As DAT pointed out, the balance of payments will push capital flows toward essentially the same distribution as exists now. There is an excellent, albeit lengthy explanation by FOFOA entitled It's the Flow, Stupid, and it's follow-up Flow Addendum.

What it boils down to is that gold can act as a store of value and a medium of exchange or a metric of value - but not all three in perpetuity. Fiat can function as a medium of exchange and a metric of value, but not a lasting store of value. No form of money has ever been able to act as all three at once. The limiting factor for gold is its physical manifestation. This is explained best by the Triffin dilemma.

Bitcoin, by being entirely abstract yet functioning almost exactly as gold does, is capable of satisfying that issue entirely because it is infinitely divisible (in theory) - in other words, Bitcoin can act in all three capacities simultaneously. The Triffin dilemma would be solved, and a unified currency finally possible.

Going further than this, even if gold were to continue as a reliable store of value, there is the possibility of massive price shocks looms within our foreseeable future. Bitcoin's hard limit of 21mm units virtually eliminates that kind of structural supply shock.

How about an omni-fuel, external combustion engine?

You, of all people, should know that I've been acknowledging and attempting to temper the emotional fervor accompanying those observations almost since they began. Your memory can't be that short.


Is there an accepted or official inception date?


Correct: I get paid a return on a small deposit with BTCS&T.

It hasn't quite been a year yet...

That is a solid counterpoint; a few emotionally-charged bits, but sensible

Accusations are one thing; assertions are another. I can admit and respect suspicions leading to the former, not the latter with lack of definitive proof.

Correct, however there was much more substantial proof surrounding the Madoff situation, in addition to several opportunities for direct access to records by regulators. As far as I know, there were no other profit-generating business operations than the fund.


From the bolded sections above, a Ponzi was not the only possibility, despite all of them being illegal. What Pirate is doing may well be illegal in traditional markets, but Bitcoin is unregulated and even if it were, proof would be difficult to come by.

If I am correct in that Pirate's operation is similar to the gold and other market management being executed by the BIS, and his actions would be considered fraudulent according to contemporary finance, then the entire traditional system is fraudulent.

Finally, is such activity (not the Ponzi) necessarily fraudulent if it serves to promote growth and provide stability in a market? Is it possible that this may even be a natural progression? Not a black & white issue anymore.


There's no way to directly link blockchain transactions to all BTCS&T related activity when taking into account offline exchanges. What we can estimate within a reasonable level of confidence is the volume necessary, and that is within the realm of possibility as far as current levels go.


It's been pointed out that all of Madoff's information was public record for the duration of the fraud...

This all comes back to trust - counterparty risk. There's never any way to be absolutely sure of any investment until it either fails, blows up, or you end the involvement.

That's the bulk of it. I should clarify the points.

• It isn't 'super-secret', only unfamiliar when not versed in capital flow dynamics, and it can be very difficult to implement initially.
• A Ponzi simply rotates incoming funds to earlier participants; potentially being backed by productive services means that it either wouldn't be a Ponzi, or not exclusively one.

Unless I've misinterpreted again, I read that as the masses acting for themselves using tools that lower the cost of empowerment, while 'the few to give' is the socialist practice of politicians doling out freebies and promises. I can see how it could be viewed as the masses demanding their 'fair share' instead of working for it. Just an inversion of perspective.

An idea whose time has come cannot be denied. It'll happen when it happens, though I don't think it'll be too long.

That's the thing - there is zero direct evidence, only circumstantial information. Neither side can irrefutably prove its case at present, only state suspicions and preliminary conclusions based on deductive reasoning. Micon and team Ponzi refuse to acknowledge the impossibility of arriving at absolute certainty by repeatedly stating the only possibility is that Pirate is running a scam. I don't think anyone has seriously said that BTCS&T is definitely not a scam.

It is certainly possible that Pirate is running a Ponzi scheme, and it is also possible that there are supporting fraudulent structures. I have yet to see anything definitively linking these postulations through exhaustive blockchain analysis or any other rigorous efforts; for now, they are only being supported by specious claims. The behavioral pattern alone is being used as the foundation of assertions that BTCS&T is a Ponzi.

On the other hand, there is an alternative possibility aside from the Ponzi assumption. The precedent of market management resulting in systemic stability that has been extremely profitable for participants is involvement by the BIS in the gold market, along with other major banks, for the past several decades (other examples exist, but aren't as correlated). Direct evidence for this is scattered and has been defended by secrecy, but it's concrete and gaining wider awareness. The similarities are major, although there are some significant differences as well, the greatest of them being BTCS&T's open access to all (mostly through PPTs) instead of exclusion. What's of particular interest is that Bitcoin and gold are alike in many ways, especially their monetary functions. When applied to Bitcoin, this type of method would be much simpler than that involved with gold, although it would still require a good amount of work and technical financial understanding.

The inclusion of other services also degrades the Ponzi argument, as they could conceivably be used to buffer the primary BTCS&T operation and maintain a consistently high rate of return. At first glance, the interplay between the various components is not obvious. Nor is the market management process. A shift of perspective to capital flow highlights dynamic movement at the margins, while obsession with the core of static holdings distracts from where the real action is. It's still beyond the ken of most people in regard to the gold market, let alone Bitcoin. There are few easily-related examples, and none that most are familiar with. This inability to grasp the functioning is probably why the Ponzi accusations persist so vehemently and without balance.

When direct explanation remains incomprehensible, things have to be dumbed down to the lowest common denominator. Rational, independent thought is sorely lacking from team Ponzi. And I find more patronizingly arrogant attitudes from their camp than from BTCS&T supporters - the reactions to Ponzi claims have simply risen to counter the amount of ignorance and emotional accusations being spouted.


Bitcoin is growing at a faster pace than Facebook.


I don't see how any of the Pirate supporters are advocating newbie deposits. Have any of them explicitly told anyone to deposit with Pirate or the PPTs?

No.

The issue is with Pirate's operation being proclaimed a Ponzi when there is substantial information to suggest it is not. Why isn't there much dispute regarding hashking or PatrickHarnett? Is it just because they don't offer as high a rate of return? Does that make them not Ponzi's?


Mmm, carrot muesli. I've never pooped better.

I see now - my misinterpretation.

I agree with the startup view. The only thing I'd point out is that there have been numerous other attempts, much like in social networking. Multiple attempts were made with varying degrees of success until Facebook hit the magical formula. It seems very likely that Bitcoin is in that position, where the magical formula has been realized. While that doesn't guarantee its success, it drastically increases the likelihood. I guess we're inverted - I see around a 2/3^rd chance of success, you (maybe?) see a 2/3^rd chance of failure.


Aside from the math, great summation.

The only additional point I'd add is that Bitcoin can be good for transferring wealth over time. As it matures, it will be immune to internal supply shocks the way other forms of money are. That's one of the things that make gold such a powerful store of wealth - the flow in use is minor compared to the stock held as savings (referring to physical, not paper).


There was also the faux attempt at establishing legitimacy by appealing to the New Zealand government for certification, rather than pursuing credibility in the eyes of the market. That was the final straw for me. It was certainly a valuable service which met a demand, but the implementation ran away from Zhou and as you said earlier, his youth seemed to guide toward irresponsible missteps in the reactions taken.


To quote Stephen Hawking: "Rubbish."

Those charts are looking at gold and the DOW without considering the common denominator upon which both are being measured - the USD. What happens with the dollar should affect equities and gold synchronously. In other words, they should both move together - DOW up, gold up; DOW down, gold down. As the realization of counterparty risk increases thanks to events like those surrounding MF Global and PFGBest, gold will be held more readily than equities, resulting in the separation of the ratio in favor of gold.

The Armstrong and Duncan links from conspirosphere are very good reads as well.

Note the distinction. Rising prices allow Pirate's operation to continue; sharply rising prices put the operation at risk. This is the same as saying that so long as Bitcoin keeps growing, everything is all well and good; if a bubble forms, he may have to halt interest payment or the business entirely.

Let's put it another way: a nuclear reactor is able to produce power so long as the reaction is under control. If the reaction accelerates to criticality, it has to be shut down or risk melting down.

One more analogy: a man-made reservoir can hold a certain amount of water, and the dam can handle a certain amount of flow. If there's more than the reservoir can contain and it's building up faster than the dam can allow through, the structure is in danger of being destabilized.

Still not working? Maybe a visual aid will help.



Water normally flows out of the sink through the drain at the bottom, but if the water is on full-blast and the drain isn't capable of getting rid of the flow fast enough, the sink could overflow. See that hole in the sink, just under the faucet? That's an extra outlet to allow excess flow to be drained in case the main drain isn't working properly or is overwhelmed. If the flow continues to be too fast for both primary and backup drains, you still get overflow.

Same thing with Pirate's operation.

Velocity is increased, as can be seen by the gradual uptrend in Bitcoin days destroyed.


There are other components than just BTCS&T.


Not bury - point out the highly probable flaws in the Ponzi reasoning. There are certainly other operations that may be much more likely to be Ponzi-related. Deeper scrutiny into all of Pirate's operations suggests that it is legitimate.


See the first rebuttal, and the A day in the life of a pirate thread. In short, by paying out the majority of profits, there's no way any competition would be able to keep pace with Pirate unless adopting the same practice, which is unlikely to be able to achieve 7% returns with only one method of generating profit.

Ignore whom?


Speaking out and voicing concerns is one thing, but the individual in question (that Van guy also) has taken it upon himself to litter almost every thread even remotely related to any investments in the lending subforum. There are threads for making a case, and threads for information regarding the respective investments. What's being displayed is willful disregard for user opinion and opposing viewpoints.

The logic of the arguments has been presented elsewhere, but instead of agreeing to disagree he's fully crossed into the realm of harassment.

Seriously.

Like calculating the behavior of a gas vs. particles?

Applying fluid dynamics models to capital flows is very interesting...


And you can see much more of the big picture than when you're distracted by all the activity in a city.

They don't have enough volume to be the primary driving force behind the price, though. If derivatives were the primary form of exchange instead of direct BTC holdings, then I'd agree. For now, the Bitcoin markets are still heavily dominated by the equivalent of physical gold trading - the real thing is in vogue.

What do you call Bitcoin futures and options?

Also, Bitcoin is now in the danger zone range of $11-12. Expect about a 10% decline over the weekend.

To close the gap to Bitcoin, gold would have to double. Possible, and even probable (for physical gold), but then again - nobody has argued that gold would outpace Bitcoin's growth.

As tvbcof pointed out, they have nearly identical purposes, but are in different classes.

Gold is on the launchpad, its purpose to escape the the planet's gravity. It's a short event, taking minutes until in orbit.

Bitcoin gets launched from space and is gaining momentum for interplanetary travel. Velocity is built up over time, taking weeks to months.