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Author Topic: Bryan Micon's List of BTC Ponzi Schemes that should not be listed as "Lending"  (Read 118695 times)
Shadow383
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August 01, 2012, 11:30:19 PM
 #301

Fun fact:

Charles Ponzi's original scheme, he would increase your funds "50% in 45 days or double in 90 days" (showing that he had a poor understanding of compound interest...)

Investing 45 days at a time, that's 2600% APR.
Investing 90 days at a time, that's 1660% APR.

Investing in BTCST, 3370% APR.

So Pirate's more ambitious than Ponzi was at least  Wink

A valid point. That's why I said that it makes more sense from a business building perspective than from a scammer point of view. It doesn't exclude the possibility that Pirate could do a 180 and abscond with everything he's accrued.

How much is an online reputation in the bitcoin community worth, really?

Because his current liabilities (assets obviously unknown) are at least a few million dollars.
BitcoinMax alone is over a million dollars, that's before you count any of the other schemes, through the forum or on GLBSE, or people's personal accounts...
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Shadow383
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August 01, 2012, 11:45:27 PM
 #302

How much is an online reputation in the bitcoin community worth, really?

Because his current liabilities (assets obviously unknown) are at least a few million dollars.
BitcoinMax alone is over a million dollars, that's before you count any of the other schemes, through the forum or on GLBSE, or people's personal accounts...
How much is a million dollars, really.  Answer:  a drop in the ocean.

Real money is taking an interest in Bitcoin - I thought that is what everyone wanted?
Oh, you're totally right, mysterious investment programs offering 7% return with no detail is exactly what will make people stand up and take bitcoin seriously.
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August 02, 2012, 12:01:17 AM
 #303

Why is ciuciu still listed in the OP? Didn't he return the entire principal for all his 2% depositors a couple of days ago. After a few hours, many of those people redeposited at the new rate of 1.5%, but there was a short period where he was holding only a few hundred BTC worth of deposits. Hardly a ponzi.
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August 02, 2012, 12:06:26 AM
 #304

Why is ciuciu still listed in the OP? Didn't he return the entire principal for all his 2% depositors a couple of days ago. After a few hours, many of those people redeposited at the new rate of 1.5%, but there was a short period where he was holding only a few hundred BTC worth of deposits. Hardly a ponzi.
Indeed, there's no doubt that some of the lenders on here make substantial enough return on their capital to offer pretty tidy returns. I have started investing a bit with Patrick Harnett, but that's in part because it's really pretty clear who he's doing business with and where the funds are  Wink
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August 02, 2012, 12:39:01 AM
 #305


CAUTION: Article is unintentionally hilarious with gems like, "Both admins and investors are responsible for the sustainability of any successful HYIP."

Why is this sentence funny in any way?
Because the only way a HYIP can be successful is if it experiences perpetual exponential growth at a rate higher than the world economy is growing. Otherwise, people are just receiving fraudulent transfers of other people's money as the HYIP as a whole gets deeper and deeper in debt.The longer a HYIP runs, the more it loses.

I am an employee of Ripple. Follow me on Twitter @JoelKatz
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miscreanity
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August 02, 2012, 12:49:50 AM
 #306

How much is an online reputation in the bitcoin community worth, really?

Because his current liabilities (assets obviously unknown) are at least a few million dollars.
BitcoinMax alone is over a million dollars, that's before you count any of the other schemes, through the forum or on GLBSE, or people's personal accounts...

That depends on how you view Bitcoin. If you're prone to suggest that this Interwebz thing is just a fad and will end 'any day now' because you don't see any use for it, then Pirate is a guaranteed scam for you regardless of logic or proof. I don't think anyone here assumes Bitcoin is a force that will change the world within months, nor do any of us expect Pirate's operation to continue in perpetuity. So there's a fairly small range of views. I'm simply more inclined to think that Pirate is legitimate based on what I know about how financial markets are influenced and that he runs more than one operation, one of which provides an especially valuable service.

As BurtW said, a million dollars is a drop in the bucket. To add to that: a million dollars worth of Bitcoins makes you a big fish in a small pond. The former is a small fish in a big pond. With great influence comes the potential to do a lot more than could be done in the 'old world' of fiat currencies.

Consider that it's the equivalent of monsoon season for Bitcoin, but drought and famine for traditional currencies. Would you rather be that small fish in a shrinking pond, or a big fish in a growing one?

As for the 7% concerns, there's more involved than just BTCS&T. Similar to Wikispeed, multiple sources can combine to provide an higher aggregate return.
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August 02, 2012, 12:56:39 AM
 #307

Because the only way a HYIP can be successful is if it experiences perpetual exponential growth at a rate higher than the world economy is growing. Otherwise, people are just receiving fraudulent transfers of other people's money as the HYIP as a whole gets deeper and deeper in debt.The longer a HYIP runs, the more it loses.

High yield offers don't necessarily start off in the negative, depending on what they're associated with and how. At a certain point of market saturation, they certain can. Then it becomes a losing proposition, and that transition can be further masked by fractional reserve practices. With Bitcoin, at least the record is in the open.
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August 02, 2012, 07:03:14 AM
 #308

Let's look at a 7% per week, 3,300% per year scheme, i.e. one with an extremely high advertised yield.

Its debt grows at an exponential rate, but the debt plays only an indirect role here. What really matters to the Ponzi scheme operator is the heap of money he is amassing.

Initially this heap grows, as new "investors" pay in. The 7% per week interest rate aims at people who calculate (just barely, because they are math-challenged) that they can get rich quick by paying in a moderate amount, if they compound their interest. This is exactly what the Ponzi operator wants.

As the Ponzi scheme becomes more popular, more people "invest", so the money heap keeps growing at first.

Then, however, as "investors" see their imagined wealth grow exponentially, a few of them are bound to withdraw some money for one reason or another. One reason could be that somebody wants to buy a car or a house, but they also believe that they will get even richer if they delay their purchase and keep riding the exponential curve.

Another group of "investors" who withdraw money do it for one of two possible reasons:

  • They become weary, because they begin to see the risk and try to withdraw, as long as that is still possible.
  • They calculate that they could reduce their risk to zero if they withdraw at least their original investment. Some may also regularly withdraw some of their interest and let another part of it compound, reckoning that this is a slower, but safer way to get rich.

The unpleasant fact for the Ponzi operator is that this group of withdrawers, even though it is small, still creates an exponentially growing flow of withdrawals. Exponential growth means that, sooner or later, these withdrawals will grow beyond the inflow of newly "invested" money, so his heap of money will begin to shrink.

This is when an intelligent Ponzi operator will shut down operations and disappear with the money. Of course the point in time is difficult to determine with any precision, as both new "investments" and withdrawals have a random component. There is always the hope for another big "investor", there are ups and downs on both sides, there is hope, self-overestimation, pride, and, most of all, greed. A Ponzi scheme operator has to deal with his own personality defects as well as the day-to-day problems of running the scheme, convincing "investors", keeping associates happy, covering his tracks, prepare for his escape, etc. He may make mistakes.

But even if he delays the end, it is still inevitable. You cannot fight an exponential curve forever. He could lower the interest, delay payments, invent excuses for changing the rules, try to reassure investors and associates, spread confusing information, which would all be signs of the coming termination of the scheme, but this can only go on for a short time. At last, when he sees his heap of money shrink week after week, he has to shut down and disappear.

Carlos Ponzi did not have this choice. He believed in his own scheme. His mathematical abilities were very limited. He ran it to the bitter end. I do think the modern Ponzi scheme operators are somewhat stupid, because if they were as intelligent as they probably believe to be, why then would they have to resort to criminal means? They could instead earn good amounts of money legally, which is not that difficult. But they are not as stupid as Carlos Ponzi. Unlike that guy, they will not give up all the money they have amassed at the height of their schemes.

So when will our current, most popular one end? I cannot be sure, but exponential growth sets tight limits. Nobody can tell whether some biggish "investor" suddenly turns up and extends the scheme by another month. But it seems unlikely, because big investors are usually not that stupid either. There are also not that many potential "investors" out there, because the active bitcoin users are all here in the forum, have already heard of the scheme, and have made their decision to "invest" or stand back. Where should new "investors" come from?

So here is my prediction. Short of the big miracle "investor", the scheme may well end within very few weeks from now. Anyway, it is extremely unlikely to continue for the rest of this year at current interest rates, as you can easily calculate.
miscreanity
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August 02, 2012, 07:30:01 AM
 #309

Let's look at a 7% per week, 3,300% per year scheme, i.e. one with an extremely high advertised yield.

Its debt grows at an exponential rate, but the debt plays only an indirect role here. What really matters to the Ponzi scheme operator is the heap of money he is amassing.

Let's not. At this point, anyone who doesn't understand how a Ponzi works hasn't been paying attention for the past 16 pages.

Next, the critical flaw: full assumption that Pirate is running a Ponzi, with zero flexibility in that assessment whatsoever. It is 100% impossible to be 100% certain of a Ponzi until it either blows up or is proven to not be one. Since neither of those events have occurred yet, your arguments have been made ad infinitum and won't change anything.

It's time for the naysayers to keep the Ponzi potential in mind and start exploring other explanations, like those offered dozens of times. Try some positivity and expand your mind a bit; it does wonders.
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August 02, 2012, 07:47:59 AM
 #310

Let's look at a 7% per week, 3,300% per year scheme, i.e. one with an extremely high advertised yield.

Its debt grows at an exponential rate, but the debt plays only an indirect role here. What really matters to the Ponzi scheme operator is the heap of money he is amassing.

Let's not. At this point, anyone who doesn't understand how a Ponzi works hasn't been paying attention for the past 16 pages.

Next, the critical flaw: full assumption that Pirate is running a Ponzi, with zero flexibility in that assessment whatsoever. It is 100% impossible to be 100% certain of a Ponzi until it either blows up or is proven to not be one. Since neither of those events have occurred yet, your arguments have been made ad infinitum and won't change anything.

It's time for the naysayers to keep the Ponzi potential in mind and start exploring other explanations, like those offered dozens of times. Try some positivity and expand your mind a bit; it does wonders.

You're wasting your time/bits.  They really are 100% certain in their minds even though there is no publicly available certain proof.

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August 02, 2012, 08:19:49 AM
 #311

You're wasting your time/bits.  They really are 100% certain in their minds even though there is no publicly available certain proof.

Yes, but I'm racking up posts. I want to see if I can get more of them than I have bitcoins!
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August 02, 2012, 09:28:13 AM
 #312

Next, the critical flaw: full assumption that Pirate is running a Ponzi, with zero flexibility in that assessment whatsoever.

The only other case Pirate's scheme would make sense is if he has inside information about the Bitcoin network collapsing in the near future so that the bitcoins he owes become worthless.

Sometimes it does make sense to borrow money at insane rates. But anyone who has a highly profitable business will want to pay off the high-interest debts as soon as possible.

And if we assume Pirate is well-connected (as those advocating his scheme seem to), he could certainly access some kind of LOC at less than 5% annually. Hell, even I can (within limits, of course), and I don't claim to be well-connected. For a financially successful, well-connected person it would never make sense to pay more than a few percent of real interest on one's debt.

And I guess your next argument will be that whatever Pirate does, he needs to do without moving the market too much, so he can't just get a loan from a bank and buy all the bitcoins he needs. This does not make sense at all. Now, instead of Pirate himself causing upward pressure on the price by buying bitcoins, he's causing upward pressure on the price by having other people acquire bitcoins in order to "invest" in his business.
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August 02, 2012, 11:05:04 AM
 #313

Another kind of pseudo-insurance would be to simply have your interest auto-paid-out. After just 10 weeks you have your principal insured. In fact, you got it back. From then on it would be pure gain.

Pirate's Ponzi works only because most people don't do that. Instead they attempt to compound their interest, because they want to get rich quick.

You must be truly amazing to be capable of asserting facts like that without offering any analysis or proof. I am in awe of your magical guessing abilities.

I just checked six high-end visible auto-payout addresses. Two "only" grew slightly compared to four weeks ago, four have been rapidly growing. Now, we're only talking about accounts that use auto-payout in the first place! Since you won't like address candidates I chose, just get some elsewhere, then see for yourself on the block chain.

The assertion is very likely correct: people compound a lot. Actual risk reduction, on the other hand, seems to be rare.



It's time for the naysayers to keep the Ponzi potential in mind and start exploring other explanations, like those offered dozens of times. Try some positivity and expand your mind a bit; it does wonders.

I tried dozens, all but two broke down logically. The only two that looked consistent were: a giant short that needs to destroy Bitcoin later, and a charity by one of the ~2 richest in Bitcoin. Though, if it keeps growing at this speed, soon not even Satoshi can pay anymore. Almost every other model posted fails basic consistency checks.

If you want critics to disprove a toy model, please try to include a decent description of the participants' intentions, and example money flows over time. To be useful in a discussion, a model needs a minimum consistency in its definition, or else people have to make wild assumption on how to connect the dots. Assumptions like "Pirate invested 100k USD at an exchange rate of 2.5 and grew them at 7% to 600k BTC now" are so broken, we can't work on them. And that's not only because Pirate claims higher internal interest and he'd have millions of Bitcoins by now. The direction of money flow, claims about him wanting to limit risk, hell, an endless amount of statements break down.

A discussion with frequent use of statements that exceed reasonable boundary conditions, or contradict earlier statements, doesn't work. The usual solution to this is betting. If the answer to that is "We don't, because our interest pays more than any reasonable bet", and there are no options and no shorting -- then nobody can help you guys, you've disconnected from the market and went straight to fantasyland.
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August 02, 2012, 02:18:43 PM
 #314

ty to Vandroiy from continuing the arguing with the naive, denial, and outright evil scammers (BurtW - on to the "million dollars is nothing" scammer speech, eh?)

I'm flying FPV race drones these days. Check out my YouTube channel: https://www.youtube.com/c/MiconFPV
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August 02, 2012, 02:23:44 PM
 #315

I just checked six high-end visible auto-payout addresses. Two "only" grew slightly compared to four weeks ago, four have been rapidly growing. Now, we're only talking about accounts that use auto-payout in the first place! Since you won't like address candidates I chose, just get some elsewhere, then see for yourself on the block chain.
How big were the accounts you looked at?

I was trying to work out roughly what people's overall exposure to BTCST is the other day but it's all smoke and mirrors... Looks to be several hundred thousand though... That would make sense if he paid 26000BTC last week in interest and many accounts automatically compound...
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August 02, 2012, 02:41:08 PM
 #316

Ok so Micon said that BTCS&T is in its final week or two. And looking at the prices of PPT bonds of GLBSE it's clear that a lot of people are withdrawing.

So if in two weeks Pirate hasn't default, is still operating or has returned all the coins, will you stop with this ponzi talk or what?

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August 02, 2012, 02:47:00 PM
 #317

The only other case Pirate's scheme would make sense is if he has inside information about the Bitcoin network collapsing in the near future so that the bitcoins he owes become worthless.

Inside information from which evil genius? The adaptive nature of the network makes that extremely unlikely.

Is that really the only possibility? I thought conspiracy theorists were more imaginative than that.

Now, instead of Pirate himself causing upward pressure on the price by buying bitcoins, he's causing upward pressure on the price by having other people acquire bitcoins in order to "invest" in his business.

Most people prefer to swim in calm waters like that of a swimming pool, not the middle of an ocean during a raging storm with towering swells. Capital flows toward healthy environments, where it isn't attacked or trapped. By influencing the Bitcoin exchange markets to create a safe environment for free flowing capital, Pirate is enabling participation by others who would've found Bitcoin unappealing with its history of high volatility. You make it sound as if there's no valid reason for anyone to use Bitcoin, so Pirate has to entice people to put their money in.

There seems to be a blanket assumption that everyone is out to destroy everything for a quick buck and will only follow a scorched earth strategy. It's as though the very idea of productive, progressive efforts simply doesn't exist. To me, that's astounding. Maybe it's because I don't find it thrilling to imagine myself having to look over my shoulder all the time the way super-secret spies do in movies. Or it could be that I think being the only one with a million BTC would be an incredibly isolated experience, not to mention detrimental to confidence in the currency.
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August 02, 2012, 02:48:57 PM
 #318

Ok so Micon said that BTCS&T is in its final week or two. And looking at the prices of PPT bonds of GLBSE it's clear that a lot of people are withdrawing.

If BTCS&T works the way some have suggested, withdrawals will actually help by allowing high rates to continue longer than they normally would. Maybe we should be thanking team Ponzi?
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August 02, 2012, 03:08:09 PM
 #319

Ok so Micon said that BTCS&T is in its final week or two. And looking at the prices of PPT bonds of GLBSE it's clear that a lot of people are withdrawing.

So if in two weeks Pirate hasn't default, is still operating or has returned all the coins, will you stop with this ponzi talk or what?

Uh, if he returns *all* the coins, it's not a Ponzi by definition, so yes.

I would cover 2-to-1 he runs within 8 weeks though. (More than Pirate rates!)
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August 02, 2012, 03:08:28 PM
 #320

Ok so Micon said that BTCS&T is in its final week or two. And looking at the prices of PPT bonds of GLBSE it's clear that a lot of people are withdrawing.

If BTCS&T works the way some have suggested, withdrawals will actually help by allowing high rates to continue longer than they normally would. Maybe we should be thanking team Ponzi?

I do agree, I got some very good deal on GLBSE. A little more help and I might even get over 7% Cheesy

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