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Author Topic: What do you guys think of BitEnsure? Interest Bearing Wallets  (Read 7315 times)
mechs
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August 12, 2013, 12:26:45 AM
 #61

So they replied this morning: "Please allow a couple days for the transfer to go through as we must wait for a withdrawal from our investment account. You will be notified when the transaction has occurred." Will update when they send.
That makes no sense at all.  Investment account?  These is no fiat involved here.  All they need to do is make a bitcoin transfer from their cold storage to you. 
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justusranvier
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August 12, 2013, 12:54:27 AM
 #62

Any service which promises to pay interest on Bitcoin deposits right now is a scam.

The only legitimate and sustainable way to pay interest on Bitcoin deposits is by profitably lending bitcoins, and there are very, very few sound loans to be made right now.

There are virtually no business activities capable of generating a return on investment that exceeds the appreciation of Bitcoin in purchasing power. If you lend bitcoins out for a 1 year term and expect to be repaid you've got to plan for the possibility that the exchange rate could be ten times higher a year from now than it is today. This means if you're looking for a borrower capable of paying back a 1 year BTC loan they had better have a business plan capable of generating more than 10X returns in the course of a year, or else they are likely to default.

Lending BTC for a year is insane, anyone proposing longer term loans at the present state of the adoption curve is a danger to themselves and others.

So where are all the sound loans to going to be made that will generate the profit needed to pay interest on deposits? Overnight lending to bitcoin businesses that need extra liquidity? How much demand for that is there really, and how much profit is available to pay depositors?

Basically if the interest you're being paid on a deposit (for any type of deposit, not just BTC) doesn't come from a borrower who used that loan to generate more business profit than they paid in borrowing costs during the loan term, then you're either gambling (speculating) or else dealing with a Ponzi scheme.
mechs
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August 12, 2013, 03:02:52 AM
 #63

Any service which promises to pay interest on Bitcoin deposits right now is a scam.

The only legitimate and sustainable way to pay interest on Bitcoin deposits is by profitably lending bitcoins, and there are very, very few sound loans to be made right now.

There are virtually no business activities capable of generating a return on investment that exceeds the appreciation of Bitcoin in purchasing power. If you lend bitcoins out for a 1 year term and expect to be repaid you've got to plan for the possibility that the exchange rate could be ten times higher a year from now than it is today. This means if you're looking for a borrower capable of paying back a 1 year BTC loan they had better have a business plan capable of generating more than 10X returns in the course of a year, or else they are likely to default.

Lending BTC for a year is insane, anyone proposing longer term loans at the present state of the adoption curve is a danger to themselves and others.

So where are all the sound loans to going to be made that will generate the profit needed to pay interest on deposits? Overnight lending to bitcoin businesses that need extra liquidity? How much demand for that is there really, and how much profit is available to pay depositors?

Basically if the interest you're being paid on a deposit (for any type of deposit, not just BTC) doesn't come from a borrower who used that loan to generate more business profit than they paid in borrowing costs during the loan term, then you're either gambling (speculating) or else dealing with a Ponzi scheme.
I agree.  Tradefortress though on his website coinlenders.com offers very high APR rates as high as 27.25% for 90 day CDs.  He seems to be fairly respected, but I have to think that there is no way such return are sustainable and it must be either a outright scam or a ponzi scheme.
justusranvier
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August 12, 2013, 03:38:07 AM
 #64

27.25% for 90 day CDs.
Three possibilities for who is on the other side of that trade:

  • BTC Borrower(s) who have business ideas capable of generating 30% return in 90 days but can't find cheaper financing.
  • Speculator(s) who want to short the BTC exchange rate but can't find a cheaper borrow. (*)
  • Ponzi scheme.

Which one is the least unlikely?

*This also includes people who don't understand that borrowing in BTC is the same thing as taking a short position.
DumbFruit
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August 12, 2013, 04:32:49 AM
 #65

I've looked at all of the "scam" accusations against TradeFortress that I could find, and the accusers have all been untrustworthy or clearly trying to get back at TradeFortress for totally unrelated reasons.
He's been around for more than a year with not one confirmed scam of any kind.
His interest rates, while high, are adjusted based on the loans he's made and the returns he believes he can make in the market.
While he is anonymous to the average person, he is well known in the community, and supposedly there are several people that know his real identity.
He has exposed scams on several occasions, and has paid interest on several accounts at CoinLenders, on one occasion he gave bitcoins to his depositors when his site went down unexpectedly.
The security on his sites are top notch, including SSL and two factor authentication, through two sites. (CoinLenders and inputs.io)
He has been up front about the risks of entrusting bitcoins with him, and he has made great effort to avoid regulatory problems through clever wording. ("Vouchers", instead of interest payments. And his disclaimer is particularly amusing.)
There is evidence that he does lend out coins to people, and he has a very high bar for applicants. He requests a great deal of information from applicants, and avoids loans that exchange into USD because of Bitcoin volatility.
Besides not personally knowing the identity of the guy, I don't see any reason to be suspicious of him.

That said, I've bought a CD at coinlenders, and we'll see how it goes.

By their (dumb) fruits shall ye know them indeed...
geofflosophy
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August 12, 2013, 05:56:26 AM
 #66

I've looked at all of the "scam" accusations against TradeFortress that I could find, and the accusers have all been untrustworthy or clearly trying to get back at TradeFortress for totally unrelated reasons.
He's been around for more than a year with not one confirmed scam of any kind.
His interest rates, while high, are adjusted based on the loans he's made and the returns he believes he can make in the market.
While he is anonymous to the average person, he is well known in the community, and supposedly there are several people that know his real identity.
He has exposed scams on several occasions, and has paid interest on several accounts at CoinLenders, on one occasion he gave bitcoins to his depositors when his site went down unexpectedly.
The security on his sites are top notch, including SSL and two factor authentication, through two sites. (CoinLenders and inputs.io)
He has been up front about the risks of entrusting bitcoins with him, and he has made great effort to avoid regulatory problems through clever wording. ("Vouchers", instead of interest payments. And his disclaimer is particularly amusing.)
There is evidence that he does lend out coins to people, and he has a very high bar for applicants. He requests a great deal of information from applicants, and avoids loans that exchange into USD because of Bitcoin volatility.
Besides not personally knowing the identity of the guy, I don't see any reason to be suspicious of him.

That said, I've bought a CD at coinlenders, and we'll see how it goes.

I have some coins in CoinLenders as well, TF seems very respected in the community. But I will say that I find it hard to believe that there is a serious market for borrowing BTC...
justusranvier
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August 12, 2013, 06:12:06 AM
 #67

It doesn't matter how long a scheme goes on before problems show up - if the source of the returns is illusionary or unsustainable it will eventually fail.

No legitimate investment is going to pay random depositors on the Internet 27% to borrow their bitcoins for 90 days.

If there exists a borrower who has such an incredibly profitable opportunity they need to finance that justifies such a high APR they can write up a business plan and find far less expensive lending via other channels so there's no reason for them to pay you exorbitant interest rates.

At rates like those, someone is either borrowing your bitcoins in order to speculate on a BTC price crash, or else funds from new investors are being used to pay old investors, i.e. Ponzi scheme.

The best case scenario is that somebody is gambling with your deposits.
mechs
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August 12, 2013, 06:38:43 AM
 #68

It doesn't matter how long a scheme goes on before problems show up - if the source of the returns is illusionary or unsustainable it will eventually fail.

No legitimate investment is going to pay random depositors on the Internet 27% to borrow their bitcoins for 90 days.

If there exists a borrower who has such an incredibly profitable opportunity they need to finance that justifies such a high APR they can write up a business plan and find far less expensive lending via other channels so there's no reason for them to pay you exorbitant interest rates.

At rates like those, someone is either borrowing your bitcoins in order to speculate on a BTC price crash, or else funds from new investors are being used to pay old investors, i.e. Ponzi scheme.

The best case scenario is that somebody is gambling with your deposits.
I agree with you, when the returns do not  make sense, you should stay away from it.  However, I disagree with your best case scenario.  The best case is it is a Ponzi scheme, but you are in the early innings, and you will get your principal plus interest back before the whole thing collapses.  Remember, even with Madoff, some early investors actually made a lot of profit (though they were eventually clawed-back)
justusranvier
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August 12, 2013, 06:42:02 AM
 #69

The best case is it is a Ponzi scheme, but you are in the early innings, and you will get your principal plus interest back before the whole thing collapses.  Remember, even with Madoff, some early investors actually made a lot of profit (though they were eventually clawed-back)
It will work out for me because I'm special!

Scammers trap more suckers via that logical fallacy than all the rest combined.
DumbFruit
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August 12, 2013, 10:13:31 AM
 #70

The best case scenario is that somebody is gambling with your deposits.
There's always some "gambling" in any investment. I'll also note that it's not 27% in 90 days, it's 27% APY, which is radically different. It ends up being about 5% over 90 days.
It's not unheard of in Bitcoin to make a smart short and make 5% in a single day. I've done it myself, and I'm terrible at speculating.

While not without risk by any means, the difference between BitEnsure and CoinLenders is night and day.
BitEnsure was made by Some-Unknown-DudeTM, CoinLenders was made by a well known member of BitcoinTalk with a long history.
BitEnsure started as up to 40%/3 months or 384.16%/APY (Static), the best return you can get at Coinlenders is, again, 27% APY which goes up and down, according to him, to meet what he thinks is a reasonable return given the market conditions, the status of his investments, etc.
BitEnsure used SSL to secure information, whereas TradeFortress uses SSL and two factor authentication, through two websites, requiring a thief to bypass the security of both sites in order to steal anything.
BitEnsure had lots of misleading information, including fake employee's, hiding the LLC status of the parent company, fake "We are hiring page", insinuating that there is a physical office which doesn't exist, etc. CoinLenders has no such misleading information.

As far as I can tell, TradeFortress is going to do what he can to make good on the yields that he promises. Does that mean there's no risk/"gambling" involved? Nope.

By their (dumb) fruits shall ye know them indeed...
justusranvier
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August 13, 2013, 01:02:19 AM
 #71

There's always some "gambling" in any investment. I'll also note that it's not 27% in 90 days, it's 27% APY, which is radically different. It ends up being about 5% over 90 days.
It's not unheard of in Bitcoin to make a smart short and make 5% in a single day. I've done it myself, and I'm terrible at speculating.
That's less outrageous, but still highly risky.
joele
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August 13, 2013, 02:37:38 PM
 #72

27.25% for 90 day CDs.
Three possibilities for who is on the other side of that trade:

  • BTC Borrower(s) who have business ideas capable of generating 30% return in 90 days but can't find cheaper financing.
  • Speculator(s) who want to short the BTC exchange rate but can't find a cheaper borrow. (*)
  • Ponzi scheme.

Which one is the least unlikely?

*This also includes people who don't understand that borrowing in BTC is the same thing as taking a short position.

The 27.25% is annual interest, that is only 6% for 90 days duration.  
mechs
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August 13, 2013, 06:12:10 PM
 #73

27.25% for 90 day CDs.
Three possibilities for who is on the other side of that trade:

  • BTC Borrower(s) who have business ideas capable of generating 30% return in 90 days but can't find cheaper financing.
  • Speculator(s) who want to short the BTC exchange rate but can't find a cheaper borrow. (*)
  • Ponzi scheme.

Which one is the least unlikely?

*This also includes people who don't understand that borrowing in BTC is the same thing as taking a short position.

The 27.25% is annual interest, that is only 6% for 90 days duration.  
I like your btc.re website but you should add coinbase prices to it as well.
geofflosophy
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August 14, 2013, 09:24:37 PM
 #74

Final update from me on this, they got me back my coins today (I had to ping them one more time this morning). Take it for what it's worth, but I got out unscathed (though without any gains either).
odolvlobo
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August 14, 2013, 09:52:11 PM
 #75

Final update from me on this, they got me back my coins today (I had to ping them one more time this morning). Take it for what it's worth, but I got out unscathed (though without any gains either).

That seems to indicate that it might not have been a scam after all. At best it was just someone with very poor judgement.

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geofflosophy
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August 14, 2013, 10:16:59 PM
 #76

Final update from me on this, they got me back my coins today (I had to ping them one more time this morning). Take it for what it's worth, but I got out unscathed (though without any gains either).

That seems to indicate that it might not have been a scam after all. At best it was just someone with very poor judgement.

They kept a record of transactions in my account, and the account that they transferred my coins into;19U7YYiNxZ5LiHBe3GCm2iZp9VGUNVGWRi; still has over 1200 coins in it. When I searched it on blockchain.info the other day, there were a ton of transactions into that wallet, but now I'm only seeing two. Anyway, I've devoted enough mental energy to these guys at this point; happy to have my coins back.
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August 15, 2013, 02:05:10 AM
 #77

Some one needs to explain why this is not pirateat40 v2.0.

Concerned that blockchain bloat will lead to centralization? Storing less than 4 GB of data once required the budget of a superpower and a warehouse full of punched cards. https://upload.wikimedia.org/wikipedia/commons/8/87/IBM_card_storage.NARA.jpg https://en.wikipedia.org/wiki/Punched_card
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