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Author Topic: Bitcoin Killer App: High Yield Investments  (Read 10095 times)
Mageant (OP)
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July 22, 2012, 02:25:59 PM
 #1

I really like Bitcoin and find it very promising, but when I initially found out about Bitcoin last year there was no compelling reason for me (other than to try it out) to actually use Bitcoin.

In the past few months it has changed.

Bitcoin is now really useful to me and enables me to do something new which I would otherwise not be able to do.

That is namely, to make more money from investments than I usually could in the 'fiat world'.

I see this as a great opportunity and quite persuasive reason for people to get into Bitcoins.

I'm not only counting BS&T (Pirate) but if you look on GLBSE there are plenty of investment opportunities which yield very high interest rates: 1% per week is common, and you can easily diversify your investment to protect against risk.

This is a staggering annualized rate of 67% which you would not otherwise easily get, at least not with the amount of capital most people have available.

So what do you think? Is this the "killer app" for Bitcoin we have been waiting for?

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BadBitcoin (James Sutton)
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July 22, 2012, 02:28:46 PM
 #2

 I don't think anyones been "waiting" for that, its been widespread since it began a few months back, it certainly is helping the economy, though.
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July 22, 2012, 02:44:15 PM
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I agree that there's a potential consumer of this "killer ap" born every minute.

Not sure it's good for bitcoin, however.
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July 22, 2012, 03:07:10 PM
 #4

So what do you think? Is this the "killer app" for Bitcoin we have been waiting for?

If you ask and get a rational explanation back as to how that high yield is reached - sure. If not, then you're just going to a casino.

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July 22, 2012, 03:22:54 PM
 #5

Every time you see a really good investment that's handed to you on a silver platter, you should immediately ask yourself one question: why isn't everyone else doing it?

If the answer is "because the investment just got created a few weeks ago and you got lucky enough to see it first", ask a follow up question: why didn't the guy just max out his credit card at 21% instead of seeking your money at 60%?

The only high-yield investments that can possibly be justified are those within the Bitcoin community - ie. those where the debt is denominated in BTC, and which traditional investors would not be willing to touch due to currency risk. So Bitcoin is not really enabling anything outside of itself.

Argumentum ad lunam: the fallacy that because Bitcoin's price is rising really fast the currency must be a speculative bubble and/or Ponzi scheme.
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July 22, 2012, 03:24:39 PM
 #6

I agree that GLBSE seems like it has some great opportunities, but I'm limiting my exposure in case it's a ponzi within a ponzi...

Coinbase for selling BTCs
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July 22, 2012, 03:59:54 PM
 #7

I agree that GLBSE seems like it has some great opportunities, but I'm limiting my exposure in case it's a ponzi within a ponzi...

Inside 12 months most of these "great investment opportunitys" will have collapsed into  failure

the rewards are far too big to be sustainable

if real world  saving investments are paying 5% -8% per year its unlikely that BTC can continue to pay 67%-3400% without some people losing their principal ,i would love to be wrong about this but i think  the decisions of a few are  going to change the community forever
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July 22, 2012, 04:05:31 PM
 #8

I keep invested about 70% of my BTC on the GLBSE from some time, but it is just play money, since I am quite worried that it may vanish in the air, be hacked, or taken down for a reason or the other.
Otherwise, the biggest mining companies seem quite a solid investment to me.
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July 22, 2012, 04:07:11 PM
 #9

Some of the more transparent deposits and also personal loans are the main reason I keep buying bitcoins. I'd rather my money be working for me than having it sit in an interest-free checking account.
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July 22, 2012, 04:16:39 PM
 #10

Some of the more transparent deposits and also personal loans are the main reason I keep buying bitcoins. I'd rather my money be working for me than having it sit in an interest-free checking account.

there are term deposits and fixed rate acounts that pay % of interest and guarantee the principal

nothing like the rates of BTC investments though Cheesy
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July 23, 2012, 09:29:56 AM
 #11

If you leave money in a bank in Australia you get negative interest by the time fees are taken out. This is one reason I keep btc and invest some on glbse.

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July 23, 2012, 09:55:14 AM
 #12

Okay lets walk through it.

I start a nice little 1%/day HYIP, minimum "investment" $1000 USD.

Say I get only 1000 takers initially, thats only $1,000,000 USD.

1% for 365 days multiplies that up to $37,780,000.00 USD.

Now if I have been using all that money to buy bitcoins, how much would bitcoins be worth by then?

(I am assuming here that I actually rake in $37,780,000.00, on the greater sucker theory. That is, each $1000 someone wants to withdraw is obtained by selling another $1000 unit to someone else, so no withdrawals happen and the basic $10,000 raked in does grow up to a full  $37,780,000.00 raked in and turned into bitcoins.)

Now continue into a second year of operation... Bitcoins would have to go up in value in order for me to have raked in an additional 1% per day for another year and bought bitcoins with it all...

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July 23, 2012, 09:58:22 AM
 #13

Bitcoin Killer App: Ponzi Schemes

Yep, it is what people really want. People don't want to invest in interesting startups, who build products with long-term focus. They want to risk their life savings with gambling and ponzi schemes. Nothing wrong with that, people will get what they want  Grin

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July 23, 2012, 10:13:24 AM
 #14

Bitcoin Killer App: Ponzi Schemes

Ohh this is indeed a killer app, the only questions are who/what will be killed and when.

So far I see only common sense got killed, but surely the list of killee's will expand.


-
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July 23, 2012, 10:14:10 AM
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Bitcoin Killer App: Ponzi Schemes

Ohh this is indeed a killer app, the only questions are who/what will be killed and when.

Cheesy
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July 23, 2012, 10:20:07 AM
 #16

Bitcoin Killer App: Ponzi Schemes

Yep, it is what people really want. People don't want to invest in interesting startups, who build products with long-term focus. They want to risk their life savings with gambling and ponzi schemes. Nothing wrong with that, people will get what they want  Grin

+1
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July 23, 2012, 02:22:50 PM
 #17

Many more Bitcoin bubbles have been predicted, and this one's probably gonna be the next. It will not so much be through the Bitcoin price this time, the community seems to have learnt that, but it will be through a Black Friday on the stock markets, like in 1929. History keeps repeating, although perpetuating faster. It seems we only really learn when we experience.

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July 23, 2012, 02:40:10 PM
 #18

Good advice that I expect will be widely ignored: only invest in what you know.

So-called high yield investments are (almost?) always dressed-up Ponzi schemes. If you "invest" in them then please lick your wounds quietly when they implode. And if you're one of the lucky few who make money on them, don't expect me to admire your investing wisdom, any more than I'd admire the number-picking brilliance of a lottery winner.

How often do you get the chance to work on a potentially world-changing project?
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July 23, 2012, 02:55:49 PM
 #19

I don't think anyones been "waiting" for that, its been widespread since it began a few months back, it certainly is helping the economy, though.

Until of course some "unplanned" dramatic collapse which decimates the BTC price, makes normal people more wary, grossly enriches a sneaky moraless few, wipes out the gullible or naive and consumes the forums posts with re-incriminations, accusations and disgust.

So, I don't know, yes-and-no. :-)

more or less retired.
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July 23, 2012, 03:06:48 PM
 #20

the rewards are far too big to be sustainable

if real world  saving investments are paying 5% -8% per year its unlikely that BTC can continue to pay 67%-3400% without some people losing their principal ,i would love to be wrong about this but i think  the decisions of a few are  going to change the community forever

Not necessarily.

The interest rate an economy can support is directly related to the health of the underlying economy and stability of the currency (See The Theory of Money). In Bitcoin's case one can reasonably infer from the interest rates and limited currency supply that the Bitcoin economy is extremely strong.

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July 23, 2012, 03:12:25 PM
 #21

Good advice that I expect will be widely ignored: only invest in what you know.

We need a bitcoin motivational poster:


DO YOUR HOMEWORK!

Frankie
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July 23, 2012, 03:14:11 PM
 #22

I don't think anyones been "waiting" for that, its been widespread since it began a few months back, it certainly is helping the economy, though.

Until of course some "unplanned" dramatic collapse which decimates the BTC price, makes normal people more wary, grossly enriches a sneaky moraless few, wipes out the gullible or naive and consumes the forums posts with re-incriminations, accusations and disgust.

So, I don't know, yes-and-no. :-)

+1
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July 23, 2012, 03:21:01 PM
 #23

the rewards are far too big to be sustainable

if real world  saving investments are paying 5% -8% per year its unlikely that BTC can continue to pay 67%-3400% without some people losing their principal ,i would love to be wrong about this but i think  the decisions of a few are  going to change the community forever

Not necessarily.

The interest rate an economy can support is directly related to the health of the underlying economy and stability of the currency (See The Theory of Money). In Bitcoin's case one can reasonably infer from the interest rates and limited currency supply that the Bitcoin economy is extremely strong.

5-8% per week might be unsustainable, but that does not mean that it is a ponzi. It just means that not everyone can get 3400% times their money, like we all know. Interest rates are being adjusted for savings accounts anyways.
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July 23, 2012, 05:07:18 PM
 #24

Good advice that I expect will be widely ignored: only invest in what you know.

We need a bitcoin motivational poster:


DO YOUR HOMEWORK!


LOOSE WALLETS SINK SHIPS!

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July 23, 2012, 05:30:18 PM
 #25

And if you're one of the lucky few who make money on them, don't expect me to admire your investing wisdom, any more than I'd admire the number-picking brilliance of a lottery winner.

I disagree. Being able to correctly read the general emotion of the investing "herd" is a far, far more valuable skill than being able to do fundamental and qualitative analysis of an investment. I am an engineer by training, and it took me way too long to discover this.
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July 23, 2012, 05:36:08 PM
 #26

The sad fact is: being an early adopter does in no way guarantee that you'll become rich.

People will be scammed, lost bitcoin to bad investment, lost bitcoin to forgetting passwords, lost bitcoin due to no backup, lost bitcoin to real life circumstance, etc.

Bitcoin is not easy money.

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July 23, 2012, 05:42:11 PM
 #27

We need a bitcoin motivational poster:

You asked for it:
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July 23, 2012, 05:47:42 PM
 #28

The difference is, that in Bitcoin, some of these rates CAN be sustained. Bitcoin has such low fees and almost no government interference. Bitcoin loans are often 10% MPR. Mining can get you 1% WPR. I don't know about 7%, but Bitcoin is not fiat, and it shouldn't be treated like it has fiat's limitations.
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July 23, 2012, 06:15:35 PM
 #29

The difference is, that in Bitcoin, some of these rates CAN be sustained. Bitcoin has such low fees and almost no government interference. Bitcoin loans are often 10% MPR. Mining can get you 1% WPR. I don't know about 7%, but Bitcoin is not fiat, and it shouldn't be treated like it has fiat's limitations.

I'm afraid Occam's razor applies here however.

We have a user on the forums who claims to be able to offer people a guaranteed 3400% APR... In a largely anonymous online currency.

Next, we have BS&T offering "Partner Accounts" encouraging people to plough many thousands of coins into this investment, and to encourage others to invest by proxy in order to increase their total amount invested.

Is there even a way to short BS&T any more?
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July 23, 2012, 06:22:58 PM
 #30

The difference is, that in Bitcoin, some of these rates CAN be sustained. Bitcoin has such low fees and almost no government interference. Bitcoin loans are often 10% MPR. Mining can get you 1% WPR. I don't know about 7%, but Bitcoin is not fiat, and it shouldn't be treated like it has fiat's limitations.

The old rules still apply: If it sounds too good to be true, it probably is.

No matter what, it still won't excuse you from doing your homework and due diligence.

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July 23, 2012, 06:23:48 PM
 #31

HYIPs subtanstantially drove the growth of digital gold currencies.  Unfortunately they also were a major part of that industry's downfall.  


Frank
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July 23, 2012, 06:28:02 PM
 #32

HYIPs subtanstantially drove the growth of digital gold currencies.  Unfortunately they also were a major part of that industry's downfall.  


Frank

Interesting. Any more details about how they helped lead to downfall of those currencies? I was under the impression their failure was due to government action.
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July 23, 2012, 06:28:22 PM
 #33

The difference is, that in Bitcoin, some of these rates CAN be sustained. Bitcoin has such low fees and almost no government interference. Bitcoin loans are often 10% MPR. Mining can get you 1% WPR. I don't know about 7%, but Bitcoin is not fiat, and it shouldn't be treated like it has fiat's limitations.

I'm afraid Occam's razor applies here however.

We have a user on the forums who claims to be able to offer people a guaranteed 3400% APR... In a largely anonymous online currency.

Next, we have BS&T offering "Partner Accounts" encouraging people to plough many thousands of coins into this investment, and to encourage others to invest by proxy in order to increase their total amount invested.

Is there even a way to short BS&T any more?
FFS. FFS! WHY ARE YOU QUOTING MY POST IF YOU DIDN'T EVEN BOTHER TO READ IT?
There are a few things that need to happen:
1. Stop talking about Pirate. Nothing new has been said in weeks
2. Stop relying on Occam's razor as your logical backing. If we apply Occam's razor to the graph of cos(X), we get a straight line.
3. Read the damn posts you reply to. I said "I don't know about 7%." Did I back pirate? No. Did I mention ways that 1% WPR can be obtained in Bitcoin without a Ponzi scheme? Yes.
Quote
The old rules still apply: If it sounds too good to be true, it probably is.

No matter what, it still won't excuse you from doing your homework and due diligence.
FFS! 1% WPR sounds too good to be true in FIAT. FIAT! FIAT FIAT FIAT.
But I know people who get that with their mining hardware. And I see Bitcoin loans every day which are done at  10% MPR. 10% MPR is too good to be true in FIAT. FIAT! FIAT FIAT FIAT. But it happens, legitimately, in BITCOIN. BITCOIN.
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July 23, 2012, 07:42:19 PM
 #34

I think the reason why we are seeing such high yields is because Bitcoin enables a truly free market for investments.

We all know, with Bitcoin there are no capital controls, no chargebacks, lower transaction fees, faster transactions, greater anonymity, no risk of seizure or interference.

One could imagine that these properties would allow for certain possibly very profitable businesses and which could not exist in the fiat world.

In these cases Bitcoin would be a more desirable (or perhaps the only) source of funding and thus command a higher 'price' in the form of higher yields.

Especially because the availability of funding with Bitcoin is relatively low. In the fiat world there are trillions sitting around earning near-zero interest but looking for higher yields. In the Bitcoin world this is not so. There are a lot of people that are fine with just holding their Bitcoin and waiting for a price increase.

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July 23, 2012, 07:44:32 PM
 #35

I think the reason why we are seeing such high yields is because Bitcoin enables a truly free market for investments.

We all know, with Bitcoin there are no capital controls, no chargebacks, lower transaction fees, faster transactions, greater anonymity, no risk of seizure or interference.

One could image that these properties would allow for certain possibly very profitable businesses and which could not exist in the fiat world.

In these cases Bitcoin would be a more desirable source of funding than fiat and thus command a higher 'price' in the form of higher yields.

Especially because the availability of funding with Bitcoin is relatively low. In the fiat world there are trillions sittings around earning near-zero interest. In the Bitcoin world this is not so, because here a lot of people are fine with just holding their Bitcoin and hoping for a price increase.
This. It's what I said, but with more words and in a clearer format.
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July 23, 2012, 11:01:06 PM
 #36

Interesting theory, somehow BITCOIN as opposed to FIAT increases typical sustainable ROI by thousands percent. This is a  miracle! Why 1 BTC does not worth 1000$ yet if that is true.

Dream on.

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July 23, 2012, 11:06:54 PM
 #37

Especially because the availability of funding with Bitcoin is relatively low. In the fiat world there are trillions sitting around earning near-zero interest but looking for higher yields. In the Bitcoin world this is not so. There are a lot of people that are fine with just holding their Bitcoin and waiting for a price increase.

The flip side is that a lot of people will get burned and a few people get rich and there will be lot of people who don't do their homework.

Fine by me, actually. But don't crying to me if I told you to do your HOMEWORK and you didn't.

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July 23, 2012, 11:11:45 PM
 #38

Interesting theory, somehow BITCOIN as opposed to FIAT increases typical sustainable ROI by thousands percent. This is a  miracle! Why 1 BTC does not worth 1000$ yet if that is true.

Dream on.

FFS. FFS! AGAIN WITH THE FUCKING PIRATE! NO, I ACTUALLY SAID "I don't know about 7%"
My theory is that BITCOIN as opposed to FIAT has fewer FEES, no GOVERNMENT INTERFERENCE, ETC and increases sustainable ROI by maybe 100 % points.

Again,
"I know people who get that with their mining hardware. And I see Bitcoin loans every day which are done at  10% MPR. 10% MPR is too good to be true in FIAT. FIAT! FIAT FIAT FIAT. But it happens, legitimately, in BITCOIN. BITCOIN."
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July 23, 2012, 11:15:35 PM
 #39

Your argument would be stronger if you repeat FIAT not 5 times, but 10 times or so and word BITCOINS not 2 times but say 20. Also use not just all caps but all caps and bold and larger red blinking font. There, it seems, not much else that can be done to make your point any less invalid.

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July 23, 2012, 11:16:41 PM
 #40

Again,
"I know people who get that with their mining hardware. And I see Bitcoin loans every day which are done at  10% MPR. 10% MPR is too good to be true in FIAT. FIAT! FIAT FIAT FIAT. But it happens, legitimately, in BITCOIN. BITCOIN."
Which leads to the question -- why is it so much more expensive to borrow Bitcoins than it is to borrow dollars? And I think the answer is that you're competing with more scammers in the Bitcoin world, driving the interest rate way up.

I am an employee of Ripple. Follow me on Twitter @JoelKatz
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July 23, 2012, 11:20:02 PM
 #41

Your argument would be stronger if you repeat FIAT not 5 times, but 10 times or so and word BITCOINS not 2 times but say 20. Also use not just all caps but all caps and bold and larger red blinking font. There it is seems not much else that can be done to make your point any more valid.





All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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July 23, 2012, 11:22:55 PM
 #42


This. It's what I said, but with more words and in a clearer format.

Save your energy. Some people just don't get it, and won't until everyone on their block is buying groceries with bitcoins. The internet is full of them, crying about 'early adopters'.
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July 23, 2012, 11:29:07 PM
 #43

2. Stop relying on Occam's razor as your logical backing. If we apply Occam's razor to the graph of cos(X), we get a straight line.

plz explain? kthxbai!!!!




In all seriousness, could you explain what you mean here? I'm the first to admit that Occam's razor gets used over much and often erroneously, but maybe it does not mean what you think it means?

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July 24, 2012, 12:08:41 AM
Last edit: July 24, 2012, 12:35:15 AM by Frankie
 #44

Again,
"I know people who get that with their mining hardware. And I see Bitcoin loans every day which are done at  10% MPR. 10% MPR is too good to be true in FIAT. FIAT! FIAT FIAT FIAT. But it happens, legitimately, in BITCOIN. BITCOIN."
Which leads to the question -- why is it so much more expensive to borrow Bitcoins than it is to borrow dollars? And I think the answer is that you're competing with more scammers in the Bitcoin world, driving the interest rate way up.

Yeah. When a kid has to pay more than the mob charges to compete with scammers, I'm not really sure it's a good thing for the honest parties, let alone the bitcoin economy.

Incidentally, I've also seen a lot of arguments here about bitcoins being a fundamentally deflationary currency, which should make them more valuable as investments. That may be sort of true as far as it goes, but it would mean the interest rates denominated in bitcoins should be lower, not higher, because of cross-currency arbitrage. If the long term trend of bitcoins is to appreciate at 28% annually, that would make a credit card cash advance basically free. With such a supposedly healthy deflationary currency, the rate should be effectively zero. And if you think the price of bitcoins will be basically, and that bitcoins will hover around single digits forever, one should expect the cost of credit in bitcoins to approximate what it does for in the real world.

If the legitimate rate for bitcoins was really 3000%, or even "only" a "legitimate" 67% (aka 1% weekly), it would actually bode poorly for the currency--it would indicate that Bitcoins were so likely to crash that lenders insist upon ridiculous rates and borrowers willingly pay them. I think these signals are false, but only because "legitimate" lending has to compete with HYIP.
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July 24, 2012, 12:22:30 AM
 #45

I agree that there's a potential consumer of this "killer ap" born every minute.

Not sure it's good for bitcoin, however.



I think the reason why we are seeing such high yields is because Bitcoin enables a truly free market for speculation.

We all know, with Bitcoin there are no capital controls, no chargebacks, lower transaction fees, faster transactions, greater anonymity, no risk of seizure or interference, and no underlying economy.

FTFY

Yeah, my last few posts here have been rather trollish.  But believe it or not, I really want bitcoin to succeed.  Thing is, btc will not be a societal good until it is broadly used as a medium of exchange (IMO).  I check in here ever so often to see if there's any progress on that front...sadly I think there's regression rather than progression.  Still the same old focus on the greater fool theory of investing, as displayed in the title of this thread.

 Embarrassed
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July 24, 2012, 02:03:36 AM
 #46

Again,
"I know people who get that with their mining hardware. And I see Bitcoin loans every day which are done at  10% MPR. 10% MPR is too good to be true in FIAT. FIAT! FIAT FIAT FIAT. But it happens, legitimately, in BITCOIN. BITCOIN."
Which leads to the question -- why is it so much more expensive to borrow Bitcoins than it is to borrow dollars? And I think the answer is that you're competing with more scammers in the Bitcoin world, driving the interest rate way up.
And with that, I can give my bitcoins to hashking and he can lend them out, then pass on some of the interest to me. I can do that in FIAT too, but with it being meatspace and all, there's fewer scammers and a lower interest rate.

@Vladimir: I am simply frustrated that people quote my post, obviously intending to reply to it, and then show that they haven't even read it. I never claimed 3000% APR is sustainable. But so far, it's doing better for me than satoshidice.
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July 24, 2012, 05:09:08 AM
 #47

The bitcoin economy as a whole (the businesses, the ppl receiving salaries in bitcoin, consumers, producers etc) is so different from the "real world" that making any comparison to it at this stage makes little sense.
Also, it's so small, that it could easily grow 1% or more weekly. And if it doesn't yet, there's plenty of speculation that it will.
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July 24, 2012, 05:38:38 AM
 #48

My response: http://ripper234.com/p/why-i-trust-patrick-harnett/

It is my belief that in a market that offers this wide range of investments, the safest ones are ... safe.
Patrick is as safe as I've been able to find.

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July 24, 2012, 05:49:20 AM
 #49

Again,
"I know people who get that with their mining hardware. And I see Bitcoin loans every day which are done at  10% MPR. 10% MPR is too good to be true in FIAT. FIAT! FIAT FIAT FIAT. But it happens, legitimately, in BITCOIN. BITCOIN."
Which leads to the question -- why is it so much more expensive to borrow Bitcoins than it is to borrow dollars? And I think the answer is that you're competing with more scammers in the Bitcoin world, driving the interest rate way up.

In the global scene of ponzi schemes there has been more wealth lost in the fiat regulated industry over the last 12months than there has been in bitcoin supposed ponzi schemes over the same time.

There has been more corrupt banking scandals and regular client money lost in the fiat world compared to the global fiat currency base than in the bitcoin world in comparison to the bitcoin global market cap.

We dont need to assume anymore that FIAT is driven by a huge ponzi scheme with extra cutting off the top by those in charge, note: LIBOR scandal, so since we have facts about the FIAT then we can conclude the FIAT ponzi have underpaid interest for years to those at the bottom.

The only thing I still know thats true about any running market from trading currencies to trading stocks is that they are all perpetual ponzi's where there is allways more losers than winners and that eventually someone will be holding everything if enough time passes.

Which of these should be used as an example when discussing the cause and effect of ponzi's ? Bitcoin or FIAT ?

Personally I think bitcoin interest rates are higher simply because of the excess risk involved lending bitcoins, same isnt true for FIAT which begs the question why do you pay any interest rates for a reversable/mass reprintable currency ?

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July 24, 2012, 06:17:51 AM
 #50

In the global scene of ponzi schemes there has been more wealth lost in the fiat regulated industry over the last 12months than there has been in bitcoin supposed ponzi schemes over the same time.
This is pure misdirection.

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July 24, 2012, 06:19:51 AM
 #51

In the global scene of ponzi schemes there has been more wealth lost in the fiat regulated industry over the last 12months than there has been in bitcoin supposed ponzi schemes over the same time.
This is pure misdirection.


Misdirection? Its facts that I am trying to make you aware of.

If you disagree with those facts then do state what new information you have because apparently thats not being shared with the world.

I didnt try to claim I know what BTCST is or that it is/isnt a ponzi scheme, I am just being more objective than most of the people in here.

Dont bother to comment if you dont feel like adding anything meaningfull to the discussion other than pure speculation.

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July 24, 2012, 07:12:43 AM
 #52

Quote
--it would indicate that Bitcoins were so likely to crash that lenders insist upon ridiculous rates and borrowers willingly pay them.


Alternatively, lenders are expecting Bitcoin to skyrocket and borrowers are competing against that expectation. Now, why would that expectation be reflected in the interest rate and not the BTC/USD ratio I don't know.
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July 24, 2012, 07:16:52 AM
 #53

Misdirection? Its facts that I am trying to make you aware of.
Facts that have nothing to do with anything. If we're talking about whether someone ran a red light, pointing out that there are murderers and rapists is pure misdirection.

Quote
If you disagree with those facts then do state what new information you have because apparently thats not being shared with the world.
I don't "disagree" with them, but that doesn't matter, since they're irrelevant misdirection.

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July 24, 2012, 10:31:36 AM
 #54

Interesting theory, somehow BITCOIN as opposed to FIAT increases typical sustainable ROI by thousands percent. This is a  miracle! Why 1 BTC does not worth 1000$ yet if that is true.

Because not everybody has found out yet.
Also, the risk or uncertainty is high.
Many people can't believe it.

Eventually, when more people find out about this and the yields still remain high, the price might substantially increase because of this.
That's what I am suggesting in the title of this thread.

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July 24, 2012, 10:42:33 AM
Last edit: July 24, 2012, 11:20:35 AM by Mageant
 #55

Again,
"I know people who get that with their mining hardware. And I see Bitcoin loans every day which are done at  10% MPR. 10% MPR is too good to be true in FIAT. FIAT! FIAT FIAT FIAT. But it happens, legitimately, in BITCOIN. BITCOIN."
Which leads to the question -- why is it so much more expensive to borrow Bitcoins than it is to borrow dollars? And I think the answer is that you're competing with more scammers in the Bitcoin world, driving the interest rate way up.

Even so, the legitimate businesses must still be generating enough profits to pay the high interest rates. Otherwise they would indeed just get their funding in fiat.

So the conclusion remains that the special properties of Bitcoin allow for high interest rates.

cjgames.com
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July 24, 2012, 10:54:37 AM
 #56

Bitcoin is special but not THAT special.  Mageant, you are not convincing anyone here but yourself.


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July 24, 2012, 11:53:15 AM
 #57

Bitcoin is special but not THAT special.  Mageant, you are not convincing anyone here but yourself.
Actually it is that special
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July 24, 2012, 01:06:52 PM
 #58

Again,
"I know people who get that with their mining hardware. And I see Bitcoin loans every day which are done at  10% MPR. 10% MPR is too good to be true in FIAT. FIAT! FIAT FIAT FIAT. But it happens, legitimately, in BITCOIN. BITCOIN."
Which leads to the question -- why is it so much more expensive to borrow Bitcoins than it is to borrow dollars? And I think the answer is that you're competing with more scammers in the Bitcoin world, driving the interest rate way up.

Even so, the legitimate businesses must still be generating enough profits to pay the high interest rates. Otherwise they would indeed just get their funding in fiat.

So the conclusion remains that the special properties of Bitcoin allow for high interest rates.

No, they would be getting their money in fiat whether their profits are enormous or modest because the borrowing costs are much lower there. Why do you believe that bitcoin entrepreneurs have figured out profit-making techniques "not everybody has found out yet," but these same people are too stupid to realize they can get a USD cash advance for 29% APR--which is effectively a free loan if they actually believe bitcoin will go up by at least 30% per year.

The rate of return depends on people who are fabulously clever when it comes to making money, but beyond imbecilic when it comes to borrowing money.  Why does that makes sense to you?
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July 24, 2012, 01:16:50 PM
 #59

Bitcoin is special but not THAT special.  Mageant, you are not convincing anyone here but yourself.
Actually it is that special

its not 3400% pa special ....... Smiley

sell your house for a million dollars ........
sleep in a tent for 12 months .......
invest it for just 1 year .......

cash out and walk away with 34 million dollars ?

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July 24, 2012, 02:18:59 PM
 #60

its not 3400% pa special ....... Smiley
See, 7% a week is not necessary the same as 3400% pa.
Lets say someone exchanges all those coins to fiat and back each week. Lets assume that he makes 10% from it and pays his lenders 7%. So a lender would "only" get 7% * 52weeks = 364%pa. If at the same time the business grows, it could look like as one could simply compound, while in fact this is not the case.
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July 24, 2012, 02:22:19 PM
 #61

its not 3400% pa special ....... Smiley
See, 7% a week is not necessary the same as 3400% pa.
Lets say someone exchanges all those coins to fiat and back each week. Lets assume that he makes 10% from it and pays his lenders 7%. So a lender would "only" get 7% * 52weeks = 364%pa. If at the same time the business grows, it could look like as one could simply compound, while in fact this is not the case.

but there IS an option to let the interest compound into the principal to generate further revenue


Pirate actually ENCOURAGES people to re-invest the compounded gains

so what is now the case ?
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July 24, 2012, 03:00:12 PM
Last edit: July 24, 2012, 05:10:36 PM by aq
 #62

its not 3400% pa special ....... Smiley
See, 7% a week is not necessary the same as 3400% pa.
Lets say someone exchanges all those coins to fiat and back each week. Lets assume that he makes 10% from it and pays his lenders 7%. So a lender would "only" get 7% * 52weeks = 364%pa. If at the same time the business grows, it could look like as one could simply compound, while in fact this is not the case.

but there IS an option to let the interest compound into the principal to generate further revenue
Pirate actually ENCOURAGES people to re-invest the compounded gains
so what is now the case ?
This could be just business grow. And it is actually less grow than the exchange rate increase over the few weeks. Pirate works in USD not BTC, so when the price did rise from $5 to $8, his working potential did rise from say $2.5M to $4M, a hefty 60% in little more than a month. If he was able to use this for business grow, then something as "little" as 28% a month should be no problem. An keep in mind that he makes most likely more than 10% a monthweek and compounding, now calculate his actual revenue.
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July 24, 2012, 04:17:52 PM
 #63

It seems you speak neither English nor mathematics fluently.

If the appreciation of bitcoins explains his return rate, how does it explain his supposed ability to provide even more in bitcoins (you know, the things that are more expensive)?

"Just 10%" per month is still triple in a year, btw.
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July 24, 2012, 06:50:58 PM
 #64

This could be just business grow. And it is actually less grow than the exchange rate increase over the few weeks. Pirate works in USD not BTC, so when the price did rise from $5 to $8, his working potential did rise from say $2.5M to $4M, a hefty 60% in little more than a month. If he was able to use this for business grow, then something as "little" as 28% a month should be no problem. An keep in mind that he makes most likely more than 10% a monthweek and compounding, now calculate his actual revenue.
Let's say Pirate has deposits of 250,000 Bitcoins. If he works in USD, then at $5, he has been paid $1.25 million. Now, the price goes up to $8. So he now owes his depositors $2 million. Every time the price of Bitcoins goes up, Pirate has a loss. What I think you're missing is that all of his "working potential" is debt, so when it goes up, he just owes other people more.


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July 30, 2012, 06:58:13 PM
 #65

Quote
Quote
HYIPs subtanstantially drove the growth of digital gold currencies.  Unfortunately they also were a major part of that industry's downfall. 

Interesting. Any more details about how they helped lead to downfall of those currencies? I was under the impression their failure was due to government action.

The endless shell games in DGCs led to increasing calls for state intervention.    While I'm not a fan of the state, I don't consider it reasonable to suggest that taking action after years of complaints and problems is really a fault of the state.   The only tragedy there is the way that e-gold's incredibly bad choices regarding how to deal with fraud and other user issues were used to shelve the service, rather than let it become a mature option for consumers like any other financial service.   I think the e-gold case in particular does show that the state is terrified of any serious alternative to fiat currency; however, it was not the state that caused e-gold's downfall -- it was the crooks operating within the system, and e-gold's baffling policies regarding those crooks (not the policies on the website, but rather the actual practices which came out during the trial.) 

Note that e-dinar, GoldMoney and Pecunix, all three of which have historically had pretty strong practices against HYIPs (and, perhaps interestingly, vastly different practices) are all still alive and kicking.    Had it not been backed on e-gold, 1MDC would probably still be around too. 


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July 31, 2012, 11:08:26 PM
 #66

This could be just business grow. And it is actually less grow than the exchange rate increase over the few weeks. Pirate works in USD not BTC, so when the price did rise from $5 to $8, his working potential did rise from say $2.5M to $4M, a hefty 60% in little more than a month. If he was able to use this for business grow, then something as "little" as 28% a month should be no problem. An keep in mind that he makes most likely more than 10% a monthweek and compounding, now calculate his actual revenue.
Let's say Pirate has deposits of 250,000 Bitcoins. If he works in USD, then at $5, he has been paid $1.25 million. Now, the price goes up to $8. So he now owes his depositors $2 million. Every time the price of Bitcoins goes up, Pirate has a loss. What I think you're missing is that all of his "working potential" is debt, so when it goes up, he just owes other people more.



You are completely correct.

The fact that he works in USD and the price has gone up recently is actually a negative thing for Pirate.
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August 01, 2012, 11:14:53 AM
 #67

This could be just business grow. And it is actually less grow than the exchange rate increase over the few weeks. Pirate works in USD not BTC, so when the price did rise from $5 to $8, his working potential did rise from say $2.5M to $4M, a hefty 60% in little more than a month. If he was able to use this for business grow, then something as "little" as 28% a month should be no problem. An keep in mind that he makes most likely more than 10% a monthweek and compounding, now calculate his actual revenue.
Let's say Pirate has deposits of 250,000 Bitcoins. If he works in USD, then at $5, he has been paid $1.25 million. Now, the price goes up to $8. So he now owes his depositors $2 million. Every time the price of Bitcoins goes up, Pirate has a loss. What I think you're missing is that all of his "working potential" is debt, so when it goes up, he just owes other people more.



You are completely correct.

The fact that he works in USD and the price has gone up recently is actually a negative thing for Pirate.

You say that as if paying 3400% interest was not a valid concern for pirate

if the above figures are correct he would have lost the best part of a million dollars ,who can recover loses
that size in a market the size of Bitcoin and still pay 7% every week ?
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August 01, 2012, 01:46:14 PM
 #68

I have some small investments in GLBSE I look for the honest small startup mining companys only no pirate stuff but so far it really is a mickey mouse or to put another way there is no security whatsoever and I mean literally none.... for example what stops me starting up a security recieving everyones money then just vanishing? Im all for trusting people its a good thing but as they say if you mix 99pounds of icecream with 1 pound of shit you have 100 pounds of shit.

I dont see any reason why the GLBSE cannot demand anyone who wants to create a security have to provide identification in the same way you would in normal commerce for if the GLBSE doesn't someone soon will and whoever does will quickly become the primary investment broker for bitcoins.
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August 01, 2012, 01:52:02 PM
 #69

This could be just business grow. And it is actually less grow than the exchange rate increase over the few weeks. Pirate works in USD not BTC, so when the price did rise from $5 to $8, his working potential did rise from say $2.5M to $4M, a hefty 60% in little more than a month. If he was able to use this for business grow, then something as "little" as 28% a month should be no problem. An keep in mind that he makes most likely more than 10% a monthweek and compounding, now calculate his actual revenue.
Let's say Pirate has deposits of 250,000 Bitcoins. If he works in USD, then at $5, he has been paid $1.25 million. Now, the price goes up to $8. So he now owes his depositors $2 million. Every time the price of Bitcoins goes up, Pirate has a loss. What I think you're missing is that all of his "working potential" is debt, so when it goes up, he just owes other people more.



You are completely correct.

The fact that he works in USD and the price has gone up recently is actually a negative thing for Pirate.

You say that as if paying 3400% interest was not a valid concern for pirate

if the above figures are correct he would have lost the best part of a million dollars ,who can recover loses
that size in a market the size of Bitcoin and still pay 7% every week ?


You are quoting me quoting someone else.

I never said 3400% annual interest was not a valid concern; quite the opposite in fact. The rates at which Pirate operates dictates that in all likelihood he is either running a ponzi scheme or is involved in other illegal activities. 3400% is just not doable in true terms. Regardless of what he was doing, even if it was a legal operation, anything that has the potential to yield 3400% is inherently risky. This is still the real world. You can't make x34 your money without taking on substantial risk. The fact that Pirate operates in a 'black box' and does not highlight risk to investors are red flags.
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August 01, 2012, 01:52:49 PM
 #70

I have some small investments in GLBSE but so far it really is a mickey mouse setup or to put another way there is no security whatsoever and I mean literally none.... for example what stops me starting up a security recieving everyones money then just vanishing? Im all for trusting people its a good thing but as they say if you mix 99pounds of icecream with 1 pound of shit you have 100 pounds of shit.

I dont see any reason why the GLBSE cannot demand anyone who wants to create a security have to provide identification in the same way you would in normal commerce for if the GLBSE doesn't someone soon will and whoever does will quickly become the primary investment broker for bitcoins.

GLBSE does have a "verification section" where it lists the types of identification of the security issuer it has done.

I think it's good that GLBSE leaves it up to the investor to decide what level of identification is sufficient.

What minimum level of identification would you suggest?

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August 01, 2012, 01:54:35 PM
 #71

I have some small investments in GLBSE but so far it really is a mickey mouse setup or to put another way there is no security whatsoever and I mean literally none.... for example what stops me starting up a security recieving everyones money then just vanishing? Im all for trusting people its a good thing but as they say if you mix 99pounds of icecream with 1 pound of shit you have 100 pounds of shit.

I dont see any reason why the GLBSE cannot demand anyone who wants to create a security have to provide identification in the same way you would in normal commerce for if the GLBSE doesn't someone soon will and whoever does will quickly become the primary investment broker for bitcoins.

You could setup an anonymous venture but not many people would invest in it. Glbse has ID verification if you take a look.

This is what verified accounts look like-


I urge you to avoid those who dont verify like this.

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August 16, 2012, 02:48:27 PM
 #72

Good advice that I expect will be widely ignored: only invest in what you know.

So-called high yield investments are (almost?) always dressed-up Ponzi schemes. If you "invest" in them then please lick your wounds quietly when they implode. And if you're one of the lucky few who make money on them, don't expect me to admire your investing wisdom, any more than I'd admire the number-picking brilliance of a lottery winner.


Good to see Gaven's quote unearthed and featured:
http://www.theverge.com/2012/8/15/3243200/bitcoin-ponzi-schemes-savings-and-trust

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August 16, 2012, 05:45:02 PM
 #73

Good advice that I expect will be widely ignored: only invest in what you know.

So-called high yield investments are (almost?) always dressed-up Ponzi schemes. If you "invest" in them then please lick your wounds quietly when they implode. And if you're one of the lucky few who make money on them, don't expect me to admire your investing wisdom, any more than I'd admire the number-picking brilliance of a lottery winner.


Good to see Gaven's quote unearthed and featured:
http://www.theverge.com/2012/8/15/3243200/bitcoin-ponzi-schemes-savings-and-trust

Nice article!

One more thing I want to add to this issue though is that I do believe it is possible to tell the difference between a legit business and a ponzi scheme. It is not a matter of pure luck, such as a lottery.

There are clues one can use. While not 100% reliable it is the skill of a good investor that, on average, he or she can tell what is a good investment and what not.

Obviously, this is not something that everybody can do, which is why good investors are highly paid.

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August 16, 2012, 06:11:43 PM
 #74

Bitcoin itself is a very high yield investment, does it make it a ponzi?
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August 16, 2012, 06:24:06 PM
 #75

Bitcoin itself is a very high yield investment, does it make it a ponzi?

Bitcoin itself doesn't "yield" anything.
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August 16, 2012, 08:51:31 PM
 #76

Bitcoin itself is a very high yield investment, does it make it a ponzi?
Some things turn out after the fact to have been high yield investments (for example, Microsoft, Apple and Google over the right time frames). That's not the same as something being offered as a high yield investment (with a predictable future high yield). Bitcoin should not be offered as a high yield investment. The risk and variability is way too high.

What makes HYIPs invariably scams is that there is no way to guarantee future high yields. It is just a fact of life that low risk means low yield and high yield, where even possible, involves high risk.

I am an employee of Ripple. Follow me on Twitter @JoelKatz
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August 16, 2012, 11:25:11 PM
 #77

Obviously, this is not something that everybody can do, which is why good investors are highly paid.

All scientific research done on the market has shown that it's random. Good investors don't outperform chance, but since there are so many of them you will always be able to find those who've done well. The trick is, you can't predict who those will be beforehand.

There's a nice anecdote in Kahneman's "Thinking, fast and slow" where he visited some fund manager office in London and realized that on some rational level they did know what they did was equal to throwing dice. Yet, they still paid out large bonuses to those who had been the best at it.

Nuts.
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August 16, 2012, 11:34:56 PM
 #78

Well, there is portfolio management and Kelly formula etc...

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September 17, 2012, 10:57:22 PM
 #79

I wish to apologize to anybody who invested in Pirate because of my posts.
I did not realize it was a scam and have not profited in any way from it (I just barely got my original investment out again).

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