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Author Topic: [Closed] 250 BTC loan @ 0.5% interest per day !!!  (Read 2907 times)
copumpkin
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December 27, 2011, 05:22:25 PM
 #41

This is exactly what is wrong with the society today: too many middle men trying to get rich of others with doing nothing. If this is indeed the case and you can't lend to pirate directly you can lend to me and I'll give you your fair share of the profit. People like this make me sick.

It's only a question of time until someone loses money at 1% daily rates.

well this is how investing works, there can't be profit without risk.
In this case risk is multiplied, for less return.

Well not for the OP.  return is multiplied and risk is reduced to nothing. Smiley

Not really. He's both a lender and a borrower, and in this case he's lending more than he actually has, and thus if pirateat40 defaults (sure, unlikely), he'll be in even deeper shit than if he was just lending his own money, because he'll still owe money to his own lender. This borrow->lend business he wants to do is mostly arbitrage, so risk is low, but counterparty risk is still nonzero Smiley

Well my point is he isn't risking any capital.  If things go south he can (not that he will) simply walk away.  His maximum net loss if walking away is 0.00

If things go south, he can walk away and be a criminal. All the standard risk and profit/loss calculations people perform in finance make the assumption that you aren't going to shoot people in the head or screw them. Counterparty risk is the assumption that they might possibly do that to you Smiley
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DeathAndTaxes
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December 27, 2011, 05:38:34 PM
 #42

If things go south, he can walk away and be a criminal. All the standard risk and profit/loss calculations people perform in finance make the assumption that you aren't going to shoot people in the head or screw them. Counterparty risk is the assumption that they might possibly do that to you Smiley

Ok we can stop the hyperbole.  Defaulting on an unsecured loan isn't a criminal act.  Not in the US, not anywhere.

Yes I get the concept of counterparty risk the point is the middle man has no financial stake in the game.  The only thing being risked is reputation.  

Personally to me that makes it a crappy deal when profit is split 50/50 and one person is risking actual assets and the other is risking only reputation.

If you disagree I assume you are interested in this deal?
You risk your life savings
I risk only my reputation
We split the profit 50/50
How much do you want to risk/invest?  I will gladly risk/invest up to $100K of your money on my reputation. Smiley
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December 27, 2011, 05:53:21 PM
 #43

If things go south, he can walk away and be a criminal. All the standard risk and profit/loss calculations people perform in finance make the assumption that you aren't going to shoot people in the head or screw them. Counterparty risk is the assumption that they might possibly do that to you Smiley

Ok we can stop the hyperbole.  Defaulting on an unsecured loan isn't a criminal act.  Not in the US, not anywhere.

Yes I get the concept of counterparty risk the point is the middle man has no financial stake in the game.  The only thing being risked is reputation.  

Personally to me that makes it a crappy deal when profit is split 50/50 and one person is risking actual assets and the other is risking only reputation.

If you disagree I assume you are interested in this deal?
You risk your life savings
I risk only my reputation
We split the profit 50/50
How much do you want to risk/invest?  I will gladly risk/invest up to $100K of your money on my reputation. Smiley

It's not hyperbole. He agreed to give someone their money back, and if he doesn't, he can't simply walk away. He may default, but there's a lot more involved in that than just reputation (assuming we have "real-world" information about him, which I'd hope a lender would insist on). Anyway, all I'm saying is that the risk to him was small, but not zero. I'm disinterested in this whole thing, and think it's arrogant to assume that the only reason someone would disagree with you is that they have something to gain by doing so.

Edit: oh crap, I was in the middle of cooking and misinterpreted your "if you disagree I assume you are interested in this deal". Disregard the arrogance comment above, sorry Smiley regardless, your "it's your life savings vs. my reputation" argument applies to any loan, and not just this one, so I stand by my "small risk, but not zero" statement earlier Smiley
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December 27, 2011, 08:54:34 PM
 #44

ok, got plenty of offers now...  No more money is needed at the moment.

(BFL)^2 < 0
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December 28, 2011, 02:27:37 AM
 #45

Interesting thread with some relevant points included and a couple missed.

INAUM (shortened) got into Pirate's loan scheme as an early adopter and took greater risk that they might not be paid back.  1% is a good rate, but it is unsecured and might all disappear if it grew into a giant ponzi worth millions.  He picked a division of profit that seemed reasonable and still profitable for someone putting in $1k of coins (roughly $5/day for a month in interest).  That's enough to get someone to bother moving coins around, and if you don't like it or can do better, he's not forcing anyone to take the risk or accept the interest.

For 0.5%/day for a user (INAUM) who has invested a lot into btc, it looks pretty reasonable and if I had done some different purchasing earlier this month I would have some coins that might have gone this direction.  Unfortunately I've been increasing my risk exposure as an early-ish adopter in Pirate's loan programme and have some funds parked there.

Hell of a lot better than 1.25% for 3 months - anyone with debt can probably get two to our times that return, and most can get equivalent returns from a real financial institution.  Plus, this kind of dealing (and credit to the smart people at the pointy end of this) will help grow the BTC economy.
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