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Author Topic: Bryan Micon's List of BTC Ponzi Schemes that should not be listed as "Lending"  (Read 107870 times)
miscreanity
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July 30, 2012, 10:19:52 PM
 #221

Yes ,if madoff had decided to repay everyone before his arrest ,he would have been about 750 million dollars short  so im thinking YES ,someone would have noticed Wink

te problem with a ponzi is the money isnt real and paying interest from the deposits is only going to work for so long before it bites you in the ass

and madoff only paid 12% a year ..........now look at pirate paying 3400% and its simple to see hes not going to run as long as madoff did

The question after that is: would anyone say anything? If it were $750mm of new investors' money, probably. If it were distributed among the largest investors that had already received billions, they'd probably chalk it up to the good times having run their course instead of balking and risking frozen assets, or worse: confiscation/loss.

The money is real, it's just that it runs out before promises can be fulfilled if it continues for too long - very much like the global economy today...

Mongolian deposits are earning 16% per year, but that isn't a scam - it's simply a high volume influx of capital. Pirate's returns are high because the market hasn't been saturated yet, and the market itself is also growing rapidly - two factors that synergistically amplify the growth rate. A Ponzi normally only has one growth factor, that being market share. The market itself usually isn't growing in combination.

As BS&T continues growing from perhaps 10% of the Bitcoin economy to 20%, it will become harder to maintain high rates of return because instead of 90% headroom, there's only 80% (which is where the Ponzi similarity arises). Likewise, as the block reward halves, it will be more difficult to acquire the necessary bitcoins to provide for return. Both of the factors that contributed to explosive growth then start to act as a brake.

The thing with Bitcoin and BS&T is that the draw to invest in BTC because of the high rates of return means acquisition of bitcoins has to occur first. That means capital flows from other sources into the Bitcoin economy. That pushes up the exchange rate against fiat currencies, garnering even more outside interest - a virtuous cycle.

What does that have to do with BTC->BTC returns?

If the incentive to hold bitcoins is rising, that starts to attract business interests, because there's always a search for an edge and new markets to capitalize on. With a growing pool of wealth forming in Bitcoin, it's only a matter of time before companies larger than independent shops take notice. Once that threshold is reached, Bitcoin quickly becomes viable in the eyes of a new wave of potential investors and businesses - another layer added to the virtuous cycle.

There's a difference between the way consumers and producers look at money. A consumer generally wants to accumulate money to acquire goods and services at a later time. A producer seeks to increase the flow of money through the business, increasing its market share - accumulation is not as much of a priority. It's sorta-kinda like the difference between eating and breathing: you can stuff yourself with a big meal and be fine for hours, but you can't stop breathing for more than a couple of minutes.

Coming back to dividends in-kind: unless BS&T manages 100% of all bitcoins in existence, there is still potentially room for growth. With market activity, there are always sellers putting BTC up for sale (think miners and those with billing cycles requiring payment), and the greater the value, the more incentive there is to do so. By the same token, there are always buyers looking to acquire for value or use.

Some buyers, like businesses, only care that the value is relatively consistent for the period they use it in - once transactions are conducted, the risk of holding BTC is either reduced or no longer exists (the same applies to any medium that isn't desired for itself). Those bitcoins are likely to find their way back into the markets for exchange, at which point Pirate is able to reacquire them. Pirate isn't just getting bitcoins from the 7,200 newly mined daily supply, but also from the market. The more the exchange volumes rise, the bigger the supply available for him to pull from, allowing high rates of return to continue. Since he is paying out what appears to be a majority of the profits, he is insulating himself from the kind of jealous animosity that demagogues play on by pointing at wealth disparities.

Everyone screaming "Ponzi" when talking about Pirate is missing the aspect of growth at the margin in the context of external market influence. The Bitcoin economy is not isolated, nor is it static; cyclical capital flow is critical to follow, both internal and external - especially at the margin.
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July 30, 2012, 10:41:35 PM
 #222

Everyone screaming "Ponzi" when talking about Pirate is missing the aspect of growth at the margin in the context of external market influence.

so when growth stops, and the amounts invested are lost, to you that is an acceptable risk because of the potential gains that were possible in the period leading up until the collapse?
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July 30, 2012, 10:46:38 PM
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Don't bother to argue. Miscreation's babble may well qualify as the largest heap of bullshit that anybody has ever posted here.
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July 30, 2012, 10:55:29 PM
 #224

it seems to me you are not a mean-spirited human, but you do lack basic and fundamental understanding of this scam and how it works.  No one wants to read the 4 or 5 paragraphs here:  http://en.wikipedia.org/wiki/Ponzi_scheme

And your positive intentions are obvious as well. Assuming I don't understand how fraud works is a sign that you're emotionally driven, like a nutcase ex-girlfriend.

Just remember: The road to hell is paved with good intentions. While you're bitching and acting out like a rabid prosecutor who's been promised judgeship, Pirate is generating returns.

You point to circumstantial observations and declare them as fact. That can only be described as WRONG. See quote above.

Alzheimer's disease cannot be confirmed until after death. This applies to Ponzi schemes as well. Flu symptoms are not a guarantee of having the flu. Get over your bad self.

What I lack is tolerance for abusive persistence steeped in ignorance. Your McCarthyist witch-hunt is not only detrimental to those targeted, but makes you a point of ridicule. You've stated your case and haven't been bothered to even remotely investigate the possibility that Pirate's operation could be legitimate, preferring to reject reason in favor of emotionally-based accusations. This despite the fact that I've clearly outlined not only the how, but also the why of Pirate's actions.

so let me answer your latest question:

You aren't "answering" anything. Your claims are one-sided and irrational, being taken out of context and with a grossly biased perspective.

1)  with Madoff, and every other ponzi scheme operator, to pay this insane interest you need constant new investment.

Anything that is growing requires a constant supply of resources, whether it's a start-up company, a baby in the womb, or a tumor. Yes, there are scams, such as Bruce Wagner's MyBitcoin last year. That does not give you some mystical power to declare yourself judge, jury, executioner, and white knight extraordinaire (extraordinarily asinine IMO).

2) as a function of time, Ponzi owner continues paying the interest and continue taking new investment, with every payment depleting the principle of each investor

Yes, that's what happens in a Ponzi. Thanks, Captain Obvious.

3) there is no money making business unit

A repeat of the emotional accusation. The process has been outlined by myself and others; ignored by you and the ZOMG-IT-HAZ-2B-PONZI crew.

4) spend money, pay employees, keep some for yourself, keep telling the investors, old and new that you are trading great and making money for everyone, ppl keep investing, total liabilities keep skyrocketing, reserves keep depleting, keep asking for new investment, keep paying, etc. as long as you can.  With the Madoff scam it's staggering how long he was able to keep this cycle going.  One of his last "investors" was a 95-yr old guy named Carl Shapiro who send Madoff $250M USD during the final months of his scam.  By this point Madoff had run out of money by paying his consistent 1% per month interest for years, thus your question "what if he just stopped right before he got caught?" is a little redic. - he had something like $64B in customer funds that were supposed to be on deposit with about $200M in cash by the end.   Remember he just had to send a paper statement to his investors each month saying saying "your balance is $x,xxx,xxx.xx" check box yes to constantly re-invest.  If this scam had been done with BTC it would have lasted much shorter.

Please. As though a balance statement would've been any guarantee the funds were there. Like I said earlier: the existing financial system is so rife with corruption and fraud that it's easy to see scams everywhere. There have been scams in the Bitcoin economy, but if we all thought the way you do, Bitcoin itself would never have come into existence.

Now relax - you've made your point repeatedly. The world can do with less negativity.
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July 30, 2012, 10:56:32 PM
 #225

Pirate's returns are high because the market hasn't been saturated yet, and the market itself is also growing rapidly - two factors that synergistically amplify the growth rate.

If all Pirate is doing is facilitating bitcoin market growth, then in the long run, doesn't he end up shooting himself in the foot as prices rise and he continues to buy back in to repay lenders? Wouldn't all bitcoin holders benefit the same, due to the eventually price correction (rise)? It seems like the main theory out there (besides ponzi) is that he is simply bypassing the public market for a premium. But all of those bitcoins will come back around in the end.

What I'm trying to say is, isn't that a zero-sum game?
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July 30, 2012, 11:19:04 PM
 #226

so when growth stops, and the amounts invested are lost, to you that is an acceptable risk because of the potential gains that were possible in the period leading up until the collapse?

No. Loss would be one thing; cessation of interest payments is another entirely. The principal doesn't disappear just because growth slows or stops. Yes, there's always a counterparty risk when another entity holds your assets, but from how I see Pirate's operation working, the only potential for loss would come from a decline in exchange rate below the initial acquisition cost.

If you bought 100 BTC at USD$5 and invested with Pirate, then interest payments had to be stopped, that doesn't mean the initial 100 BTC are gone. The accrued interest up to the point of cessation would remain as well. If the return amounted to 10% for 110 BTC total, and we assume the current exchange rate of $9, then the only way you would incur a loss is if you sold below $4.55/BTC.

100 @ $5.00 = $500.00
110 @ $4.55 = $500.50

Pirate's risk is holding other currencies with which to acquire BTC - EUR, USD, etc. The amount entrusted to him has been increasing geometrically, but the return-generating activity is separate. It is what investment banks do, and is especially similar to how precious metals have been managed for decades. It's nothing new.

Anyone investing with Pirate has not only been making a killing with the dividend returns, but has also seen a huge increase in relative value from the growth of Bitcoin alone. They're getting capital gains and direct proceeds from company profits. That puts any Ponzi to shame.

As a side note: the way Pirate is running BS&T is not the only way to generate very high returns, but it is a very favorable balance of risk/reward.

Don't bother to argue. Miscreation's babble may well qualify as the largest heap of bullshit that anybody has ever posted here.

Oh, that hurt sooooo much, please stop hurling insults!

Reason and logic seem to be unfamiliar to you. It's amazing that, for so many bright and progressive individuals involved with Bitcoin, there are still so many crabs in the pot.

Ok, I'll stop being an ass now. If you don't see how the dynamic works, ask questions like koin is doing. That way we all come away enriched.
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July 31, 2012, 12:01:38 AM
 #227

Don't bother to argue. Miscreation's babble may well qualify as the largest heap of bullshit that anybody has ever posted here.
I agree, even better yet, do not even bother to read it or try to understand it - you might learn something - but at a cost of your current deeply felt but hightly limiting beliefs.

I can understand hgmichna's frustration with both Miscreation and BurtW

An intense amount of denial and fundamental misunderstanding of economics has been displayed by Miscreation.  I am willing to continue debating for a bit longer.  I can cite some real-world post-mortem details from past ponzis and draw even more similarities.

BurtW is a different story.  At this point in my understanding, BurtW is running the largest BCST pass-through.  He is extremely valuable to Pirateat40, as he is basically an affiliate for a Ponzi scheme.  He is funneling BTC to the largest BTC scam ever.  The question is does he know it or not.  This puts him in either 1 of two categories:

1)  he knows what he is doing is wrong, profiting from it, and does not care that he is hurting many, many different persons of the BTC investing community and helping funnel a large amount of BTC to the largest BTC scam ever run.  He doesn't care, has no risk himself, simply takes investor money and gives it to Pirateat40 because he has one of the "super trust accounts" and if the interest comes that week he gives 6.9% to the investors and keeps .1% himself for setting up the system.

2)  he is duped by Pirateat40 in a way that he really, really, really believes that Pirateat40 is some bitcoin super-trader or has some other super-secret thing that he can do that makes tons and tons and tons of BTC but he can never tell anyone about.  The denial part comes in here, and he thinks he is just simply offering another wild-west style bitcoin product to smaller "investors,"  Sure it's been alleged by many, many users to be a Ponzi but maybe, just maybe, once upon a star this guy is totally legit, and is trading like a boss or whatever to be able to pay investors 3000+% each year.  In this scenario he is only guilty of being naive and ignorant, duped by Pirateat40 who does in fact seem to be a reasonably good scammer.  If BurtW really rolled dice with Pirate, really saw the "baller lifestyle" in Vegas, then this scenario is very likely and after this scam collapses he will be regretful but he won't have known the whole time he was an agent of evil for .1%/wk for all he could bring in.


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July 31, 2012, 12:27:10 AM
 #228

If BurtW didn't know exactly what he's doing, he wouldn't feel the need to zealously defend Pirate as much as he does, nor the need to hype the scam in the Newbies forum. Ponzi scheme "investors" become promoters because they know it's the only way they can make a killing like the lead scam artist.

He's enabling penny ante scam victims for pennies on the dollar, as you've pointed out.

As for the mysteries of "how pirate makes the money," it's really astonishing to me how much BS is thrown up by his conspirators. If you look at the posts early from his scam, they bear no resemblance to the bitcoin selling/arbitrage schemes theorized.
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July 31, 2012, 12:39:53 AM
 #229

Micon, I would not be so sure all pass-throughs internally get the 7% rate.

This was actually an interesting hint by someone else. Try analyzing Bitcoinmax past balances, both real and a simulated paper balance, and try to make a fit with interest payments, applying different rates. The person who gave this hint ended up at 7.7%, and it looks consistent at first glance. If anyone else wants to check this out, please tell me your opinions.
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July 31, 2012, 12:44:45 AM
 #230

Micon, I would not be so sure all pass-throughs internally get the 7% rate.

This was actually an interesting hint by someone else. Try analyzing Bitcoinmax past balances, both real and a simulated paper balance, and try to make a fit with interest payments, applying different rates. The person who gave this hint ended up at 7.7%, and it looks consistent at first glance. If anyone else wants to check this out, please tell me your opinions.

That would be an interesting analysis. Maybe it could be posted on a google document for crowd sourcing? Have you tried tracking the coins in and out?
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July 31, 2012, 12:51:16 AM
 #231

3) I know exactly what he is doing, how he does it and why.  It is not a ponzi. It is a a legit business taking advantage of a rare economic opportunity that was just explained to you better and more detail than I have seen anywhere else.

Seems like we are past the denial / drank the kool-aid theory.

BurtW - you know exactly what you are doing - it's shameful and I hate you for doing it.  You are knowingly defrauding many users, making a small profit yourself, and helping the largest BTC scammer ever run a scam. 

I hope you get Dox'd / wish I met you to take a pic.

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July 31, 2012, 12:54:56 AM
 #232

If BurtW didn't know exactly what he's doing, he wouldn't feel the need to zealously defend Pirate as much as he does, nor the need to hype the scam in the Newbies forum. Ponzi scheme "investors" become promoters because they know it's the only way they can make a killing like the lead scam artist.

He's enabling penny ante scam victims for pennies on the dollar, as you've pointed out.

As for the mysteries of "how pirate makes the money," it's really astonishing to me how much BS is thrown up by his conspirators. If you look at the posts early from his scam, they bear no resemblance to the bitcoin selling/arbitrage schemes theorized.

+1 / shameful / plz link to BurtW hype-threads in newbie forum

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July 31, 2012, 01:08:54 AM
 #233

Micon, I would not be so sure all pass-throughs internally get the 7% rate.

This was actually an interesting hint by someone else. Try analyzing Bitcoinmax past balances, both real and a simulated paper balance, and try to make a fit with interest payments, applying different rates. The person who gave this hint ended up at 7.7%, and it looks consistent at first glance. If anyone else wants to check this out, please tell me your opinions.

First off it is likely Pirateat40 would give preferred interest rates to his closest and largest affiliates.  Seems like BurtW and Bitcoinmax are large ones.  It's all BS anyway, if he gives 7.7% instead of 7% to his top guys, he knows they will aggressively market for him, getting him fresh new investment BTC in the final weeks of the scam.  Like I said, good scammer.  but an extra .7% to 1 passthrough / BCST derivative / isn't the issue here, it's just a scammer tactic to motivate his top scam affiliates.

Vandroiy, can you plz update me (and anyone else that will follow this scam, I'm going to tweet this thread soon / the poker guys will be interested because it is so obvious and as of this post still afloat) on the following, and I'm sure this info appears elsewhere but I'll bet you have it handy:

1)  Who runs this forum?  who allows stickied threads in this Lending section? are they sold and if so by whom?
2)  Is Bitcoinmax the largest passthrough?  what about burtw and his many issues of GLBSE scam-bonds?  and their operators?  what do you think about them?
3)  I saw some numbers back there that says ~ 26k coins were block-chain verified paid in interest this past week from BCST - are you comfortable with those numbers? has anyone taken a look at the block chain for possible shill accounts or other things that don't make sense based on claims?

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July 31, 2012, 01:47:53 AM
 #234

3) I know exactly what he is doing, how he does it and why.  It is not a ponzi. It is a a legit business taking advantage of a rare economic opportunity that was just explained to you better and more detail than I have seen anywhere else.
Then why aren't YOU doing it?
Someone drops a business opportunity in your lap that pays >3000% APR and you're NOT already a competitor?
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July 31, 2012, 02:54:37 AM
 #235

If you bought 100 BTC at USD$5 and invested with Pirate, then interest payments had to be stopped, that doesn't mean the initial 100 BTC are gone. The accrued interest up to the point of cessation would remain as well. If the return amounted to 10% for 110 BTC total, and we assume the current exchange rate of $9, then the only way you would incur a loss is if you sold below $4.55/BTC.

100 @ $5.00 = $500.00
110 @ $4.55 = $500.50

why would the exchange rate matter for an investment that is denominated in bitcoins?  a gain or loss is determined in bitcoins not in dollars.  when the "cessation" comes and the fund pays out $500 usd instead of the 110 bitcoins expected then there's going to be some very unhappy campers.

oh, of course! that's the whole scam right there isn't it?

see, you can't be charged with a serious crime if one didn't happen.   a person that lends an amount worth $500 usd and then gets back $500 usd can't really claim that fraud happened.  where are the financial losses?  u.s. dollars must be accepted as payment for debt.  you loaned $500, you got back $500 (plus a little interest maybe).  in the worst case, since nobody lost any money (in terms of dollars) there's not much of a penalty even if there is theft (of expected returns) by deception.



simply locking up the bitcoins (which were acquired only through the promise of fantastic returns) is something that keeps the supply on the market low.  once the block reward drop occurs in december, the market will have 25,000 btc fewer issued each week.  so the exchange rate is likely to be higher at "cessation" and as a result nearly nobody will have lost money, in terms of dollars.

if this is how pirate's scam works, then those who thought their 100 bitcoins which cost $500 at the time are now worth $990 (after returns grew them to 110 btc and are priced at today's $9 each) will find out they were very, very wrong.  they get their $500 back plus a jar of vaseline and a note saying thanks but it was perfectly legal.

the only winners are those who withdraw in full before the "cessation" event.
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July 31, 2012, 04:24:04 AM
 #236

3) I know exactly what he is doing, how he does it and why.  It is not a ponzi. It is a a legit business taking advantage of a rare economic opportunity that was just explained to you better and more detail than I have seen anywhere else.
Then why aren't YOU doing it?
Someone drops a business opportunity in your lap that pays >3000% APR and you're NOT already a competitor?
Pirate's business model is known by some, but I don't think anyone but those intimately involved in operating BS&T have any knowledge of who the contacts are.

Don't mix your coins someone said isn't legal
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July 31, 2012, 05:25:04 AM
 #237

3) I know exactly what he is doing, how he does it and why.  It is not a ponzi. It is a a legit business taking advantage of a rare economic opportunity that was just explained to you better and more detail than I have seen anywhere else.
Then why aren't YOU doing it?
Someone drops a business opportunity in your lap that pays >3000% APR and you're NOT already a competitor?

Just because I know how a real bank makes money doesn't mean I can run a bank... oh. ah....also banks are ponzi scams/...
Just knowing the business model doesn't make one capable of doing the exact same thing even if one wanted to.

BurtW said in previous posts that he inst running a competing business  because: 1) he is very happy with his profits from pirate and 2) he likes his day job....     

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July 31, 2012, 06:33:23 AM
 #238

… if the interest comes that week he gives 6.9% to the investors and keeps .1% himself for setting up the system.

We don't know about the 0.1%. It seems too low to keep the Ponzi aides in line. But, of course, the collaborators will not tell us how much they really get.

2)  he is duped by Pirateat40 in a way that he really, really, really believes that Pirateat40 is some bitcoin super-trader or has some other super-secret thing that he can do that makes tons and tons and tons of BTC but he can never tell anyone about.  The denial part comes in here, and he thinks he is just simply offering another wild-west style bitcoin product to smaller "investors,"  Sure it's been alleged by many, many users to be a Ponzi but maybe, just maybe, once upon a star this guy is totally legit, and is trading like a boss or whatever to be able to pay investors 3000+% each year.  In this scenario he is only guilty of being naive and ignorant, duped by Pirateat40 who does in fact seem to be a reasonably good scammer.  If BurtW really rolled dice with Pirate, really saw the "baller lifestyle" in Vegas, then this scenario is very likely and after this scam collapses he will be regretful but he won't have known the whole time he was an agent of evil for .1%/wk for all he could bring in.

pirateat40 cannot risk showing himself to anybody who is not fully involved, so this is out of the question. He cannot reveal his identity. This says something about everybody who claims to have met him.
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July 31, 2012, 06:40:04 AM
 #239

why would the exchange rate matter for an investment that is denominated in bitcoins?  a gain or loss is determined in bitcoins not in dollars.  when the "cessation" comes and the fund pays out $500 usd instead of the 110 bitcoins expected then there's going to be some very unhappy campers.

The exchange rate doesn't matter for BS&T investors. They put BTC in, they get BTC back. No matter what, investors' bitcoins remain available. Only Pirate has to be concerned with the exchange rates.

The connection between other economies and Bitcoin is the crux of the issue. It's critical to keep in mind that if Bitcoin remains a purely speculative play, it will collapse eventually; paper pushing doesn't create value. In addition, until utility bills and such can be paid for directly in BTC, there will be an inextricable link to other currencies - that is part of what helps Pirate to acquire a greater share of the total amount of bitcoins for payment to investors.

How do you get a crew to want to get off a nuclear submarine?

In the same manner, how do you get people to want to sell their bitcoins? It's an incentive problem. There has to be something more enticing than holding onto your BTC. That something is higher exchange prices. Miners who see the price rising week after week are likely to dump a good amount of their BTC at some point. So are people who buy in at $5 and see the price nearly double. There's the supply for returns from BS&T.

A portion of the returns investors receive from BS&T may be used to purchasing items online, real goods, services, etc. The businesses receiving those bitcoins may then sell them for dollars, which likely brings the BTC back to the exchanges where Pirate picks them up again. Again, BS&T growth occurs at the margin.

There is no exposure to USD for investors - Pirate assumes that risk entirely. I won't elaborate on exactly how other than to say that it requires multiple pools of different assets. No fiat payouts can even occur for investors; they'll only ever be involved in the Bitcoin side of the operation. So long as the value of BTC remains elevated or continues to climb against other currencies, there is no risk for them.

If the exchange rate were to fall precipitously, it would hurt Pirate as much as it would his investors. In the case of a wild spike high, only Pirate would be at risk and may be forced to halt interest payments. The BTC that have already been earned or deposited don't go away; only the accumulated value relative to other forms of wealth changes. In the same way that an ounce of gold is an ounce of gold, a bitcoin is a bitcoin.

see, you can't be charged with a serious crime if one didn't happen.   a person that lends an amount worth $500 usd and then gets back $500 usd can't really claim that fraud happened.  where are the financial losses?  u.s. dollars must be accepted as payment for debt.  you loaned $500, you got back $500 (plus a little interest maybe).  in the worst case, since nobody lost any money (in terms of dollars) there's not much of a penalty even if there is theft (of expected returns) by deception.

That would only be possible if BTC deposits and interest were paid back in another currency like EUR or USD. I only used the example to show that the relative value would have to fall below the initial entry point to incur a real, or realized loss in purchasing power. The vast majority of people still think in terms of fiat currency denomination, but I could've made an example as follows:

1,000 BTC @ 100BTC/month = 1 Honda Civic
1,100 BTC @ 110BTC/month = 1 Honda Civic

The second line shows that, while the value of BTC relative to a Honda Civic declined by 10%, the returns balanced it out. That's also assuming the relative value of BTC were to fall. If it keeps rising, the only losers in this are those in traditional finance - primarily the big banks and those dependent upon them, especially governments.

simply locking up the bitcoins (which were acquired only through the promise of fantastic returns) is something that keeps the supply on the market low.  once the block reward drop occurs in december, the market will have 25,000 btc fewer issued each week.  so the exchange rate is likely to be higher at "cessation" and as a result nearly nobody will have lost money, in terms of dollars.

if this is how pirate's scam works, then those who thought their 100 bitcoins which cost $500 at the time are now worth $990 (after returns grew them to 110 btc and are priced at today's $9 each) will find out they were very, very wrong.  they get their $500 back plus a jar of vaseline and a note saying thanks but it was perfectly legal.

the only winners are those who withdraw in full before the "cessation" event.

Just to clarify: deposits and dividends made in BTC are exclusively returned in BTC, not another currency. To do otherwise would expose Pirate to all manner of regulatory agencies and all but guarantee financial fraud charges being made by clueless bureaucrats simply because they don't understand what he's doing any more than they can grasp the LIBOR debacle.

Yes, locking up bitcoins reduces the supply available for Pirate to acquire and disburse to investors. That means price has to continue rising to entice selling. If Pirate were to throw his own money in to raise the price, he'd have to dole out the equivalent of hundreds of thousands of dollars per week with no gain. That would drain his assets, if he has that much in personal wealth, and the economy would end up in decline.

Unless Pirate is more than a little eccentric, I don't think he's dumping his own wealth into the system. Instead, he's acting to stabilize the markets so that real wealth feels comfortable testing the waters - businesses, investors wanting to diversify out of other currencies, early tech adopters who might've been scared off after the bubble last year, even small governments that may be more receptive to disruptive technologies...

By doing the above, Pirate is drawing in much-needed support and interests that do the job of naturally raising the exchange rates in favor of Bitcoin. Awareness is building, and with greater inflows of wealth comes greater systemic strength. Keep in mind that Pirate isn't the only one helping - there are numerous others. Every Bitcoin-related business, every exchange, every advocate telling people about the cryptocurrency makes an impact and contributes to organic growth. Pirate does it in his own way; even Micon contributes (I think it'd be better if he worked on ways to use Bitcoin in the pro gambling area than to pursue Quixotic efforts, but hey).

Hopefully you can see how the external factors indirectly affect investor returns, and how the dynamic can continue for a long time with the only real requirement being a continued steady rise in Bitcoin exchange rates.

There are also a number of others that are doing what Pirate is doing. As long as my assessment is correct, nothing about this is illegal or fraudulent. It actually provides better market depth and response because those who need to sell can easily match a buyer and vice versa, not to mention the stability and investor returns.

3) I know exactly what he is doing, how he does it and why.  It is not a ponzi. It is a a legit business taking advantage of a rare economic opportunity that was just explained to you better and more detail than I have seen anywhere else.
Then why aren't YOU doing it?
Someone drops a business opportunity in your lap that pays >3000% APR and you're NOT already a competitor?
Pirate's business model is known by some, but I don't think anyone but those intimately involved in operating BS&T have any knowledge of who the contacts are.

It's also not as simple as flicking a light switch. There's a lot of work involved, even at a small scale. Also, Pirate is so far ahead that it would take a large amount of wealth to acquire the quantity of bitcoins necessary to compete. Going head-to-head won't make sense for a while.
hgmichna
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July 31, 2012, 07:23:17 AM
 #240

Apparently pirateat40 has issued orders to his cronies to write long, professional-looking forum postings that make potential new "investors" stand in awe and part with their money.

Since new "investors" are necessarily stupid, it isn't very difficult to write such texts.

The best of miscreant's postings is their very last line with the quotation, which is very fitting indeed:

"I don't really do much but move my lips."
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