How could Pirate fuck your brains so well that even now many believe in him?

[labestiol]

That is pretty common in ponzi schemes.  Madoff for example ran a traditional hedge fund for for well over two decades until he made some really bad trades.  Fearing his clients would move their money he faked trades for the quarter.  Of course now he essentially had "juice" running on the difference between the real books and the fake books.   As investors continued to expect returns on the fake numbers that difference required him to fake trades qtr after qtr.  Eventually he reached the point he could no longer "go legit" if he wanted to.   He was committed to the ponzi because deviaiton from it would get him caught.   Of course no ponzi can continue forever but he was "stuck" so he played it well and kept the ponzi cashflow + (more coming in than paying out) for years.  Had the economic downturn not spooked investors he might still be paying out dividends regularly but they would be fake and eventually something would have caused the ponzi to fail.

I agree he was probably not thinking about going ponzi from the start.
My favorite hypothesis is that pirate was shorting bitcoins, and it was working great at the beginning. Then the market recovered, and he doubled down as much as he could. Not the fanciest theory, but would make so much sense...

[unclescrooge]

No it doesn't not make much sense, price has been going up since his beginning of btcst

[labestiol]

No it doesn't not make much sense, price has been going up since his beginning of btcst

From what i know, he began borrowing coins around a year ago. Then what does a degenerate overconfident gambler would do when his bet goes bad ? double down.

EDIT : what do you think about that post ?

[muyuu]

http://en.wikipedia.org/wiki/Post-purchase_rationalization

[bitlane]

......... Bitlane ...... sockpuppet ? ........

Unfortunately this is my ONLY forum account. Back during the 'BitcoinXpress' battle, I asked theymos to confirm it and he did.

I don't use TOR, I don't attempt to hide my identity from anyone and I happily sleep with my front door unlocked, as I have very little to fear.

I therefore am NO ONE'S sockpuppet. I currently have a personal interest in things, the same as most others and am simply 'enjoying the ride'.....

[ldrgn]

A bubble is just a ponzi really isn't it, other possibly than the "deliberate act of fraud" aspect. (A ponzi is a deliberate bubble, often accompanied by fraud?)

Wat? A ponzi doesn't do any investing, it just pays out customer deposits.  A bubble has real economic activity and investing but the economic activity is unsustainable.  I don't get how the two are comparable.  When the ponzi collapses all of the later investors lose everything but when a bubble collapses late investors still have a real asset that can at least return something (just not much).  Am I missing the forest for the trees?  Why do you qualify the end of your quote with "often accompanied with fraud"? When is a ponzi not fraud?

[Cluster2k]

How did Pirate get some many people to give him BTC without revealing his so called method for promising 7% weekly returns. I'm sure plenty of people were willing to gamble with small amounts and not really mind losing knowing something aint kosher here.

That's part of the time honoured ponzi formula.  Claim you have a new method to generate massive returns.  A proprietary space age trading system in the cloud, leveraging world events while hedging against all risk.  Or something like that.  It's different this time.  I'm breaking all the rules.  People fall for that all the time.

Why do people hand over massive amounts of money to essentially anonymous businesses?  Why do pensioners hand over their life savings to slick operations only to see it being lost, time and time again?  Slick marketing and the target's greed.  Many people don't realise that generating a guaranteed 7% return after inflation per annum is quite difficult.  Pirate was offering 7% a week.  Alarm bells anyone?

Its been almost a week since Pirate promised to start making full payments to his clients.  How's that going?  If he was paying out interest from trading activities then he should have had all bitcoins required to pay out immediately.

[AndrewBUD]

It'll take a while to buy those assets back >30%

[DanielVG]

pi·rate   [pahy-ruht] noun, verb, pi·rat·ed, pi·rat·ing.
noun
1.
a person who robs or commits illegal violence at sea or on the shores of the sea.
2.
a ship used by such persons.
3.
any plunderer, predator, etc.: confidence men, slumlords, and other pirates.



seems pretty obvious to me....

[muyuu]

http://en.wikipedia.org/wiki/Post-purchase_rationalization

Even better http://en.wikipedia.org/wiki/Escalation_of_commitment

Escalation of commitment was first described by Barry M. Staw in his 1976 paper, "Knee deep in the big muddy: A study of escalating commitment to a chosen course of action".[1] More recently the term "sunk cost fallacy" has been used to describe the phenomenon where people justify increased investment in a decision, based on the cumulative prior investment, despite new evidence suggesting that the cost, starting today, of continuing the decision outweighs the expected benefit. Such investment may include money, time, or — in the case of military strategy — human lives. The phenomenon and the sentiment underlying it are reflected in such proverbial images as "Throwing good money after bad" and "In for a dime, in for a dollar" (or "In for a penny, in for a pound").
The term is also used to describe poor decision-making in business, government, information systems in general, software project management in particular, politics, and gambling. The term has been used to describe the United States commitment to military conflicts including Vietnam in the 1960s - 1970s and in Iraq in the 2000s, where dollars spent and lives lost justify continued involvement.[2]
Alternatively, "irrational escalation" (sometimes referred to as "irrational escalation of commitment" or "commitment bias") is a term frequently used in psychology, philosophy, economics, and game theory[citation needed] to refer to a situation in which people can make irrational decisions based upon rational decisions in the past or to justify actions already taken. Examples are frequently seen when parties engage in a bidding war; the bidders can end up paying much more than the object is worth to justify the initial expenses associated with bidding (such as research), as well as part of a competitive instinct.
[edit]Examples

The dollar auction is a thought exercise demonstrating the concept.
After a heated and aggressive bidding war, Robert Campeau ended up buying Bloomingdale's for an estimated 600 million dollars more than it was worth. The Wall Street Journal noted that "we're not dealing in price anymore but egos." Campeau was forced to declare bankruptcy soon afterwards.[3]

[el_rlee]

http://en.wikipedia.org/wiki/Post-purchase_rationalization

Even better http://en.wikipedia.org/wiki/Escalation_of_commitment

not to forget a lot of this: http://en.wikipedia.org/wiki/Confirmation_bias

[Herodes]

http://en.wikipedia.org/wiki/Post-purchase_rationalization

Even better http://en.wikipedia.org/wiki/Escalation_of_commitment

not to forget a lot of this: http://en.wikipedia.org/wiki/Confirmation_bias

What should we do without wikipedia ?

[nazgulnarsil]

this whole episode is really quite brilliant.  Pirate played a ponzi scheme COMPLETELY STRAIGHT.  It's like he followed a textbook for ponzi schemes.  He even exaggerated everything, he called himself a type of robber and offered more ridiculous returns than are possible.  And everyone STILL fell for it.

He deserves the money IMO.

[AndrewBUD]

LOL ^

[uuidman]

How did Pirate get some many people to give him BTC without revealing his so called method for promising 7% weekly returns. I'm sure plenty of people were willing to gamble with small amounts and not really mind losing knowing something aint kosher here.

That's part of the time honoured ponzi formula.  Claim you have a new method to generate massive returns.  A proprietary space age trading system in the cloud, leveraging world events while hedging against all risk.  Or something like that.  It's different this time.  I'm breaking all the rules.  People fall for that all the time.

Why do people hand over massive amounts of money to essentially anonymous businesses?  Why do pensioners hand over their life savings to slick operations only to see it being lost, time and time again?  Slick marketing and the target's greed. 

Indeed, but regarding what he was doing, there have been some longtimers saying that they now know what his business model are and that its really clever.  Hopefully they will soon reveal it. I am curious. I guess that it in itself tipped some over to invest. I did not.

[AndrewBUD]

I hope you're right.... ^ only time will tell..... but if it's true he passed a bad cheque in the past and now he has 1million+ dollars..... seems iffy to me......


Good luck to all and I hope everything works out for the better....

[DeathAndTaxes]

The debt continuing to accrue interest and I expect a full reconciliation to be made.

LOLZ.  

Pirate debt has increased by 52,303 BTC* just in the period of time since he ended the operation.  That is $549,270 at current exchange rates.  Even if he was profitable and could afford the interest obligation while operating, since shutting down he racked up another half million in debt.  In another five days he will have racked up over a million USD in additional debt since the shutdown.  His interest only obligation is now $57,993 per day or $40.27 per minute.

All that ignores the fact that the debt is legally unenforceable (violates usary laws in the US) and that BTC can be hidden from a judgement with trivial ease.  So the debtor can't be collected against and has 40 new reasons every minute to walk away.  Of course that even assume he could pay if he wanted to but it is increasingly obviously he can't.  Even if he could only pay say half doing so would save him almost $30,000 per day in additional interest yet he hasn't.  

So please, humor me I am just curious at which point will you no longer "expect a full reconciliation to be made"?  Another week (when he now owes ~$6.3 mil USD), another month (when he owes ~ $8.2 mil USD), 180 days (when he owes ~$46 mil USD)?



* Based on the claim by Pirate that the "trust" had 500K BTC when he shut it down.

[el_rlee]

others seam more confident:

I guess Ill throw mine up for sale too, PM if interested:
(User #269 of 373)      Balance: 44.40847487      Next Payment: 3.06418477

Ill take 40btc for it. OBO

(User #229 of 373)      Balance: 562.18232401      Next Payment: 38.79058036

Looking for 350+. PM if interested.

I'll sell mine for 900ish.  PM me any offers

(User #71 of 373)      Balance: 1184.04269172      Next Payment: 81.68066151

Since I need the coins sooner rather than later:

Anyone want to buy my account?
(User #114 of 373)      Balance: 390.30038379   Next Payment: 26.93072648

I'll consider offers from 300 upwards.

If you are insterested PM me please.

damn tempting offers!

[P4man]

hehehehe..


These are the only facts I need to hear to make a sane educated guess as to the outcome...

Simple math will answer this one easily...  

Id does make a very important implicit assumption; that BTC value will remain more or less stable. If Prirate's big secret is that he hacked sha256 or has been mining a forked chain on asics for half a year, that assumption might be very wrong.

[teflone]

others seam more confident:

I guess Ill throw mine up for sale too, PM if interested:
(User #269 of 373)      Balance: 44.40847487      Next Payment: 3.06418477

Ill take 40btc for it. OBO

(User #229 of 373)      Balance: 562.18232401      Next Payment: 38.79058036

Looking for 350+. PM if interested.

I'll sell mine for 900ish.  PM me any offers

(User #71 of 373)      Balance: 1184.04269172      Next Payment: 81.68066151

Since I need the coins sooner rather than later:

Anyone want to buy my account?
(User #114 of 373)      Balance: 390.30038379   Next Payment: 26.93072648

I'll consider offers from 300 upwards.

If you are insterested PM me please.

damn tempting offers!

Confidence is overwhelming!