Kelly Criterion for dummies  For those who don't feel like digging through the Kelly formula, here is a strongly simplified explanation. It boils down to the old saying: "Never put all your eggs in one basket." The idea behind it is that, if you make investments that (usually) involve some risk, if you always bet all your money, you run a high risk to eventually lose it all. When I apply the Kelly Criterion to typical bitcoin investments and speculation, the result is often that I should invest or bet no more than 10% to 20% of my entire wealth. Of course this applies to your entire wealth, not only bitcoins. You have to include your assets and income. For example, if you have a monthly income of $5,000 and can save $1,000 of these each month, then it may not matter all that much if you put all your 1,000 bitcoins into one risky investment. If you lose them, you buy another 1,000 bitcoins half a year later. If, on the other hand, you have saved 20,000 BTC to bring your pension up to par, you should not put all of these into any risky investment. You should limit your exposure to each single risk to, say, 2,000 BTC, so the likelihood of losing your entire stash remains sufficiently small. That's the essence of the Kelly Criterion.
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Like a lot of other people on this forum, I have my suspicions about the investment, but I still invest in a PPT. There seems to be this unsaid assumption that the only two options are to invest "nothing" or "everything". I would consider those extremes. Where is the conversation about how much people are willing to invest? Everyone has some lower limit they feel comfortable just throwing away for fun, right? ...
Check the Kelly Criterion. |
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... people are still depositing like mad despite the brouhaha.
Ah, a valuable bit of information. Or is it disinformation? Should we ask him where he's got it from? You make it too easy for us to tell stupid propaganda from useful information. Invent something better. |
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I'll tell you one thing for sure, and that is that all the noisy assholes that have been bashing pirate have been pushing me closer to investing, just out of spite for their windy and non-logical posts. I'm sure I'm not the only one that's feeling this way, so be careful that you don't overdo it and get the opposite effect to what you are are trying to achieve, capisce?
Reading your message, I really think you should invest all your bitcoins in the pirate fund. As clever as you are, you probably own a fair amount. Just imagine, on 7% they will double in a little over 10 weeks. Wouldn't that be wonderful? In a few years you could be a millionaire. You wouldn't have to work any more. Another year, and you could buy a big yacht and a business jet. Go for it! |
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I can do several percent per week on trading at Mt. Gox + some other exchanges, though not very often ...
What does that mean? On average you are not even making 10% a year. You may have been able to achieve such gains in the beginning, with luck. But now you can't, not on any longer-term average. |
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Well, I'm staying. Staying in a 5-star hotel with wife for drinks and a decent meal and breakfast on Saturday morning. I know exactly who's paying - Thanks P@40!
So you withdrew your capital gains? Lucky you—you are one of the few who got their money back. |
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Well, after some of the clues pirate posted, having big influence at Mt.Gox or some other large exchange, he might be doing Front running which is extremely profitable. ... Front-running that continuously yields several percent per week? Front-running with the help of Mt.Gox? Come on ... If anybody could do some front-running, then that would be Mt.Gox themselves. But even they would not make several percent per week while staying inconspicuous. |
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I believe that I have a solution that might work for BOTH sides of the so-called Coin.... Obviously people need to agree to dissagree on certain things, but at the end of the day, why don't both sides just concede and call it a... PERPETUAL-Ponzi  Everyone is happy. Both sides feel a little bit better and we can FUCKING MOVE ON ONCE AND FOR ALL. Yes, that is possible. In theory anyway. Provided, nobody ever asks for his money back. Never mention the interest. But what if the Ponzi scheme owes more than the number of existing bitcoins? This would happen in less than two years. Easy to calculate (for those who understand exponential growth). |
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Money laundering? Why do you need to borrow money to do money laundering? The people who want their money laundered will give you their money anyway. And if you try to pinch it, they will shoot you.
Um, you exchange tainted coins for clean ones ... Ah, we have a new concept here—the tainted bitcoin. Please explain why exactly you think somebody needs to borrow bitcoins to launder money. Who came up with this ridiculous money laundering explanation anyway? You are digressing from this thread to try and take it over with your point while totally missing mine. Blacklist/Ignore here you come. Do you have OCD or something? Seriously. Yes, you are right. The "pirate default" expression triggered it. I will stand back. |
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I've yet to figure out why Occam's razor says it must be a ponzi.
Occam's razor doesn't "prove" anything, and people using it in support of the Ponzi argument are committing a logical fallacy. It doesn't mean their conclusion is wrong, but that the course of their reasoning is unsound. However, people who do not apply rigor to their reasoning are more likely to go astray. People who say the moon landings were faked employ Occam's razor, but it doesn't make Buzz Aldrin want to punch them any less. I'm wondering anyway why one needs Occam's razor to understand that 7% per week, or 3,300% per year, or anything above 10% a year means Ponzi? You don't need Occam's razor to state the obvious. |
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Money laundering? Why do you need to borrow money to do money laundering? The people who want their money laundered will give you their money anyway. And if you try to pinch it, they will shoot you.
Um, you exchange tainted coins for clean ones ... Ah, we have a new concept here—the tainted bitcoin. Please explain why exactly you think somebody needs to borrow bitcoins to launder money. Who came up with this ridiculous money laundering explanation anyway? |
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These posts will never end will they?
I guess they will end soon—along with the Ponzi scheme itself. |
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I've always had an issue with the "3300%" per year figure... It only makes sense to bring that up if the program claims that it will run at 7%/week for a year with unlimited redepositing... and I doubt it will
So you think 100% per year would be more credible? Or 1,000% per year? Tell me where you last actually got 10% per year (except in the early stage of a Ponzi scheme). (Personally I think pirate is legit, but all wells run dry)
Now that's an interesting statement! Why do you think that? |
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What are you talking about? I have not heard of any proven Bitcoin-based Ponzi schemes.
High time. How about obvious? |
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It's not odd because I'm not calling it a Ponzi. You are.
I'm neither defending nor attacking Pirate. I honestly have no idea what the hell he's doing. It could be silk road coin laundering for all I know (in which case I don't want to be involved either). I'm not getting involved because of the mystery and confusion everyone has about who this person is and what this person is doing.
Everyone? Mystery and confusion? Ask some uninvolved people what they think of somebody who anonymously offers 7% per week (3,300% per year) interest on the amount you give him. So much for everyone and for mystery and confusion. You will get a certain laugh and no trace of mystery. Money laundering? Why do you need to borrow money to do money laundering? The people who want their money laundered will give you their money anyway. And if you try to pinch it, they will shoot you. In fact, there is some truth to the money laundering claim. He launders your money on its way into his pocket. |
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...
"The greatest shortcoming of the human race is our inability to understand the exponential function" -Albert A. Bartlett
I'm pretty good at math I know what exponential is. I was asking if he meant Pirate's balance sheet was growing exponentially. I know some of the largest investors and I know they're taking payouts so it'd be pretty hard for Pirate's total to be growing Just a moment. You state: - You understand the exponential function.
- You assume that some people have their interest paid out, which I will take the liberty to translate into: Some other people will not have their interest paid out, but instead will try to accrue compound interest.
- You conclude that the total will not be growing significantly.
What gives? The other question is: Somebody anonymous offers to take your money and accumulate 7% interest per week for you (i.e. 3,300% per year). It takes me half a second to conclude that this is a Ponzi scheme. You come to a different conclusion? Could you please confirm that you come to a different conclusion? I'm not trying to attack you. I don't want to be your or any honest person's enemy. I just want to make sure we understand each other properly. I believe the things we are discussing here are actually pretty simple. |
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A Ponzi scheme, also called pyramid scam or similar, is a financial operation in which its operator promises investors a high interest payout, only to collect their money and run with it, as soon as his money mountain no longer grows fast. Early investors, who attempt to withdraw their accrued interest, will actually get it, so the scheme remains credible. So be wary if anybody offers you some incredibly high interest rate. A currently operating Ponzi scheme offered 7% per week, which is equal to 3,300% per year. Some stupid buggers actually "invested" money. Some still believe they will be paid back with interest. Bitcoin makes such things relatively easy, for two reasons: - The Ponzi scheme operator can remain anonymous (even if he tries to appear real, identifiable, and honest).
- Bitcoin is unregulated, so he may not even be illegal. Law enforcement might consider bitcoin toy money.
You have been warned. |
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The effect will not be very strong, because he will not suddenly sell off all the bitcoins. He has done that already for the most part.
so yes, the pression of people buying bitcoins to invest them with him and of him selling them to buy tropical islands could have balanced all along, so that they can disappear without damage. After all it could be that if you invested in Bitcointorrentz, after the dust settles you will go almost unchanged. But for some kind of reason I can not get myself to be convinced of that... By the way, he may not be able to "disappear without damage". He will have to be a bit careful. Since the law may not reach him, some of the betrayed "investors" may well take the law in their own hands and gun him down. In fact, he has to be extremely careful. To be safe, he would have to have made no mistake in many years. If his identity could be found out, I would not like to wear his skin. |
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As to the fanatical coverage bit.. the defenders are fanatical just as much as the people crying wolf are fanatical. Its bad on both sides.
There is just a tiny little difference. Only one of the sides can be right. |
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there are a lot of things that don't add up on both sides of the ponzi / not-a-ponzi arguments.
i haven't read much describing this as possibly being an attack against bitcoin itself. we worry endlessly about defending against a 51% attack, but we put our head on the chopping block with this ponzi-like scheme. if someone were trying to smear bitcoin, a story describing the several million dollar "bitcoin ponzi" collapse would be something that would spread wide and far. can you picture the post-mortem reported in gawker? it will be written in a way where there is no sympathy given. like ... "guys the fact that it was run by a person called pirate should have been your first clue. all the markings of a ponzi were ignored. you deserved to lose ever penny you idiots".
that solves a few problems all at once. it takes money from the early miners and others with lots of bitcoins. ask a random person on the street and the majority of those that know anything about bitcoin will remember that it "crashed down to a penny" (because that is what the media told them happened, regardless of what really happened). "bitcoin really was just a big ponzi" will be the take-way from this once it makes it into the headlines. even though this has nothing to do with bitcoin digital currency itself, this is what people will remember and bitcoin will continue to have an "image problem".
we've forgotten that there are people who do not want bitcoin to succeed.
I would not worry too much. There are only so many suckers. Only an extremely stupid person will hand his money over to someone anonymous, claiming to get him 7% per week. That is so obviously ridiculous. The Ponzi scheme will not garner any very large fraction of all existing bitcoins. And if you are worrying about the Ponzi operator suddenly selling his entire mountain of bitcoins, no, he does not have to do that, because he has already sold most of them. He is a rather evil scammer, but stupid he is not. There may be a dent in the bitcoin value when the Ponzi scheme finally shuts down, which may happen soon. But I will not sell now. If the dent is strong enough, I will buy then. If more people think like me, the dent will be limited. I will certainly do my best not to let bitcoin sink below $5. We want stability. The US Treasury's and ECB's own Ponzi schemes may well blow up in a few years too and will help bitcoin even more. Watch the poor euro owners flock to bitcoin already today. |
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