A day in the life of a pirate.

[pirateat40]

Can you tell us if your business venture is converting the bitcoin you borrow to fiat or not? I'd like to invest in a PPT type thing but I wouldn't like to invest in a business that uses btc only as a transport mechanism for fiat. I'll understand if you think this would give away to much about your business model.

Well, the only reason Bitcoin is worth anything is due to it's value against fiat currencies.  At this point Bitcoin is a commodity and those that say otherwise have much more to learn.  I hope to be a part of what changes that and look to see Bitcoin as the currency others are based upon.  So to answer your question, I would say Yes, but it really depends on what you think Bitcoin is.

Let's try to bring it back on track a little. What bitcoin variables do you think can affect your operation, and in which way? Inflation, growth index? And how do you believe that your operation will be affected by the halving of subsidy in December?

The only thing that would affect my profits would be a huge spike in price over a very short period of time.  At this point I really don't need to know when things will affect my operation because I'm able to hedge my risk with how it operates.  If I saw something coming that I felt would cost me more than I'm willing to lose, I would take the necessarily actions to limit the loss, but like I said... it's just a profit loss.  Like I've said before and my lenders know, if I had to take a large loss to cover coins... One, they wouldn't know about it (I still owe them the coins) and two it wouldn't be enough to put me in a pinch or cause me to run to Antarctica.  So as far as my lenders are concerned the only thing they need to trust is me.

[JusticeForYou]

So as far as my lenders are concerned the only thing they need to trust is me.

Never trust a Pirate.

Trust the Pirate's Booty.

This is fun stuff. You couldn't make it up if you tried. lol

[Otoh]

I joined the FPS&T, BTC S&T on the 1st of March 2012, it wasn't easy to get on board then either, I requested that my investment be rolled over for compound interest but this got missed on our communications which is fine by me, who on earth would be paying out interest if he could just keep it when up to anything dodgy, nearly 3 months down the line of receiving these payments that never even had to be made plus continual monitoring of the evolution of Pirate's offering & most of all this thread have convinced me to PM Pirate today to request doubling my previous investment much sooner that I was originally planning to do if he has that sufficient availability at present. <-- Edit, period added (((for the gramar Nazis, jk )))

[rjk]

I joined the FPS&T, BTC S&T on the 1st of March 2012, it wasn't easy to get on board then either, I requested that my investment be rolled over for compound interest but this got missed on our communications which is fine by me, who on earth would be paying out interest if he could just keep it when up to anything dodgy, nearly 3 months down the line of receiving these payments that never even had to be made plus continual monitoring of the evolution of Pirate's offering & most of all this thread have convinced me to PM Pirate today to request doubling my previous investment much sooner that I was originally planning to do if he has that sufficient availability at present

Congratulations! You managed to use five commas and zero periods.

[JusticeForYou]

I joined the FPS&T, BTC S&T on the 1st of March 2012, it wasn't easy to get on board then either, I requested that my investment be rolled over for compound interest but this got missed on our communications which is fine by me, who on earth would be paying out interest if he could just keep it when up to anything dodgy, nearly 3 months down the line of receiving these payments that never even had to be made plus continual monitoring of the evolution of Pirate's offering & most of all this thread have convinced me to PM Pirate today to request doubling my previous investment much sooner that I was originally planning to do if he has that sufficient availability at present

Congratulations! You managed to use five commas and zero periods.

vrag, is that you?

IC,IC. is correct. "How about IC,IC,ICDCDC,InterogatoryDC,DCRunON." ?

[organofcorti]

I joined the FPS&T, BTC S&T on the 1st of March 2012, it wasn't easy to get on board then either, I requested that my investment be rolled over for compound interest but this got missed on our communications which is fine by me, who on earth would be paying out interest if he could just keep it when up to anything dodgy, nearly 3 months down the line of receiving these payments that never even had to be made plus continual monitoring of the evolution of Pirate's offering & most of all this thread have convinced me to PM Pirate today to request doubling my previous investment much sooner that I was originally planning to do if he has that sufficient availability at present

Congratulations! You managed to use five commas and zero periods.

However he did not use any ellipses which makes him somewhat unique for punctuation over-users on this forum.

[Sukrim]

I do not follow this "pirate" thing, nor do I know much about any GLBSE listed "assets".

However, please consider the following hypothetical GLBSE listed company.

Someone places BMMM IPO on GLBSE. The company does not disclose what they do, however they pay rather good dividends. Everyone is happy (for now).

What they do is the following, they convert BTC's into USD's and "invest" it into a piramide scheme http://en.wikipedia.org/wiki/MMM-2011 run by http://en.wikipedia.org/wiki/Sergei_Mavrodi that reportedly currently pays up to 50% per month of "dividends". BMMM pockets 30%, pays out 20% to their "investors". They also hope that with such "profitability" they will be able to accumulate enough money to buy out the shares once the "master ponzi" breaks down.

see also (google translate if needed) https://bitcointalk.org/index.php?topic=77316.0
and read up on to http://en.wikipedia.org/wiki/Stockholm_syndrome it might get applicable.

The above is a ponzi scheme by proxy which BTW is pretty close to what all the investment banks out there are doing with the central banks and ultimately the fed being the "master ponzi".

My idea exactly and similar to what I'd do if I wanted to create something like this - find a Ponzi that isn't going down yet (though MMM seems to me also burned out quite a bit) and that pays crazy enough rates that it's still possible to earn back the deposits + interest in a short time frame.

Pirate however said the following in this thread:

He doesn't have to run a Ponzi on his own - my guess is still that he "invests" in some Ponzi/pyramid game like MMM. If you read carefully, he never denied that, only that he doesn't Ponzi himself.

I can't believe I missed this one.   None of my dealing have anything to do with, related to or managed by anyone running a Ponzi scheme.

P.S. I do like how you read between the lines though, you should be a lawyer or one of my public relations people.

I even asked Nefario recently if it would be ok to list an open Ponzi on GLBSE (stating clearly in the contract that the shares have 0 value and the payouts come only from shares sold) and he declined, so to do something like this you'd really need to claim to have "insider knowledge" + "a perfect but proprietory idea" and disclose as little as possible. Also it might help NOT to pay out 20%. Better call it "mining bond" with 150% PPS returns or so and pay this out. Sounds less dodgy, you have more profits and you can "expand" from time to time to raise more capital.

[bitdragon]

thanks Pirate for reminding me that Bitcoin is a commodity and not a currency for now.

[nofuture]

There's a discussion on another thread that may be related to this one.

https://bitcointalk.org/index.php?topic=80174.0;all

[coblee]

The only thing that would affect my profits would be a huge spike in price over a very short period of time.  At this point I really don't need to know when things will affect my operation because I'm able to hedge my risk with how it operates.  If I saw something coming that I felt would cost me more than I'm willing to lose, I would take the necessarily actions to limit the loss, but like I said... it's just a profit loss.  Like I've said before and my lenders know, if I had to take a large loss to cover coins... One, they wouldn't know about it (I still owe them the coins) and two it wouldn't be enough to put me in a pinch or cause me to run to Antarctica.  So as far as my lenders are concerned the only thing they need to trust is me.

Before bitcoinica went down, you could have used bitcoinica to hedge your risk in case the value of bitcoin rises too much and wipe out your profit. What are you using now?

[coblee]

Would you be willing to disclose anything about your actual profit margins over the 7% weekly you pay for the use of funds?

The only good thing about this ever ending is that I'll find out what the hell it is. I might be able to replicate it in a different context ....

Sure, I net gross 10.65% per week and payout 5.98% on average and it really depends on how much I want to work.  The process has become pretty automated lately which is nice because I can spend more time on my other projects and with the family.

Thanks for your polite and non-divulging question.

To those that wonder why pirate still needs to borrow coins from people and not use his own coins, I think I know why. It's true that if he uses his own coins, he can earn the full 10.65% he makes each week, but then he had to take on the risk of bitcoin failing. For example, if a flaw is found in bitcoin and the value drops to 0, he would lose all the money he held in bitcoin. Even if bitcoin doesn't fail, he may not want to have so much of his wealth tied to such a risky currency.

So instead of holding 10,000 of his own bitcoins to use in this business and earn 1065 btc each week (10.65% of 10k), he can just borrow 25,000 bitcoins from us and earn 1168 btc each week. (10.65% - 5.98% of 25k). Another way to look at it is, would you rather make 10.65% a week but have some risk of losing your capital if bitcoin fails OR would rather make only 4.67% a week using someone else's capital and have pretty much no risk whatsoever. I think pirate would be stupid to risk his own money. If you don't agree, ask yourself this: if you had a way to make 3% a week on your bitcoins with absolutely zero risk on your capital, would you still invest in pirate's program and make 7% a week but risk losing it all if it turns out to be a ponzi scheme?

[Mageant]

Would you be willing to disclose anything about your actual profit margins over the 7% weekly you pay for the use of funds?

The only good thing about this ever ending is that I'll find out what the hell it is. I might be able to replicate it in a different context ....

Sure, I net gross 10.65% per week and payout 5.98% on average and it really depends on how much I want to work.  The process has become pretty automated lately which is nice because I can spend more time on my other projects and with the family.

Thanks for your polite and non-divulging question.

To those that wonder why pirate still needs to borrow coins from people and not use his own coins, I think I know why. It's true that if he uses his own coins, he can earn the full 10.65% he makes each week, but then he had to take on the risk of bitcoin failing. For example, if a flaw is found in bitcoin and the value drops to 0, he would lose all the money he held in bitcoin. Even if bitcoin doesn't fail, he may not want to have so much of his wealth tied to such a risky currency.

So instead of holding 10,000 of his own bitcoins to use in this business and earn 1065 btc each week (10.65% of 10k), he can just borrow 25,000 bitcoins from us and earn 1168 btc each week. (10.65% - 5.98% of 25k). Another way to look at it is, would you rather make 10.65% a week but have some risk of losing your capital if bitcoin fails OR would rather make only 4.67% a week using someone else's capital and have pretty much no risk whatsoever. I think pirate would be stupid to risk his own money. If you don't agree, ask yourself this: if you had a way to make 3% a week on your bitcoins with absolutely zero risk on your capital, would you still invest in pirate's program and make 7% a week but risk losing it all if it turns out to be a ponzi scheme?

I think you are right on, and this fits with what I think he does. Also it is better to have more powder if it can be used.

Also you need to consider what would happen if there were a big decrease in price. He would then need to get more bitcoins from somewhere. If he already has a system set up with lenders and is trusted as a borrower he can easily get more bitcoins. If he were doing it alone though he would have a problem.

[nofuture]

This scam looks like front-running. 

http://en.wikipedia.org/wiki/Front_running

He is probably front-running entire market for bitcoins.  For the past few months price has been strangled to $5. Front-running could explain why this is happening. With this type of scam every honest trader is losing money on the sell-side or buy-side.  It's like scalping or taxing every trade. 

What this means is that honest long bitcoin investors are losing potential profits that they are entitled to.  New players have been entering the the market increasing demand.  Investors long bitcoin should benefit from higher prices.  They aren't and the scam is why.  This wealth extraction is preventing bitcoin from trading higher.  There should be growth but we aren't seeing any.

To front-run he would needs two things to pull it off successfully:

1. Inside information possibly from the exchange itself.
2. A very large amount of capital at his disposal.  That capital could be leveraged up with borrowed money to get have more "powder" to pummel the market. 

He says he generates gross of 10.65% per week

10.65% per week is 1,9296.28% annualized. 

Let's say he started this scam with 10,000 coins or roughly $50,000 at current trading.  Under that scenario that amount would become $9,648,143 in a year. That's a significant sum of money.  That is enough to move the entire market.  Bitcoin market capitalization is ~ $45,000,000.  So $9.6 million scalped is like stealing 20% from everyone. 

Flatlining the price affects the way everyone perceives bitcoin.  Nearly every news article we read about bitcoin mentions the price.  The price is seen as a measure of bitcoin's vitality. Suppressing the price of bitcoin suppresses its image in the eyes of others.  If bitcoin was trending up every more people would want to get in and invest in the commodity currency.  Positive feedback loop.  Stagnant trading makes it look nothing is happening.  Outside observers will just assume that real growth is stagnant as well as the price.  Instead what is really happening is that wealth is being transferred to a few insiders. 

http://bitcoincharts.com/charts/mtgoxUSD#rg150zczsg2012-03-21zeg2012-05-24ztgSza1gSMAzm1g14zm2g25zv


Bitcoin is a commodity currency.  Prices for commodities tend to be volatile.  Bitcoin is a exotic commodity.  So you would expect to a volatile trading pattern short-term with an upward trend over the long term.  Not a flatline.  For most of bitcoin's history prices rose steadily long-term while extremely volatile short-term.  With somebody skimming off every rise and fall, we can't grow.  The scam is stunting the growth of bitcoin.

We need to stop this. One possible way was suggested by Pirate himself.   Pirate has said that he would be imperiled by a price spike. 

Pirate said :

Quote

The only thing that would affect my profits would be a huge spike in price over a very short period of time.

So if that's the case a "money bomb" might work.  Coordinated mass buying.

http://en.wikipedia.org/wiki/Moneybomb

Lot of details would need to be worked out to make that effective. 


Front-running is covered in more detail in the following cross-post.


https://bitcointalk.org/index.php?topic=80174.msg911226#msg911226





When something sounds too good to be true it often is.

[rjk]

...scam...scam...scam...

And price stability as a bad thing, why? You aren't entitled to see a market rise if you happen to be long on it. It seems to me that investing in Bitcoin is getting closer to real world investment returns instead of being a "too-good-to-be-true" investment that is making large returns.

Having huge spikes and dips does nothing for wider market adoption.

[Serge]

HFT isn't out of realm
but front-running with "inside information" is highly doubtful at best

[unclescrooge]

This scam looks like front-running. 

http://en.wikipedia.org/wiki/Front_running

He is probably front-running entire market for bitcoins.  For the past few months price has been strangled to $5. Front-running could explain why this is happening. With this type of scam every honest trader is losing money on the sell-side or buy-side.  It's like scalping or taxing every trade. 

What this means is that honest long bitcoin investors are losing potential profits that they are entitled to.  New players have been entering the the market increasing demand.  Investors long bitcoin should benefit from higher prices.  They aren't and the scam is why.  This wealth extraction is preventing bitcoin from trading higher.  There should be growth but we aren't seeing any.

To front-run he would needs two things to pull it off successfully:

1. Inside information possibly from the exchange itself.
2. A very large amount of capital at his disposal.  That capital could be leveraged up with borrowed money to get have more "powder" to pummel the market. 

He says he generates gross of 10.65% per week

10.65% per week is 1,9296.28% annualized. 

Let's say he started this scam with 10,000 coins or roughly $50,000 at current trading.  Under that scenario that amount would become $9,648,143 in a year. That's a significant sum of money.  That is enough to move the entire market.  Bitcoin market capitalization is ~ $45,000,000.  So $9.6 million scalped is like stealing 20% from everyone. 

Flatlining the price affects the way everyone perceives bitcoin.  Nearly every news article we read about bitcoin mentions the price.  The price is seen as a measure of bitcoin's vitality. Suppressing the price of bitcoin suppresses its image in the eyes of others.  If bitcoin was trending up every more people would want to get in and invest in the commodity currency.  Positive feedback loop.  Stagnant trading makes it look nothing is happening.  Outside observers will just assume that real growth is stagnant as well as the price.  Instead what is really happening is that wealth is being transferred to a few insiders. 

http://bitcoincharts.com/charts/mtgoxUSD#rg150zczsg2012-03-21zeg2012-05-24ztgSza1gSMAzm1g14zm2g25zv


Bitcoin is a commodity currency.  Prices for commodities tend to be volatile.  Bitcoin is a exotic commodity.  So you would expect to a volatile trading pattern short-term with an upward trend over the long term.  Not a flatline.  For most of bitcoin's history prices rose steadily long-term while extremely volatile short-term.  With somebody skimming off every rise and fall, we can't grow.  The scam is stunting the growth of bitcoin.

We need to stop this. One possible way was suggested by Pirate himself.   Pirate has said that he would be imperiled by a price spike. 

Pirate said :

Quote

The only thing that would affect my profits would be a huge spike in price over a very short period of time.

So if that's the case a "money bomb" might work.  Coordinated mass buying.

http://en.wikipedia.org/wiki/Moneybomb

Lot of details would need to be worked out to make that effective. 


Front-running is covered in more detail in the following cross-post.


https://bitcointalk.org/index.php?topic=80174.msg911226#msg911226





When something sounds too good to be true it often is.

When a merchant is more likely going to consider bitcoin as money: with crazy volatility, or with a stable price that allow him to predict future profit?

[nofuture]

HFT isn't out of realm
but front-running with "inside information" is highly doubtful at best

If you back and look at what he has posted it is consistent with HFT.  

Without the right information things will go awry fast.

[nofuture]

This scam looks like front-running.  

http://en.wikipedia.org/wiki/Front_running

He is probably front-running entire market for bitcoins.  For the past few months price has been strangled to $5. Front-running could explain why this is happening. With this type of scam every honest trader is losing money on the sell-side or buy-side.  It's like scalping or taxing every trade.  

What this means is that honest long bitcoin investors are losing potential profits that they are entitled to.  New players have been entering the the market increasing demand.  Investors long bitcoin should benefit from higher prices.  They aren't and the scam is why.  This wealth extraction is preventing bitcoin from trading higher.  There should be growth but we aren't seeing any.

To front-run he would needs two things to pull it off successfully:

1. Inside information possibly from the exchange itself.
2. A very large amount of capital at his disposal.  That capital could be leveraged up with borrowed money to get have more "powder" to pummel the market.  

He says he generates gross of 10.65% per week

10.65% per week is 1,9296.28% annualized.  

Let's say he started this scam with 10,000 coins or roughly $50,000 at current trading.  Under that scenario that amount would become $9,648,143 in a year. That's a significant sum of money.  That is enough to move the entire market.  Bitcoin market capitalization is ~ $45,000,000.  So $9.6 million scalped is like stealing 20% from everyone.  

Flatlining the price affects the way everyone perceives bitcoin.  Nearly every news article we read about bitcoin mentions the price.  The price is seen as a measure of bitcoin's vitality. Suppressing the price of bitcoin suppresses its image in the eyes of others.  If bitcoin was trending up every more people would want to get in and invest in the commodity currency.  Positive feedback loop.  Stagnant trading makes it look nothing is happening.  Outside observers will just assume that real growth is stagnant as well as the price.  Instead what is really happening is that wealth is being transferred to a few insiders.  

http://bitcoincharts.com/charts/mtgoxUSD#rg150zczsg2012-03-21zeg2012-05-24ztgSza1gSMAzm1g14zm2g25zv


Bitcoin is a commodity currency.  Prices for commodities tend to be volatile.  Bitcoin is a exotic commodity.  So you would expect to a volatile trading pattern short-term with an upward trend over the long term.  Not a flatline.  For most of bitcoin's history prices rose steadily long-term while extremely volatile short-term.  With somebody skimming off every rise and fall, we can't grow.  The scam is stunting the growth of bitcoin.

We need to stop this. One possible way was suggested by Pirate himself.   Pirate has said that he would be imperiled by a price spike.  

Pirate said :

Quote

The only thing that would affect my profits would be a huge spike in price over a very short period of time.

So if that's the case a "money bomb" might work.  Coordinated mass buying.

http://en.wikipedia.org/wiki/Moneybomb

Lot of details would need to be worked out to make that effective.  


Front-running is covered in more detail in the following cross-post.


https://bitcointalk.org/index.php?topic=80174.msg911226#msg911226





When something sounds too good to be true it often is.

When a merchant is more likely going to consider bitcoin as money: with crazy volatility, or with a stable price that allow him to predict future profit?

the merchant is going to want a stable price.  he doesn't want something with crazy volatility. he has to run a business and bitcoin presents far too much currency risk

so he won't want to use bitcoin for day to day stuff like point of sale transactions.  even if price was stable confirmation times would be an issue.

bitcoin is a terrible currency for everyday use.  it won't succeed in that space... ever.  it will always be volatile despite attempts to manipuate it.  manipulation never works out long-term.

fiat money is stable.  merchants love it.   but fiat has some very serious problems that everyone on this forum is aware of.  

something else is needed.  that something else is not here yet


bitcoin is almost just like gold.

[imsaguy]

HFT isn't out of realm
but front-running with "inside information" is highly doubtful at best

If you back and look at what he has posted it is consistent with HFT.  

Without the right information things will go awry fast.

You're doing this instead of your algebra homework, aren't you?  Once you hit high school, those grades matter to universities.

Since when do garbage collection specialists need a college degree?

[Realpra]

Okay, not defending pirates business here, as I think its a ponzi, but:

1. Everyone withdrawing shows nothing. If I was running a legitimate business investing peoples money in wind turbines (serious pooling benefits) then I would not be able to pay out a dime or much anyway (edit: During a bank run).

... then again if I was doing that I would just show documents for turbine ownership.

2. The reason you invest other peoples money and not just your own is so you can scale up. I may only have a small amount, say 5K$, and even if I get the full return for that, taking 1-10% of other peoples return while investing 50-500K$ more still nets me extra income.

As others said it is also safer for me to "gamble" with other peoples money.

The benefit for my clients is that I would have the contacts, pooling benefits and save them time investing themselves.

So yeah pirate is likely running a ponzi, but the above are not suspicious signs.