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Author Topic: A day in the life of a pirate.  (Read 28365 times)
Raoul Duke
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May 29, 2012, 05:15:39 PM
 #261

Glad to see so much speculation in the bitcoin discussion sub forum.

Apparently, pirateat14 and you, ARE Bitcoin.  Huh

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jamesg
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May 29, 2012, 05:47:54 PM
 #262

Apparently, pirateat14 and you, ARE Bitcoin.  Huh

Now that's just silly.
bitfoo
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May 30, 2012, 04:29:15 AM
 #263

Does anyone suspect that Clipse and pirateat40 might have the same business model? They both sell bitcoins locally, and they both pay extra for people to mine for them. Neither of them give away much more information than that (understandably).

Hmm.... Smiley

bulanula
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May 30, 2012, 01:10:16 PM
 #264

Does anyone suspect that Clipse and pirateat40 might have the same business model? They both sell bitcoins locally, and they both pay extra for people to mine for them. Neither of them give away much more information than that (understandably).

Hmm.... Smiley

Ever considered that Clipse's so-called "pool" ( not a pool 100% because all normal pools publish found blocks - it is a proxy like ABCPool ) is just diverting to GPUMAX and he is taking a big fat 30% cut from everybody ?

No wonder you cannot use GPUMAX through his pool ...

The myth of selling BTC to fools locally is laughable. Nobody is stupid to pay more for BTC than market rate I would believe.
rjk
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May 30, 2012, 01:12:05 PM
 #265

Does anyone suspect that Clipse and pirateat40 might have the same business model? They both sell bitcoins locally, and they both pay extra for people to mine for them. Neither of them give away much more information than that (understandably).

Hmm.... Smiley
I'm pretty sure it is, although I wasn't going to call it. He's in South Africa, and Pirateat40 is in Texas, so their markets don't really overlap when selling to local people on the ground.

As to why the buyers will pay such a premium - well I still haven't figured that out.

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Raoul Duke
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May 30, 2012, 01:25:25 PM
 #266

well I still haven't figured that out.

When you can't get privacy for free and yet you value it that much, why not pay a premium for it?

rjk
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May 30, 2012, 01:27:30 PM
 #267

well I still haven't figured that out.

When you can't get privacy for free and yet you value it that much, why not pay a premium for it?
I get that, but I can't figure out the massive market density around these people. Unless folks travel far and wide to meet them.

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PatrickHarnett
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May 30, 2012, 10:03:49 PM
 #268


The myth of selling BTC to fools locally is laughable. Nobody is stupid to pay more for BTC than market rate I would believe.

I've done just that, might only have been a few thousand dollars worth, but a 10-20% premium was still worth having.
publio
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May 30, 2012, 10:20:56 PM
 #269


The myth of selling BTC to fools locally is laughable. Nobody is stupid to pay more for BTC than market rate I would believe.

I've done just that, might only have been a few thousand dollars worth, but a 10-20% premium was still worth having.

Did you find a fool, or someone using the coins for illicit means?

bulanula
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May 30, 2012, 10:35:21 PM
 #270


The myth of selling BTC to fools locally is laughable. Nobody is stupid to pay more for BTC than market rate I would believe.

I've done just that, might only have been a few thousand dollars worth, but a 10-20% premium was still worth having.

Did you find a fool, or someone using the coins for illicit means?

I think the latter most likely Wink

Buying coins on MtGox requires you to be AML and follow the law and submit documents.

Trading BTC person to person requires none such things and it is understandable why the 20% premiums demanded by the seller. Especially if in high quantities.

BTC buyer hands over money to be laundered -> BTC seller gives "untainted" BTC -> BTC buyer then goes and gets his "clean" USD through exchange as BTC can't be traced etc.  

I don't think pirate is doing this BTW. Just my observations / possible explanation why somebody would be selling BTC at a high premium locally.
MrTeal
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May 30, 2012, 10:36:15 PM
 #271


The myth of selling BTC to fools locally is laughable. Nobody is stupid to pay more for BTC than market rate I would believe.

I've done just that, might only have been a few thousand dollars worth, but a 10-20% premium was still worth having.

Did you find a fool, or someone using the coins for illicit means?

For many people actually buying BTC is a huge pain in the ass. If you were only buying a couple hundred dollars worth of BTC it might be worth your time to just pay someone $40 extra to get you the BTC, especially if it also saves you a few bucks in exchange fees.
pirateat40
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May 30, 2012, 10:38:51 PM
 #272

When you sell trade Bitcoins do you always ask every buyer trader what they are going to use them for?

I don't like those words. Smiley

rjk
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May 30, 2012, 10:39:24 PM
 #273


The myth of selling BTC to fools locally is laughable. Nobody is stupid to pay more for BTC than market rate I would believe.

I've done just that, might only have been a few thousand dollars worth, but a 10-20% premium was still worth having.

Did you find a fool, or someone using the coins for illicit means?

For many people actually buying BTC is a huge pain in the ass. If you were only buying a couple hundred dollars worth of BTC it might be worth your time to just pay someone $40 extra to get you the BTC, especially if it also saves you a few bucks in exchange fees.
I wonder if and how Bitinstant's cash deposits are affecting Pirate's operation.

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miscreanity
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May 30, 2012, 10:47:41 PM
 #274

Could you clarify please. What would be an example of an operation where having USD liabilites as opposed BTC liabilities is by 2-3 orders of magnitude more risky?

Ok lets say your business was in "pet rocks".

...

I don't know about you but that's what risk management means to me. Smiley

The way I reckon, that view is a much more responsible one than most here are assuming. To put it as Jim Sinclair might say, the days of colonial style wealth extraction that only benefit those at the top are over.

Sure, the concentration of wealth from a successful venture might be extreme at the top, but it leads to impoverishment and resentment of those involved, whether directly or indirectly. A rising tide raises all ships, but wealth extraction holds many underwater.

Instead of hoarding his shiny Bitcoins and his proprietary venture a la Facebook, Pirate is granting access to a potentially risky investment. Doing so means that no other business doing the same can offer as high a rate of return without copying his profit-sharing model.

As for his risk, it is not so much that Bitcoin might fail, but that those whom he is obligated to might come after him with pitchforks, demanding blood. To lessen or eliminate the latter, he is sharing access to his operation - in the event of failure, he'll step down as Captain of the ship rather than be forced to walk the plank like Jamie Dimon.

In light of that, lead on, Captain Pirate!
miscreanity
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May 30, 2012, 10:57:37 PM
 #275

I'm not paying interesting interest (see I'm just tired) in fiat, it's in Bitcoins.  My lenders do whatever they want with the profits I pay out.

Oh there are doubts what you are paying interest in. Or more accurately that you prefer to have 2-3 orders of magnitude higher cost of capital when denominated in BTC as compared to cost of capital denominated in USD. This much is clear and really indisputable.

My statement is still not refuted:

Quote
there are only two possibilities:

1. The issuer is acting irrationally.
2. The issuer is offloading to "investors" some enormous risks. As such these are not really "investors", but simply gamblers. And they should be really not so much concerned about return on capital as about return of capital.

Is there a third possibility? If yes what it is? If not, is it 1 or 2?

P.S. I am aware of only one biz model where 10% per month cost of capital would make sense. It is a ponzi scheme.

It's possible that the risk may be outside of the Bitcoin environment. Assuming small operations doesn't give enough perspective because small fry generally have an eye on growth, not preservation.

Since Pirate's business is geographically dependent, I'll outline one possible perspective. When looking to preserve wealth, there are a few options that high net worth entities have always been able to rely upon:
  • Precious Metals (esp. Gold & Silver)
  • Land & Real Estate
  • Fine/Rare Artwork
  • Gemstones

Not every HNW entity is at the high end of the spectrum, so ownership of any of the above might not be held in ideal locations, or liquidation may not be easy. Asset seizure or account freezing can be far more devastating to HNW entities than it might be for middle and lower class individuals. Risk of confiscation is a 100% loss consideration; without much to confiscate, the financial loss isn't as great. If there happens to be another form of wealth preservation that's even more difficult to attack than the above list, you can be certain that it will garner attention. Even a handful of Euro or USD millionaires could easily take a sizable stake without breaking a sweat, yet still look at their purchase as insurance.

Example:

Assume my net worth is USD$10,000,000 and I want to protect as much as I can. Keep in mind that nothing is truly free. With the absolute worst-case scenario of 100% loss due to some form of loss, theft, or destruction, I elect to protect 25% in total, so $2,500,000 is reserved.

All of the above are physical items that could be somehow taken. Astute HNW individuals often keep their eyes open for investments or ways of protecting their assets. Let's say I've been hearing about this 'Bitcoin' thing from another HNW associate. I observe for a while and learn what I can about the system. At the same time, I'm well aware of increasing threats from government that may seriously jeopardize the safety of my accumulated wealth. Not only would my savings be at risk, but also my livelihood. It would be folly to think that HNW persons are incapable of sensing when sentiment toward their social class is negative.

My decisions on wealth preservation lead me to conclude that equities are too risky given recent events, and the banking system is too dangerous for wealth storage. Not counting fees, I decide to allocate my security assets as so:

$1,000,000 is put into gold.
$500,000 is put into property.
$400,000 is put into art.
$400,000 is put into gemstones.
$200,000 is put into Bitcoin.

In the event that Bitcoin fails, I'm only out 2% of my net worth and less than 10% of my preservation fund. If it takes off, I could easily become a Bitcoin Billionaire. If it remains about where it is, no harm has been done and my wealth has been preserved.

How much would I be willing to pay for that protection? There are many who spend a good percentage of their net worth on security. I certainly don't want to cause any serious disturbances for whatever I'm putting my wealth into unless there's an impending threat and time is of the essence. If I have to pay 50-100% on top of the going rate to acquire an asset without drawing attention to myself, so be it. It's often a small price to pay for peace of mind.

Other cases can be made from a low net worth individual or business perspective, but they mostly fall under the trade-off in perceived risk between classes, not so much speculation or growth within a single asset class.

A Pecuniary Pirate's Path to Profit: use the little straw to sip from a big jug.

It boils down to finding a niche, and in retrospect people say: "Why didn't I think of that?"

Are you sure the exchanges reflect Bitcoin's real value? Do you have access to dark pools? Are there other assets less desirable or risky than Bitcoin... ?

The way Pirate has things structured, a sudden failure is much less likely than a gradual evaporation. Unless, as he said, the price appreciates sharply.

What will happen with all these loan portfolios if (when actually) BTC exchange rate jumps 40-50% in one month?

There may be defaults in extreme cases. Pirate may have to either keep a large reserve of BTC, halt/reduce interest payments, or acquire quietly by using USD from the other side of his business so as not to further displace price. That isn't to say 40-50% change is even enough to cause such stresses; the number may be 400-500% or more.

This is basically what we're seeing in traditional financial markets, only in the opposite direction. In the case of lenders, halting interest payments is a very powerful tool that actually indicates positive growth, whereas in traditionally mature markets it's indicative of negative potential.

Of course, the ride will end sometime; the interest rates will decline and competition will increase. However, until the 21mm unit asymptote is approached, there's still room for expansion.
miscreanity
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May 30, 2012, 11:02:03 PM
 #276

blah blah blah blah

Good thing most of the forum has you on ignore.

I just discovered that beer actually has an aftertaste (afterscent?) when it goes out through the nose. Also, remember to turn your head away from the screen...

pirateat40
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"Yes I am a pirate, 200 years too late."


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May 30, 2012, 11:04:07 PM
 #277

Could you clarify please. What would be an example of an operation where having USD liabilites as opposed BTC liabilities is by 2-3 orders of magnitude more risky?

Ok lets say your business was in "pet rocks".

...

I don't know about you but that's what risk management means to me. Smiley

The way I reckon, that view is a much more responsible one than most here are assuming. To put it as Jim Sinclair might say, the days of colonial style wealth extraction that only benefit those at the top are over.

Sure, the concentration of wealth from a successful venture might be extreme at the top, but it leads to impoverishment and resentment of those involved, whether directly or indirectly. A rising tide raises all ships, but wealth extraction holds many underwater.

Instead of hoarding his shiny Bitcoins and his proprietary venture a la Facebook, Pirate is granting access to a potentially risky investment. Doing so means that no other business doing the same can offer as high a rate of return without copying his profit-sharing model.

As for his risk, it is not so much that Bitcoin might fail, but that those whom he is obligated to might come after him with pitchforks, demanding blood. To lessen or eliminate the latter, he is sharing access to his operation - in the event of failure, he'll step down as Captain of the ship rather than be forced to walk the plank like Jamie Dimon.

In light of that, lead on, Captain Pirate!

Reading posts like this makes me smile.  There're still smart people in this community and it's those people I've learned to surround myself with.

"Surround yourself with like-minded people who want to see you successful." - Robert Kiyosaki

Smiley

imsaguy
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May 30, 2012, 11:06:16 PM
 #278

Reading posts like this makes me smile.  There're still smart people in this community and it's those people I've learned to surround myself with.

"Surround yourself with like-minded people who want to see you successful." - Robert Kiyosaki

Smiley

Or maybe you just like the feel of a nose placed firmly against your cheeks.

Coming Soon!™ © imsaguy 2011-2013, All rights reserved.

EIEIO:
https://bitcointalk.org/index.php?topic=60117.0

Shades Minoco Collection Thread: https://bitcointalk.org/index.php?topic=65989
Payment Address: http://btc.to/5r6
pirateat40
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"Yes I am a pirate, 200 years too late."


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May 30, 2012, 11:09:35 PM
 #279

Reading posts like this makes me smile.  There're still smart people in this community and it's those people I've learned to surround myself with.

"Surround yourself with like-minded people who want to see you successful." - Robert Kiyosaki

Smiley

Or maybe you just like the feel of a nose placed firmly against your cheeks.

LOL, if i wanted that.  I'd pay for it. Tongue

imsaguy
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Don't send me a pm unless you gpg encrypt it.


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May 30, 2012, 11:10:47 PM
 #280

Reading posts like this makes me smile.  There're still smart people in this community and it's those people I've learned to surround myself with.

"Surround yourself with like-minded people who want to see you successful." - Robert Kiyosaki

Smiley

Or maybe you just like the feel of a nose placed firmly against your cheeks.

LOL, if i wanted that.  I'd pay for it. Tongue

I thought pimps don't have to pay?

Coming Soon!™ © imsaguy 2011-2013, All rights reserved.

EIEIO:
https://bitcointalk.org/index.php?topic=60117.0

Shades Minoco Collection Thread: https://bitcointalk.org/index.php?topic=65989
Payment Address: http://btc.to/5r6
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