best you can do if you don't like it is to not invest with him. If you come here preaching at us and telling us it's risky, it just comes across as condescending, as if we haven't thought about this before. I lend a _lot_ of money to pirateat40, and sure, the thought of him running with it does cross my mind. I've decided that the risk is worth it, and lend to him anyway. Perhaps I'm irrational and/or greedy, but I don't think you're going to help with any of that.

Maybe you'll successfully convince some people here to withdraw from him because you've pointed out that there's no free lunch, and that's good because we don't want people naively thinking they can get high profits with no (or even low) risk. But when they pull out and open up more capacity, those of us who are more risk-tolerant and who can afford to play a bit more are just going to jump in.

Dammit, we need to agree on our stories before posting here!

Nah, I've got them both. Mormonism is great.

I don't think it's appropriate to "dox" someone like that on a public thread. I'm a lender too and I know his identity, but I don't think it's anyone's right to know who he is. If the whole thing goes sour, I'd feel differently, but for now I don't think he needs to answer to anyone but his lenders, and he's shown himself quite willing to answer questions to them (not just me) personally.

For what it's worth, other people have made warnings like yours earlier in this huge thread. I think I addressed one of them fairly well, so I urge you to look back through (just load all pages and search for my name). I can only speak for myself though


This kind of reaction just makes you look like an asshole, honestly. I'm aware of the risks here, and am willing to accept losses from it. It bothers me when people take pleasure in others' misfortune though, however risky their behavior was.

In a similar vein (pie in the sky) to my previous post on bitcoin CDSes, and stemming from some discussion with BTC_Bear, vragnaroda and imsaguy on IRC, I wanted to gather some thoughts on credit ratings in bitcoin land.

As BTC_Bear said in another thread, interest rates around here are often very high, and that's often because there's almost no information to build a reasonable expectation of the likelihood of default. Having a good reputation on WOT and the forum are a good indicator, but fraud isn't the only reason for default. Some people are irresponsible, or make bad predictions, or might just be unlucky. And I think it'd be nice to have some independent credit reporting facilities on borrowers.

I've already gone on about how I think the approach people often use in loan requests (posting a deposit address up front) is flawed and could cause some unpleasantness if multiple people claimed a loan. But taking things a step further, I think it would be cool if we could design a standard format for making loan requests, and it would be built on top of a GPG identity (which might also be associated with a WOT identity).

One example of this might be to have you paste information into a form like

BTC requested:
Loan duration:
Type of loan: (whether it has periodic "coupon" payments or just pays back a lump sum at the end)
Special features: (anything unusual)
Reason for loan:
Other loans or similar contracts currently open:

And crucially, a link to a credit report. For now, this could just be a text file in a standard format in a standard location (writable by people who are willing to sign their contributions), containing a sequence of signed statements from previous lenders about how the loan worked. Specifically, this would involve a double-signed statement at the point the loan is issued and another double-signed statement when the loan is fully repaid (or defaulted on). The gpg signature scheme would include transaction IDs and should be fairly secure and fair to both parties. If the repayment statement is only singly signed there might have been a disagreement, but that's fine and should go on the report. Other factors listed should include things like punctuality and how communicative the borrower was, and whether other special conditions of a loan were respected.

Entities could also voluntarily disclose other information about themselves, like real identity, or ties to well known online pseudonyms, which could also be signed by third parties who are willing to vouch for them. How meaningful those vouching signatures are depends on how much you trust the person signing them (this could get cumbersome)

The centrally available credit reports would be visible to everyone, and there would be one for every GPG identity. As these reports would often get quite long (and the meaningfulness of signatures depends on the trust of the signer), it could be a good place for third-party credit evaluators, who would develop their own criteria and look over longer credit reports and synthesize them into a few key points, and then would sign those syntheses (possibly something as succinct as a score, but who knows). To discourage people from discarding bad credit reports by creating new identities, the length and age of the report would also be factored positively into the overall rating. One open question is compensation for the evaluators so as to not create too many perverse incentives, but I don't think there's too much we can do to avoid that other than to double check their reports.

Ideally the reports would not be a text file, and would just be a database of signed statements by one entity for another entity that could be searched by both. This would allow people to evaluate lenders, too. Ideally, it'd also be decentralized (much more like bitcoin) but we want something lightweight or nobody will use it, and it could already become fairly complicated.


Anyway, just more random thoughts and I'm half asleep, so I apologize if I've written anything particularly stupid But I think that a better infrastructure would lead to better rates for longer term loans than we're able to give these days. Lending would still be risky (exchange rate risk!), but the risk would be a bit easier to evaluate. Maybe one day we could have a real lending-specific website that dealt with all the complicated issues above

It'd be interesting to see what some of the creditors around here would be willing to pay for insurance. Or what speculators would be willing to pay to bet on someone's illegitimacy

Other open questions would include whether we want to make the open CDS contracts public, as an additional measure of risk for potential lenders evaluating a deal. I'm leaning towards "no" on that, but I guess it'd be up to individual CDS sellers. I'd expect GPG contracts to be crucial if the agreements are to be private.

I was wondering if anyone had considered CDSes on loans around here. To prevent fraud, we'd probably need to verify that any buyers are known, reputable members of the community, or they could someone could ask for loans under one identity and buy a CDS under another identity, then disappear/default and make money twice.

There are also other ventures that people could buy CDSes against. bitscalper or even larger bitcoin enterprises come to mind. Shades Minoco? It could give investors "insurance" against bad shit happening there.

Given how risky this market is, anyone selling CDSes could make really good money, too. But again, reputation would be important as the potential losses could be quite large. And of course, it'd be tricky to figure out a "right" price for this stuff, but should definitely be possible.

Anyway, it was just a random idea, and I wanted to see if people had any thoughts on it

I'm all for shorting and leverage, unlike most people here. I'm also not cheering at your loss, unlike most people here, because it sucks and I'm sorry. But dude, there are other wealthy people on these forums. If you post information showing exactly the parameters it would take to screw you, people are going to take advantage of you. It's not impossible that foul play could be involved, but seriously, Ockham's Razor. As people on IRC are saying, you showed your poker hand early and someone fucked you for it.

I'm not even talking about opinions on the direction the market is heading, because those are pretty hard to be sure about. I'm talking about basic mechanics of how trading on a margin works, for example (i.e., someone is lending you the coins you're trading on a margin; it happens on bitcoinica and it's been happening OTC for a lot longer than that).

Yeah, especially when people who don't know how markets work insist on having opinions on them anyway.

wat.

Leverage is borrowing to make additional profit in either direction. Most rational individuals consider borrowing a reasonable activity if you can use the borrowed money to make more money than your borrowing costs. Companies borrow to build new infrastructure and thus to make themselves more profitable.

Leveraged trades on bitcoinica or any real trading platform carry massive risk of the market going the wrong way and causing forced liquidation. The guy took a big risk and made a big profit from it. The idea is just taking standard investment practice and magnifying it a bit, magnifying the risk along with it. If someone is risk-tolerant, they might do this. If they're risk-averse, they might not. I don't see how it makes sense to be against it on principle, and don't understand why you feel such animosity against people who aren't against it.

Except it wasn't, because as I said, I know at least another guy who was a lot more short than this guy. This might have triggered bitcoinica to balance its books and dump onto mtgox, but the guy in the screenshot didn't have that much of an effect.