The Lending Bubble

[Kluge]

Most things that are worth doing are not easy. OTC registration is one of them. Its just like many aspects of the business world - if you want to taken seriously, you have to jump through a few hoops first.

Oddly enough, I've received >$10k in deposits and never registered for the damned thing.

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[PatrickHarnett]

Most things that are worth doing are not easy. OTC registration is one of them. Its just like many aspects of the business world - if you want to taken seriously, you have to jump through a few hoops first.

Oddly enough, I've received >$10k in deposits and never registered for the damn thing.

Similar - did a lot of business before doing the OTC thing.  I have done some ratings recently (only took 30 minutes), but playing with a few other bits and pieces.

I do have people send me BTC500 deposits as that's a sensible level, and they get paid back too.  (had 1000 coins returned to happy owners in the past few weeks)
Currently, I'm paying interest on more than 3000 coins (that's about 0.0001/sec if I bother to watch in real time) and have some nice interest payments arriving regularly from different loans.

[foggyb]

Well, I didn't mean to imply that OTC is a requirement to exchange funds, but that's how it is being read, seemingly.

OTC is not the only way to build trust, that is why you guys were able to do without it.

[PatrickHarnett]

Well, I didn't mean to imply that OTC is a requirement to exchange funds, but that's how it is being read, seemingly.

OTC is not the only way to build trust, that is why you guys were able to do without it.

No, we were observing, as you have, that there are multiple ways of doing things.

[imsaguy]

or be like me and do both!

[nrd525]

I'm now thinking this is mostly about the Pirate bubble  (the Bitcoin Savings and Trust ponzi scheme).

How long do Ponzi schemes typically last?  Are there any research studies done on this matter?  I'm guessing that the higher the interest rate, the shorter the duration.

It looks like the original Charles Ponzi scheme lasted around 8 months. He was doubling investments in 90 days.

The first MMM ponzi (Russia 1994) lasted 6 or 7 months.

The second MMM ponzi (Stock Generation) lasted two years - because they had rules that let them arbitrarily reduce the amount in your account (even down to zero).

The Romanian Caritas ponzi lasted 2 years and 4 months.  8 times return in 6 months (same as 100% in two months).

The Madoff scheme lasted a very long time (20-48 years), but gave much lower returns (as low as 10%/year).

Bitcoin Savings and Trust is almost 6 months old and returns 34%/month.

It seems that giving out 40% interest per month is fairly typical for Ponzi schemes.  There is probably a balance between having a very high rate to get people to join, and actually being able to pay it out - which is why they don't promise 100% monthly returns.

[PatrickHarnett]

If I exclude my personal Pirate deposit from the other stuff I do with bitcoin I am still making monthly returns comparable and higher to annual returns in local currency.  While many people think Pirate is the lynch-pin for the lending and returns, that is simply not the case.  Yes, it would certainly place a big hole in things, but other thefts have been larger and the economy survives.

Expectation: rates will come down, and I have that in my medium term plan.  But while returns are still high elsewhere from productive activities, rates stay high.  It is what the market is prepared to pay.

[N12]

If I exclude my personal Pirate deposit from the other stuff I do with bitcoin I am still making monthly returns comparable and higher to annual returns in local currency.  While many people think Pirate is the lynch-pin for the lending and returns, that is simply not the case.  Yes, it would certainly place a big hole in things, but other thefts have been larger and the economy survives.

Expectation: rates will come down, and I have that in my medium term plan.  But while returns are still high elsewhere from productive activities, rates stay high.  It is what the market is prepared to pay.

What kind of "other stuff"? If it is related to Bitcoin lending, there is the problem that the rates you can demand are affected by the availability of pirate interest rates.

I have thought this over and must agree it can be viewed as a bubble. The relevant question for me is whether interest rates will be maintained for as long as possible, and collapse all of a sudden, or if they will gradually decrease.

With regard to the BTC/USD price, I believe that the former option would be bearish, while the latter one would dampen price increases.

[imsaguy]

I'm now thinking this is mostly about the Pirate bubble  (the Bitcoin Savings and Trust ponzi scheme).

How long do Ponzi schemes typically last?  Are there any research studies done on this matter?  I'm guessing that the higher the interest rate, the shorter the duration.

It looks like the original Charles Ponzi scheme lasted around 8 months. He was doubling investments in 90 days.

The first MMM ponzi (Russia 1994) lasted 6 or 7 months.

The second MMM ponzi (Stock Generation) lasted two years - because they had rules that let them arbitrarily reduce the amount in your account (even down to zero).

The Romanian Caritas ponzi lasted 2 years and 4 months.  8 times return in 6 months (same as 100% in two months).

The Madoff scheme lasted a very long time (20-48 years), but gave much lower returns (as low as 10%/year).

Bitcoin Savings and Trust is almost 6 months old and returns 34%/month.

It seems that giving out 40% interest per month is fairly typical for Ponzi schemes.  There is probably a balance between having a very high rate to get people to join, and actually being able to pay it out - which is why they don't promise 100% monthly returns.

First off, FPS&T/BS&T has been around longer than 6 months. 

Second, you've yet to actually prove its a ponzi, therefor the rest is just idle speculation.  What else you got?

[PatrickHarnett]

If I exclude my personal Pirate deposit from the other stuff I do with bitcoin I am still making monthly returns comparable and higher to annual returns in local currency.  While many people think Pirate is the lynch-pin for the lending and returns, that is simply not the case.  Yes, it would certainly place a big hole in things, but other thefts have been larger and the economy survives.

Expectation: rates will come down, and I have that in my medium term plan.  But while returns are still high elsewhere from productive activities, rates stay high.  It is what the market is prepared to pay.

What kind of "other stuff"? If it is related to Bitcoin lending, there is the problem that the rates you can demand are affected by the availability of pirate interest rates.

I have thought this over and must agree it can be viewed as a bubble. The relevant question for me is whether interest rates will be maintained for as long as possible, and collapse all of a sudden, or if they will gradually decrease.

With regard to the BTC/USD price, I believe that the former option would be bearish, while the latter one would dampen price increases.

Other stuff:
I have long-term enduring investments with several people.
GLBSE has been a source of some great trading profits during April.
There are some BTC backed loans for non-BTC ventures.
I invested in a manufacturer recently - returns yet to be determined.
Lots of the loans in my book are for equipment/trading/non-lending arbitrage.

If I didn't have my Pirate account, the remainder of the coins would still be working hard, and people borrowing are prepared to pay 10-15%/month currently.  My own expectation is that the rates will decline slowly.  But for now, I'm able to pay around 7%/month on deposits and make a margin.

[nrd525]

As of today, Bitcoin Savings and Trust has now been around 7 months if the Nov 3 post thread date is accurate.  I'd be happy to hear the official start date if I'm wrong on this one.

As for proof that it is a Ponzi scheme, I will openly admit that I am speculating. However unlike Pirate, I'm willing to share my analysis and am not making any money on this.  Pirate refuses to share any meaningful business model and wants to take your money.  His defenders are profiting (at least on paper) from the Ponzi.  Who would you trust?

[imsaguy]

As of today, Bitcoin Savings and Trust has now been around 7 months if the Nov 3 post thread date is accurate.  I'd be happy to hear the official start date if I'm wrong on this one.

As for proof that it is a Ponzi scheme, I will openly admit that I am speculating. However unlike Pirate, I'm willing to share my analysis and am not making any money on this.  Pirate refuses to share any meaningful business model and wants to take your money.  His defenders are profiting (at least on paper) from the Ponzi.  Who would you trust?

What's your analysis? that you cannot fathom a business plan that pays 1% a day?  That explains why pirate's starting ventures and you're just trolling the forums.

[PatrickHarnett]

His defenders are profiting (at least on paper) from the Ponzi.  Who would you trust?

Hmmm, yes, who would I trust?

In my bank account, I have a lot of dollars.  It's not "on paper" as my wife sees it in the bank account.

It might interest you to know that my deposit with pirate, paying out well over 100% now, is not the most lucrative or highest paying investment I have here, and they certainly are not ponzi schemes.