Bryan Micon's List of BTC Ponzi Schemes that should not be listed as "Lending"

[miscreanity]

If you had a bitcoin business that was able to produce >1.3 Million BTC per year, would you give such a large chunk of it away?
If he's really making such stellar returns, why is he still seeking new deposits?

Besides, if he was making profit equal to 16% of the entire currency (so far) per year, I'm fairly sure we'd be able to track down somebody he's done business with.

I don't think he's seeking new deposits so much as compromising on the referral entry barrier. With so much demand and the additional layer of counterparty risk involved with the PPT offerings, there are probably a good number of investors whom would prefer to deposit directly with Pirate even if the rate is lower. That also takes some of the pressure off Pirate at the top tier rates.

There are quite a few who have a direct FPS&T account from before it went referral only.

[miscreanity]

Startups are completely honest about the fact that they are very high risk investments. The majority of startups fail.

All Ponzis fail eventually

I'm more convinced that Pirate is running a legitimate outfit than I am that it's a scam. How it works is close to how the management of precious metals functions in traditional markets, but less complex. I think that's why Pirate has stated a rapid rise in BTC exchange value would be a threat to BS&T. It might even be viewable as a reverse Ponzi, drawing from other pools of wealth like the USD to enrich Bitcoin holders...

If I'm wrong, I'll be the first to admit it. As for fiscal prudence, I have nowhere near my full Bitcoin holdings involved with BS&T and wouldn't recommend that anyone else go whole hog either.

I also think it's become easy to have strong suspicions about virtually any investment opportunity when the very foundations of the current financial system have become thoroughly fraudulent. That said, I won't invest in much of anything dollar or Euro based.

[Vandroiy]

Last week, BS&T paid out 26,000 BTC in interest.

i really wonder how anyone can know this.

the reason is, because when i ask for a withdrawal, it comes in exactly the same transaction as the interest payment.

so if someone is due to be paid 100 in interest, but they request a 400 btc withdrawal at the same time, everyone seems to assume they have (500 / 0.07) invested when in reality their balance is much lower.

I was just hinted at this post. This is not at all what is seen on the block chain and what users say.

Bitcoinmax withdrawal from BS&T matches very well with http://blockchain.info/address/19kEo3qmuUdAQb1Q7VZhRwahw5v3NSZCeW?filter=0

The 800 payment last Wednesday can be timed with withdrawal requests shown on the forum. I also was told by BS&T users that they could withdraw at any time, and Bitcoinmax offers withdrawals within 24h, explicitly allowing "withdrawals at any time"! How could the withdrawals be delayed until the next Monday with such promises?

Furthermore, look at the immediate large re-investment on Monday last week. Withdrawal?

[EpicFail]

they're not all delayed until monday, but almost every single monday a withdrawal is taken at the same time as interest payment, hence amounts can't be relied upon to simply "divide by 0.07".

you're all just doing guess work, most of which is completely off the mark.

I guess the assumption that everyone is a Compounding Moron^TM is false. I would not be suprised if many depositors have taken into consideration the risk of default/ponzi and already have in place some strategy of risk reduction based on systematic withdrawals.

[Vandroiy]

they're not all delayed until monday, but almost every single monday a withdrawal is taken at the same time as interest payment, hence amounts can't be relied upon to simply "divide by 0.07".

you're all just doing guess work, most of which is completely off the mark.

If it's "completely off the mark", then what is the 5004 BTC transaction last Monday? I don't think you have a customer with >129k BTC throughput from Bitcoinmax, often paid in medium three-digit chunks on top. 1FmC6gUV1tkT7HHmQzo3NwtgZs3WGSz4Rd would make more sense as the deposit address at BS&T.

Also, wow those are neatly stable-growing Monday "withdrawals" when you look at the chart: http://blockchain.info/charts/received-per-day?address=19kEo3qmuUdAQb1Q7VZhRwahw5v3NSZCeW

Of course I can't tell the exact numbers from it, but this isn't a random withdrawal curve!

[Micon]

Care to make a 100 BTC wager with me that we will escrow to a person we mutually agree upon that BCST will default by the end of 2013?  I love free BTC!  

So, that was it then? It was only a setup so that you can propose a bet that cannot make you lose any money? If someone takes your bet, you only have to also put 100 BTC into pirateat40 fund at the same time: you'll either win because pirateat40 defaults (you'll get the 100 BTC from your opponent + the interests you got from pirateat40 in the meantime) or win because he doesn't default and you can take your principal back and have multiplied it by a large amount even after you lose the bet.

In fact, you're proposing to buy a 200 BTC insurance against pirateat40 default, for a cost of 100 BTC, valid until the end of 2013, at which date you would have made much more than that. Clever.

I must admit that I'm a little disappointed. I thought you were playing the white knight here, while you were just setting up the atmosphere needed to propose this bet.

1)  i can assure you no matter what I will never buy buying pirate-anything or ponzi-anything or bonds of such or anyone that makes these posts saying 2% weekly, totally legit, i do stuff with btc that's awesome, just send the coins.

2)  Among other things I'm a pro gambler.  When the user laughed off my post suggesting a scenario that pirate would want shill accounts in order to generate blockchain verifiable interest, I asked him to put BTC where his mouth is - a standard response in my industry.

3)  you think I'm forward thinking enough to set up an entire thread-atmosphere to swoop in for the $800 score?  Pirate is stealing $1M+ USD and you think I am spending all this time researching this to make a quick 100 btc? 

[koin]

I'm more convinced that Pirate is running a legitimate outfit than I am that it's a scam.

"It is difficult to get a man to understand something, when his salary depends on his not understanding it." - Upton Sinclair

[Micon]

I am going to ask the users with strong economics backgrounds to please also +1 this thread.  Also feel free to assign weight to your thoughts, i.e. for my own perosnal:

"I 100% think that BCST is a classic Ponzi scheme and anyone running a pass-through is helping Pirateat40 steal large amounts of BTC"

I 87% think it's a Ponzi. So what. Let's talk about something else now. This was only fun to talk about the first 11 times around. I enjoyed the drama, but now I've got other dead horses to beat.

Anyone who runs a pass-through doing the community a favor. Whoever wants a slice of that pie should be able to have it.

Now, either I am going to be extremely pissed off that I missed out on the investment of a lifetime, or a lot of people are going to be robbed. Everything has been said that can possibly be said about it, now we just have to ride it out.  You came to the party about a month too late. It is good to raise your concerns, they are they same as about 40 other people on this forum, including me. But Every single one of your posts is FUD. Suckers will be suckers no matter how much you scream (that said, you and I may be the suckers here).

Ponzi Bob

1)  it is extremely important to continue it's discussion, as the scam is going on right now each day and each week, and I will stop discussing it when it goes boom or is at least not mucking up what should be an important, legitamite part of the BTC community.  

2) Micro-lending is a possible killer app for BTC because of the extremely low fees.   Right now if I wanted to lend or borrow BTC in any way on any scale I click the lending tab and have to wade through scam after scam after derivative of a scam to find legitimate lenders and borrowers.

2)  like it or not, ready or not, this community is setting BTC precedents.  Let's set another one by not allowing blatant scams to be listed under "lending."

[Micon]

1)  I live in Vegas
2)  it requires an almost Catholic amount of denial to compare IBM with Pirate's ponzi scheme
3)  what do you believe is Pirate's business unit that makes so much money?

1) That is a crying shame.  I wish that I had know that before.
2) I was not comparing Pirate to IBM.  I was making a point about your use of the word indefinitely.  And you know this.
3) My beliefs and your beliefs do not matter.  What matters is my knowlege or lack thereof.  Also, and this may shock you, your uninformed opinion does not matter.

My first hand conversations with him are all that matter to me and to the people who trust me.  You do not trust me so there you sit with your opinion and no way of changing it.

Good night everyone.

Denial to the Nth degree.

Every time you ask the Ponzi for how it makes the monies it's always a secret.

(again, from http://en.wikipedia.org/wiki/Ponzi_scheme )
Typically extraordinary returns are promised on the investment,[5] and vague verbal constructions such as "hedge futures trading," "high-yield investment programs", "offshore investment" might be used. The promoter sells shares to investors by taking advantage of a lack of investor knowledge or competence, or using claims of a proprietary investment strategy which must be kept secret to ensure a competitive edge.

I would love to have a guy like you on my Podcast to debate this topic - it runs each Wed. 7-9pm PST and you can give me any cell / phone / skype or call my skype #

further more what you (and me before living here) think of Las Vegas is a strip casino and drunks wandering the streets.  I live next to a park and a golf course.  I am staring at the mountains out my office window right now.  Parts of this town are shitty, and parts are breathtakingly beautiful.  but that tangent is for a different thread completely. 

[Micon]

It would be ~16 k BTC if Pirate does not default and keeps up the current rates

If you want to propose this bet you would have to give met better odds then the 16000 times my money I make by investing with Pirate until the end of 2013 (1.07^75).

So your 17000 BTC (1k for tying up my funds) versus my 100 BTC and you pay the escrow fees and I'm game.

(If you mean the end of 2012 instead of 2013 Pirate would yield 4.74 times my money so your 500 BTC (26 BTC incentive) versus my 100 BTC + you pay the escrow fees would suffice).

This is a good point that I did not think about late last night when asking to bet.  I agree that if some1 thought the 7% would continue for 1.5 yrs, why would they flat-bet me $100 as opposed to investing?  One-Eyed made the similar point. 

In the interest of continuing the real discussion that these Ponzis shouldn't be listed as Lending + all should be exposed, I will refrain from offering any more bets.  Just saw a sure thing, i.e. there is no way this scam lasts until end 2013. 

[miscreanity]

I'm more convinced that Pirate is running a legitimate outfit than I am that it's a scam.

"It is difficult to get a man to understand something, when his salary depends on his not understanding it." - Upton Sinclair

Good quote. I wouldn't be invested if I didn't see a way for it to be viable without being a scam.

This is a good point that I did not think about late last night when asking to bet.  I agree that if some1 thought the 7% would continue for 1.5 yrs, why would they flat-bet me $100 as opposed to investing?  One-Eyed made the similar point.

Funny how emotion clouds judgment for those on both sides of the argument, isn't it?

In the interest of continuing the real discussion that these Ponzis shouldn't be listed as Lending + all should be exposed, I will refrain from offering any more bets.  Just saw a sure thing, i.e. there is no way this scam operation lasts until end 2013.

It probably can't at current rates of return. That still doesn't mean it will implode and result in a loss of assets. What would've happened if Madoff had returned all deposited funds before his operation failed? Would it have still been considered a Ponzi? Would anyone have known?

[CoinCidental]

I'm more convinced that Pirate is running a legitimate outfit than I am that it's a scam.

"It is difficult to get a man to understand something, when his salary depends on his not understanding it." - Upton Sinclair

Good quote. I wouldn't be invested if I didn't see a way for it to be viable without being a scam.

This is a good point that I did not think about late last night when asking to bet.  I agree that if some1 thought the 7% would continue for 1.5 yrs, why would they flat-bet me $100 as opposed to investing?  One-Eyed made the similar point.

It probably can't at current rates of return. That still doesn't mean it will implode and result in a loss of assets. What would've happened if Madoff had returned all deposited funds before his operation failed? Would it have still been considered a Ponzi? Would anyone have known?

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

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

[Micon]

It probably can't at current rates of return. That still doesn't mean it will implode and result in a loss of assets. What would've happened if Madoff had returned all deposited funds before his operation failed? Would it have still been considered a Ponzi? Would anyone have known?

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

so let me answer your latest question:

1)  with Madoff, and every other ponzi scheme operator, to pay this insane interest you need constant new investment.  
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
3) there is no money making business unit
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.

[pekv2]

Eh.

Has anyone read this guys "micon" first post?

[smoothie]

Wow. Just noticed there are multiple pass through's to Pirates BS&T. House of cards will come down.

Watch out for the falling knife investors!!

[Shadow383]

Wow. Just noticed there are multiple pass through's to Pirates BS&T. House of cards will come down.

Watch out for the falling knife investors!!

What's startling is the sheer size of the operation.
We're talking >200K BTC just in various pass-throughs and "trust accounts" before we even start talking about people's own BTCST accounts (published or otherwise).

[miscreanity]

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

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.

[koin]

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?

[hgmichna]

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

[miscreanity]

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.