I have made a 25% return this week trading *against* the pirate

[dust]

One thing I realized today is that part of the recent rally in BTC price might be ponzi victim wannabes purchasing bitcoins in order to "invest" in Pirate's scheme (either directly or through some passthrough services). [snip]

I also suspect this.  No one is offering 7% a week on USD deposits.

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[Bitcoin Oz]

If you were an early oil baron what would you pay to corner the oil market by buying saudi arabia ? 7% seems cheap  

[JoelKatz]

If you were an early oil baron what would you pay to corner the oil market by buying saudi arabia ? 7% seems cheap  

It almost always costs more to corner the market than you can possibly make after having cornered it. If you try to corner the market on something people don't need, nobody will care that you've cornered it, you still won't make any money. And if you try to corner the market on something people need, you'll wind up having to pay more and more over fair market value to corner the market, and people still won't pay more for something than it's worth to them.

[notme]

If you were an early oil baron what would you pay to corner the oil market by buying saudi arabia ? 7% seems cheap  

It almost always costs more to corner the market than you can possibly make after having cornered it. If you try to corner the market on something people don't need, nobody will care that you've cornered it, you still won't make any money. And if you try to corner the market on something people need, you'll wind up having to pay more and more over fair market value to corner the market, and people still won't pay more for something than it's worth to them.

Such as text messages and mobile data plans.

Creating the market is different from cornering the market on an existing good.

[miscreanity]

Creating the market is different from cornering the market on an existing good.

And the potential market for Bitcoin is as big as that of the major fiat currencies. That's quite a market that can be created, or more accurately - replaced.

[boonies4u]

Creating the market is different from cornering the market on an existing good.

And the potential market for Bitcoin is as big as that of the major fiat currencies. That's quite a market that can be created, or more accurately - replaced.

Given that only 21 million coins will ever exist... If the bitcoin economy were to grow, the path to becoming a giant may not be to corner some market, but at whatever you do... acrue bitcoins over time.

It would only take around 2 million USD to purchase 1% of all the bitcoins that will exist. Of course if you tried to buy these all at once, the market would reflect your interest.

The idea that Pirate is selling coins to people wishing to acquire them without reflecting the market is certainly feasible.

[eldentyrell]

If you were an early oil baron what would you pay to corner the oil market by buying saudi arabia ? 7% seems cheap  

It almost always costs more to corner the market than you can possibly make after having cornered it.

seriously

[miscreanity]

If you were an early oil baron what would you pay to corner the oil market by buying saudi arabia ? 7% seems cheap  

It almost always costs more to corner the market than you can possibly make after having cornered it.

seriously

Hypothetically, what do you think would've happened if silver were instated as a currency at that point?

[notme]

If you were an early oil baron what would you pay to corner the oil market by buying saudi arabia ? 7% seems cheap  

It almost always costs more to corner the market than you can possibly make after having cornered it.

seriously

Hypothetically, what do you think would've happened if silver were instated as a currency at that point?

The Hunt brothers would have become rich, owning 1/3 of the currency's wealth.  That would be a retarded move by any government.

[ArticMine]

If you were an early oil baron what would you pay to corner the oil market by buying saudi arabia ? 7% seems cheap  

It almost always costs more to corner the market than you can possibly make after having cornered it.

seriously

Hypothetically, what do you think would've happened if silver were instated as a currency at that point?

Even after over 32 years the price of silver has not reached the 1979 - 1980 peak of 49.45 USD an ounce. As a currency initially hyper inflation. The key difference with Pirate is that Pirate is a bear and the Hunts were bulls. So if Pirate were to try the same thing as the Hunts did in 1979 - 1980 but as a bear, the initial impact on Bitcoin would be hyper deflation.

[miscreanity]

Hypothetically, what do you think would've happened if silver were instated as a currency at that point?

The Hunt brothers would have become rich, owning 1/3 of the currency's wealth.  That would be a retarded move by any government.

Exactly. No government would sign on to that, but with Bitcoin they may not have a choice.

Even after over 32 years the price of silver has not reached the 1979 - 1980 peak of 49.45 USD an ounce. As a currency initially hyper inflation. The key difference with Pirate is that Pirate is a bear and the Hunts were bulls. So if Pirate were to try the same thing as the Hunts did in 1979 - 1980 but as a bear, the initial impact on Bitcoin would be hyper deflation.

By hyper inflation, do you mean the relative value of silver would rise? How do you know Pirate is a bear?

[notme]

How do you know Pirate is a bear?

Because he puts too much faith in the random musings of various forum members .

[mp420]

How do you know Pirate is a bear?

This is based on the far-fetched idea that he's intending to pay back all his BTC-denominated debts. Didn't he lower his rates? If he's paying 3% weekly (I don't know the exact current rate and I don't care) that comes to 465% annual interest when compounded. No one in their right mind would commit to pay that kind of interest unless they were pretty damn certain the currency is going to lose at least 80% of its value every year (i.e. 400% yearly inflation, which would make the annual real interest rate 13%, which is in the consumer credit card or insolvent nation state range).

[notme]

How do you know Pirate is a bear?

This is based on the far-fetched idea that he's intending to pay back all his BTC-denominated debts. Didn't he lower his rates? If he's paying 3% weekly (I don't know the exact current rate and I don't care) that comes to 465% annual interest when compounded. No one in their right mind would commit to pay that kind of interest unless they were pretty damn certain the currency is going to lose at least 80% of its value every year (i.e. 400% yearly inflation, which would make the annual real interest rate 13%, which is in the consumer credit card or insolvent nation state range).

Unless he fears the USD debt default scenario (guys with guns kicking him out of his house) more than the BTC default scenario (gnashing of teeth on a forum).  Then it makes more sense to have bitcoin denominated debt than USD debt, especially if his business requires holding large amounts of bitcoin and he can't discount the possibility of a large drop in bitcoin prices.

[Shadow383]

The idea that Pirate is selling coins to people wishing to acquire them without reflecting the market is certainly feasible.

People always say this and I'm not too sure where they're coming from.
Sure it works when the bitcoin price is declining rapidly, as pirate can hoard USD and pay back extra BTC.
But with prices going in the other direction however, then what?

Say market price is $8.50, and someone decides to be a bit charitable and buy 100000BTC from pirate for $9.

Okay, so now he's got $900000, and has given away 100000BTC from his "investors".
He still needs to buy back that currency, which is going to shift the price upwards, so he'll struggle to make any significant amount of coin at all, as pirate making 100000BTC worth of buy orders is going to shift the price upward just as much.

How does the "buying large quantities of something without moving the market at all" thing work 

[notme]

The idea that Pirate is selling coins to people wishing to acquire them without reflecting the market is certainly feasible.

People always say this and I'm not too sure where they're coming from.
Sure it works when the bitcoin price is declining rapidly, as pirate can hoard USD and pay back extra BTC.
But with prices going in the other direction however, then what?

Say market price is $8.50, and someone decides to be a bit charitable and buy 100000BTC from pirate for $9.

Okay, so now he's got $900000, and has given away 100000BTC from his "investors".
He still needs to buy back that currency, which is going to shift the price upwards, so he'll struggle to make any significant amount of coin at all, as pirate making 100000BTC worth of buy orders is going to shift the price upward just as much.

How does the "buying large quantities of something without moving the market at all" thing work  

Because he can do off market trades from his personal connections on bitcoin-otc.  There are big fish on both sides, and neither side wants to deal with slippage.

[Shadow383]

The idea that Pirate is selling coins to people wishing to acquire them without reflecting the market is certainly feasible.

People always say this and I'm not too sure where they're coming from.
Sure it works when the bitcoin price is declining rapidly, as pirate can hoard USD and pay back extra BTC.
But with prices going in the other direction however, then what?

Say market price is $8.50, and someone decides to be a bit charitable and buy 100000BTC from pirate for $9.

Okay, so now he's got $900000, and has given away 100000BTC from his "investors".
He still needs to buy back that currency, which is going to shift the price upwards, so he'll struggle to make any significant amount of coin at all, as pirate making 100000BTC worth of buy orders is going to shift the price upward just as much.

How does the "buying large quantities of something without moving the market at all" thing work 

Because he can do off market trades from his personal connections on bitcoin-otc.

This is the problem though - bitcoin trading via OTC or the exchanges is a zero-sum game, somebody's losing.
Let's be optimistic and assume that he manages to buy back through OTC at 5% below market price - this is crazy, because nobody on there will sell you BTC that cheaply if you're buying bulk, but I digress.

Using this fanciful 5% guaranteed profit, you'd need to make something like 550,000BTC in transactions over OTC every single week in order to just barely cover interest payments. So yeah, Pirate would need to be doing trades equal to some multiple of the entire MtGox volume 

[notme]

The idea that Pirate is selling coins to people wishing to acquire them without reflecting the market is certainly feasible.

People always say this and I'm not too sure where they're coming from.
Sure it works when the bitcoin price is declining rapidly, as pirate can hoard USD and pay back extra BTC.
But with prices going in the other direction however, then what?

Say market price is $8.50, and someone decides to be a bit charitable and buy 100000BTC from pirate for $9.

Okay, so now he's got $900000, and has given away 100000BTC from his "investors".
He still needs to buy back that currency, which is going to shift the price upwards, so he'll struggle to make any significant amount of coin at all, as pirate making 100000BTC worth of buy orders is going to shift the price upward just as much.

How does the "buying large quantities of something without moving the market at all" thing work 

Because he can do off market trades from his personal connections on bitcoin-otc.

This is the problem though - bitcoin trading via OTC or the exchanges is a zero-sum game, somebody's losing.
Let's be optimistic and assume that he manages to buy back through OTC at 5% below market price - this is crazy, because nobody on there will sell you BTC that cheaply if you're buying bulk, but I digress.

Using this fanciful 5% guaranteed profit, you'd need to make something like 550,000BTC in transactions over OTC every single week in order to just barely cover interest payments. So yeah, Pirate would need to be doing trades equal to some multiple of the entire MtGox volume 

In your example, price is 8.5.  He got paid 9.  Someone wants to sell a shit ton of bitcoins at current price.  Pirate makes $0.5/bitcoin.

What's the problem?

It's not a zero sum game if you aren't just trading.  Some people actually want to trade something they have for something they don't have.

[ArticMine]

Hypothetically, what do you think would've happened if silver were instated as a currency at that point?

The Hunt brothers would have become rich, owning 1/3 of the currency's wealth.  That would be a retarded move by any government.

Exactly. No government would sign on to that, but with Bitcoin they may not have a choice.

Even after over 32 years the price of silver has not reached the 1979 - 1980 peak of 49.45 USD an ounce. As a currency initially hyper inflation. The key difference with Pirate is that Pirate is a bear and the Hunts were bulls. So if Pirate were to try the same thing as the Hunts did in 1979 - 1980 but as a bear, the initial impact on Bitcoin would be hyper deflation.

By hyper inflation, do you mean the relative value of silver would rise? How do you know Pirate is a bear?

No. Silver is the currency in this example. In hyperinflation the relative value of the currency will fall drastically. That is what happened with sliver in 1980. As to why Pirate is a bear, my conclusion here is based mostly on Pirate's own threads and comments and some of the comments from his supporters. I then compare this with the market data and have reached my conclusions from the relationship between the pro Pirate comments and the market data.

[notme]

Hypothetically, what do you think would've happened if silver were instated as a currency at that point?

The Hunt brothers would have become rich, owning 1/3 of the currency's wealth.  That would be a retarded move by any government.

Exactly. No government would sign on to that, but with Bitcoin they may not have a choice.

Even after over 32 years the price of silver has not reached the 1979 - 1980 peak of 49.45 USD an ounce. As a currency initially hyper inflation. The key difference with Pirate is that Pirate is a bear and the Hunts were bulls. So if Pirate were to try the same thing as the Hunts did in 1979 - 1980 but as a bear, the initial impact on Bitcoin would be hyper deflation.

By hyper inflation, do you mean the relative value of silver would rise? How do you know Pirate is a bear?

No. Silver is the currency in this example. In hyperinflation the relative value of the currency will fall drastically. That is what happened with sliver in 1980. As to why Pirate is a bear, my conclusion here is based mostly on Pirate's own threads and comments and some of the comments from his supporters. I then compare this with the market data and have reached my conclusions from the relationship between the pro Pirate comments and the market data.

Yay!  Hearsay and assumptions!

Let's bet the farm!