Why I used to trust Patrick Harnett

[JoelKatz]

Well put. Joel, please respond.

I responded to that argument at least five times now. When you realize it's basically, "I borrow money at 100% APR just to short bitcoins with zero leverage" it kind of falls apart.

I would add that the market for deposits is very high (1%/week) so since I want to do everything in BTC my loan rate has to be higher than that in order to make a profit.

Well, if I want to ship my soda only in gold-plated trucks, my soda is going to be very expensive too. But that's why very few people ship soda in gold-plated trucks.

Or, here is an idea:  Joel, I will create a special CD just for you and the rest of the Ponzi Pals.  You give me your BTC and I will give you the totally "reasonable" rate of 10% APR for an 18 month CD.  This is way better than you can do anywhere else in USD - and the "reasonable" rate proves it is not a Ponzi.  Please PM me for a deposit address.  Thanks.

I don't trust you. If Bitcoins triple in price, how will you buy the coins to pay me back? But if that issue was resolved, that would be a great offer. I know quite a few people who are long on Bitcoins for the long term who would be quite interested in something like that if they could trust you.

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[Fiyasko]

OK, closing down my lending business.  You have convinced my it is a horrible idea.  Thanks!

Noo!

[thezerg]

Borrowing in fiat to loan out bitcoins? SOunds like some nasty exchange-risk there.

1) Borrowing BTC to convert to fiat does not make sense. You can get cheaper loans in fiat without the exchange risk.

2) Borrowing fiat to convert to BTC is also risky for both the lender and borrower. In addition to the 10% APR you need to add the exchange-risk. BTC-USD can easily go up by 50-100% or down by 50% over the next 12 months. If I were someone who borrowed USD at 10% APR from by bank, converted that to BTC, and loaned out the BTC to a business venture that operates using BTC (and not USD), I would probably loan it out for at least 10% + 50-100% APR = 60-110% APR. That way the BTC interest takes into account the USD interest and the BTC-USD risk.

3) Borrowing BTC to use as BTC makes more sense. It is difficult to say what a reasonable APR would be. It really depends on whether BTC-USD is expected to rise or fall over the loan period. IMO the APR should be less than 2), but probably still higher than fiat rates.

In summary, because of the exchange-risk component I would NOT consider a BTC loan with and interest rate of 60-110% APR to be usurious. Borrowing in BTC makes sense only when that business needs BTC and not fiat.

2. Is a bit risky but if you are really making significant returns I think you'd start doing it in a small way, eat rice & beans and plow all profits back into your system.
3. Its possible you'd do a bit of 3, but you wouldn't open it up to the nickel & dime forums.  You'd tell your business model to one or 2 high bitcoin-worth individuals, get a much better rate, and most importantly, you'd be paying the thing off (reducing the size of the loan) NOT soliciting new investment.

But 3 is great if you need to pass tremendous risk onto your investors, or if you are doing a Ponzi.  Of course the first becomes the second as soon as some of your investments fail (and you hide that by paying out normally).

[WifeOfStarfish]

So it's ok for Micon to say Patrick is running a scam but not for me to express my opinion on his accusation? What a very even playing field this forum is - not

I think you fail to appreciate the difference between an opinion unsupported by any argument and a reasoned argument. It's not okay to respond to a reasoned argument with a bare opinion and pretend that this in any way invalidates the argument.

Do you have any explanation for why, other than it being a scam, your husband is making so much money he can pay unbelievable interest rates yet doesn't have enough money to pay off his own ultra-high interest rate debt? Because the only reason the rest of us can think of is that he's scamming. If there's some other explanation, we don't know it. And all other such schemes in the past have turned out to be scams.

There's no point answering this.

But there's a point in pretending to?

You'll believe what you want to.

That's a good one! In case you run short of witty retorts, you may want to add "Says who? and "That's what you think!" to your repertoire.

Only wrote this in case my silence was construed as ''hiding something''.

I don't know if you're a shill or you've been duped, but there are arguments on the other side that you refuse to either acknowledge of respond to. You simply keep insisting on a position not only in the absence of evidence but against the weight of all evidence.

Do you know why your husband needs to borrow other people's money at outrageously high interest rates even though he supposedly has some sure fire way to turn massive profits? Or are you taking his word for it? All logic and reason suggests that someone who had a source of extraordinary wealth would make paying off usurious loans their top priority.

I find your behavior extremely bizarre. If you're attempting to vouch for your husband, you need to respond to the substance of the complaints.

Your words reflect poorly on yourself - shame on you for bullying me

[PatrickHarnett]

You are incorrect.   My wife is not supporting a scam or scammer, and your behaviour continues to be disrespectful.  Your attitude continues to be a significant negative for anyone considering to use this forum, let alone bitcoin.

I'm not a scammer.  If you think I am, please find someone I have scammed rather than continuing with your lies.

[DiCE1904]

I also trust Patrick, He gave me a 209BTC loan about a month and a half ago. He answered all of my questions and responded quickly even thought we have a huge time difference. Once my my funds are back in order I plan on depositing in an interest account with Patrick with no second thought about it.

[Mosrite]

So it's ok for Micon to say Patrick is running a scam but not for me to express my opinion on his accusation? What a very even playing field this forum is - not

I think you fail to appreciate the difference between an opinion unsupported by any argument and a reasoned argument. It's not okay to respond to a reasoned argument with a bare opinion and pretend that this in any way invalidates the argument.

Do you have any explanation for why, other than it being a scam, your husband is making so much money he can pay unbelievable interest rates yet doesn't have enough money to pay off his own ultra-high interest rate debt? Because the only reason the rest of us can think of is that he's scamming. If there's some other explanation, we don't know it. And all other such schemes in the past have turned out to be scams.

There's no point answering this.

But there's a point in pretending to?

You'll believe what you want to.

That's a good one! In case you run short of witty retorts, you may want to add "Says who? and "That's what you think!" to your repertoire.

Only wrote this in case my silence was construed as ''hiding something''.

I don't know if you're a shill or you've been duped, but there are arguments on the other side that you refuse to either acknowledge of respond to. You simply keep insisting on a position not only in the absence of evidence but against the weight of all evidence.

Do you know why your husband needs to borrow other people's money at outrageously high interest rates even though he supposedly has some sure fire way to turn massive profits? Or are you taking his word for it? All logic and reason suggests that someone who had a source of extraordinary wealth would make paying off usurious loans their top priority.

I find your behavior extremely bizarre. If you're attempting to vouch for your husband, you need to respond to the substance of the complaints.

Your words reflect poorly on yourself - shame on you for bullying me

Where is there any bullying? SHAME on you for shilling for and supporting a scam/scammer.

[Bitcoin Oz]

Deposit rates have been reducing as the market starts to mature a bit more. I think we will see them approach fiat rates eventually. Patrick has explained this before for anyone willing to actually listen to what hes saying.

You simply cant loan out bitcoins at fiat rates at this point in time but Im sure as more local bitcoin loansharks come on board youll be able to get lower rates by using collateral they can repossess in the event of a default.

[WifeOfStarfish]

So it's ok for Micon to say Patrick is running a scam but not for me to express my opinion on his accusation? What a very even playing field this forum is - not

I think you fail to appreciate the difference between an opinion unsupported by any argument and a reasoned argument. It's not okay to respond to a reasoned argument with a bare opinion and pretend that this in any way invalidates the argument.

Do you have any explanation for why, other than it being a scam, your husband is making so much money he can pay unbelievable interest rates yet doesn't have enough money to pay off his own ultra-high interest rate debt? Because the only reason the rest of us can think of is that he's scamming. If there's some other explanation, we don't know it. And all other such schemes in the past have turned out to be scams.

There's no point answering this.

But there's a point in pretending to?

You'll believe what you want to.

That's a good one! In case you run short of witty retorts, you may want to add "Says who? and "That's what you think!" to your repertoire.

Only wrote this in case my silence was construed as ''hiding something''.

I don't know if you're a shill or you've been duped, but there are arguments on the other side that you refuse to either acknowledge of respond to. You simply keep insisting on a position not only in the absence of evidence but against the weight of all evidence.

Do you know why your husband needs to borrow other people's money at outrageously high interest rates even though he supposedly has some sure fire way to turn massive profits? Or are you taking his word for it? All logic and reason suggests that someone who had a source of extraordinary wealth would make paying off usurious loans their top priority.

I find your behavior extremely bizarre. If you're attempting to vouch for your husband, you need to respond to the substance of the complaints.

Your words reflect poorly on yourself - shame on you for bullying me

Where is there any bullying? SHAME on you for shilling for and supporting a scam/scammer.

After reading your (short) post history it is clear you are here only to troll

[WifeOfStarfish]

You are incorrect.   My wife is not supporting a scam or scammer, and your behaviour continues to be disrespectful.  Your attitude continues to be a significant negative for anyone considering to use this forum, let alone bitcoin.

I'm not a scammer.  If you think I am, please find someone I have scammed rather than continuing with your lies.

Patrick is referring to a Mosrite post that has been deleted at my request

[JoelKatz]

I'm not a scammer.  If you think I am, please find someone I have scammed rather than continuing with your lies.

Was it obvious all along that Pirate would one day have to default and be unable to repay principles deposited with him? If your answer is yes, why is it not equally obvious with you? If your answer is no,  why would it matter whether I could or couldn't find someone you scammed? You couldn't find anyone Pirate had scammed until the day he stopped making payments.

[PatrickHarnett]

On that logic, you are a scammer too - the presumption of guilt in the absence of evidence.  I find that quite a silly stance to take, and if that is how you view the world, it must be an unhappy place.

[WifeOfStarfish]

On that logic, you are a scammer too - the presumption of guilt in the absence of evidence.  I find that quite a silly stance to take, and if that is how you view the world, it must be an unhappy place.

Is that the way the US justice system works perhaps - presumption of guilt in the absence of evidence? Hopefully not!

[finkleshnorts]

I'm not a scammer.  If you think I am, please find someone I have scammed rather than continuing with your lies.

Was it obvious all along that Pirate would one day have to default and be unable to repay principles deposited with him? If your answer is yes, why is it not equally obvious with you? If your answer is no,  why would it matter whether I could or couldn't find someone you scammed? You couldn't find anyone Pirate had scammed until the day he stopped making payments.

On that logic, you are a scammer too - the presumption of guilt in the absence of evidence.  I find that quite a silly stance to take, and if that is how you view the world, it must be an unhappy place.

Joel does make a good point. And I do appreciate the awareness he is raising on these boards.

However, I truly hate to see Patrick's name being drug through the mud. FWIW, I don't think for a second think he is scamming anybody. I know everybody said the same thing about Pirate, but I believe that 1% a week (R.I.P. Starfish ), as outrageous an IRL rate as it may be, is very manageable given what I've gathered about the lending economy here. For now, at least. Of course it isn't (wasn't) risk-free, but Patrick seems intent on treating his depositors right, even when it costs him.

Why anyone (besides a miner) would borrow bitcoins is beyond me, though. Scary bull market is scary.

[slider1978]

On that logic, you are a scammer too - the presumption of guilt in the absence of evidence.  I find that quite a silly stance to take, and if that is how you view the world, it must be an unhappy place.

Is that the way the US justice system works perhaps - presumption of guilt in the absence of evidence? Hopefully not!

In the court of public opinion sadly this is exactly the way it works.

I would add that I've had several dealings with Patrick and he has always conducted himself professionally.

i will also say that I've had several dealings with Pirate and has so far conducted himself professionally as well, including paying back my personal BS&T account after his closing announcement. I still have another account with him and it remains to be seen if that is re-paid.

[JoelKatz]

On that logic, you are a scammer too - the presumption of guilt in the absence of evidence.

Please show how you can use that logic to show that I'm a scammer.

I find that quite a silly stance to take, and if that is how you view the world, it must be an unhappy place.

If you think it's a silly stance then you should have no problem showing me what's incorrect about it. The world is not an unhappy place, but it would be much happier if it wasn't polluted by ponzi schemes.

[JoelKatz]

However, I truly hate to see Patrick's name being drug through the mud. FWIW, I don't think for a second think he is scamming anybody. I know everybody said the same thing about Pirate, but I believe that 1% a week (R.I.P. Starfish ), as outrageous an IRL rate as it may be, is very manageable given what I've gathered about the lending economy here. For now, at least. Of course it isn't (wasn't) risk-free, but Patrick seems intent on treating his depositors right, even when it costs him.

If he has some source of money that's so amazing that he can afford to pay 1% a week interest and still make money, why doesn't he use the money he is making to pay off his debt? Nobody has ever explained why such a scheme would require a constant flow of other people's money other than that it's a scam. Any rational businessman who was making a ton of money would make paying off his high-interest debt his number one priority. There is exactly one known explanation that perfectly explains all the observed facts -- it's a scam.

You seriously believe that Patrick is so smart that he is the first person to figure out a way to reliably make ultra-high profits at low risk and is simultaneously so dumb that he borrows more and more money at *way* above market rates? How do you manage to pull that off?

[rdponticelli]

However, I truly hate to see Patrick's name being drug through the mud. FWIW, I don't think for a second think he is scamming anybody. I know everybody said the same thing about Pirate, but I believe that 1% a week (R.I.P. Starfish ), as outrageous an IRL rate as it may be, is very manageable given what I've gathered about the lending economy here. For now, at least. Of course it isn't (wasn't) risk-free, but Patrick seems intent on treating his depositors right, even when it costs him.

If he has some source of money that's so amazing that he can afford to pay 1% a week interest and still make money, why doesn't he use the money he is making to pay off his debt? Nobody has ever explained why such a scheme would require a constant flow of other people's money other than that it's a scam. Any rational businessman who was making a ton of money would make paying off his high-interest debt his number one priority. There is exactly one known explanation that perfectly explains all the observed facts -- it's a scam.

If the business is precisely the allocation of idle, unused capital to potentially profitable businesses who happens to need it to be developed to their maximum capacity, it does indeed make sense to get indebted. The profitability of the allocator comes from taking a cut from the maximized profitability of the capitalized business, and so he can share that cut with his lender, the capitalist.

I know, your concern is that this scheme has risks attached and you can't understand how they claim that the lender isn't at a risk. Yes, this is the weak point of their business as I can understand it (if his business really is what they say it is, because I don't have that as a fact, but I tend to believe that at least Patrick and Kluge are doing what they say they're doing). The lender is effectively taking a big risk, and all that jazz about some "guarantee" or "insurance" comes down as soon as anything goes wrong, and a lot of things can go wrong...

You seriously believe that Patrick is so smart that he is the first person to figure out a way to reliably make ultra-high profits at low risk and is simultaneously so dumb that he borrows more and more money at *way* above market rates? How do you manage to pull that off?

Maybe his profits aren't that great. Nor are those of his lenders, if you take into account all the risks attached... Maybe that's precisely the point that they are realizing now...


Edit: s/lendee/lender/ I confused the terms... 

[eroxors]

Joel... you're being an argumentative asshole. Patrick is willing to provide ample personal information to anyone depositing with him which provides plenty of recourse should anything happen. Why not troll some where else?

[justusranvier]

Joel... you're being an argumentative asshole.

Yet nobody will answer his very simple question. The only responses have been evasions, smokescreens, and personal attacks.