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

[JoelKatz]

have you not seen this yet ?
https://www.globaloilfund.com/

Obvious HYIP.
http://hyip-watch.blogspot.com/2012/07/global-oil-fund-aftermath_18.html
CAUTION: Article is unintentionally hilarious with gems like, "Both admins and investors are responsible for the sustainability of any successful HYIP."

[1714769586]

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[Raoul Duke]

Don't you guys love it when one guy admits he fell for scams

I lost half my coins to this scam/hack.

Why are you more worried about OP's alleged proclivity to be scammed than the person who supposedly holds $1 million in coins. Good luck getting them back after he's "hacked" by "hackers."

What makes you think I'm worried about something?
Also, nice job cutting my sentence in half. You should get a prize for that only.

[Clipse]

I find the in-depth knowledge of the newbie crew compelling, thats why I allways make sure to go to the dentist who have the absolute least experience in his field.

[softwareseller]

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?

[Shadow383]

A question to all the pirate pass-through operators:

If you're so confident in pirate's investment scheme, why don't you sell insured bonds?
There seems to be a great market for insured pirate bonds paying around 2-3%, and if you let the 4-5% you collected each week compound you'd be in profit by Halloween.

I mean, if you can make an extra 4-5% on the entire sum of all your deposits every week, at absolutely no effort, why aren't you doing it?
The rewards are massive, so if the risk/reward ratio isn't there for you then you clearly perceive an absolutely astronomical default risk 

Alternatively, you could sell pirate bonds paying 2-3% interest compounding over say 4 weeks where just the principal is insured - that cuts your exposure by about 20% and you still make a profit of about 15-25% on your entire fund every single month.

If we're extremely likely to get all invested funds back then why not? 

[John (John K.)]

A question to all the pirate pass-through operators:

If you're so confident in pirate's investment scheme, why don't you sell insured bonds?
There seems to be a great market for insured pirate bonds paying around 2-3%, and if you let the 4-5% you collected each week compound you'd be in profit by Halloween.

I mean, if you can make an extra 4-5% on the entire sum of all your deposits every week, at absolutely no effort, why aren't you doing it?
The rewards are massive, so if the risk/reward ratio isn't there for you then you clearly perceive an absolutely astronomical default risk 

Alternatively, you could sell pirate bonds paying 2-3% interest compounding over say 4 weeks where just the principal is insured - that cuts your exposure by about 20% and you still make a profit of about 15-25% on your entire fund every single month.

If we're extremely likely to get all invested funds back then why not? 

There is in fact a ton of investment schemes like this:

New Insured PPT offering.

Summary:
Interest Rate: 3.30% Weekly.
Insurance : If there is a Pirate default anyone under this plan will receive 50% of their funds back.  

If Pirate changes his rates, then the rates of this program will change. Deposits can be made anytime at http://www.hkbtclending.com and interest will be paid 7 days after your deposit is made.  For Example, if you deposit on Tuesday your payment will go out on Wednesday.  Deposits must be held for one week minimum and there will be no proration of days on interest.  Withdrawals may take up to 24 hours to be returned.   Deposits can be returned at anytime.    

This is the only deposit backed by an insurance where you will be able to see the insurance funds sitting in an address in case of default.  As deposits exceed the current insurance allocated I will add more to the insurance address.  I will currently start the fund with 4,000 BTC which will allow for 8,000 BTC worth of Deposits.  

Link to Insurance fund.
http://www.blockchain.info/address/12ducqed4pLJjCQL9CkwpfVLMEWAa1UQDn
Address of insurance fund.
12ducqed4pLJjCQL9CkwpfVLMEWAa1UQDn

If there is any questions on how to setup this deposit up on the website or about the program feel to contact me.

Email: Hashking1@gmail.com
PM: hashking

New Insured PPT offered follow link for details. https://bitcointalk.org/index.php?topic=97041.msg1068849#msg1068849.

[dust]

A question to all the pirate pass-through operators:

If you're so confident in pirate's investment scheme, why don't you sell insured bonds?
There seems to be a great market for insured pirate bonds paying around 2-3%, and if you let the 4-5% you collected each week compound you'd be in profit by Halloween.

I mean, if you can make an extra 4-5% on the entire sum of all your deposits every week, at absolutely no effort, why aren't you doing it?
The rewards are massive, so if the risk/reward ratio isn't there for you then you clearly perceive an absolutely astronomical default risk 

Alternatively, you could sell pirate bonds paying 2-3% interest compounding over say 4 weeks where just the principal is insured - that cuts your exposure by about 20% and you still make a profit of about 15-25% on your entire fund every single month.

If we're extremely likely to get all invested funds back then why not? 

YARR is an insured pirate bond.  The problem with insured bonds is that you have to trust the issuer to actually pay out when pirate defaults.  If an operator wants to reliably insure a pirate bond for its principal/face value, they need to keep that many BTC out of pirate, preferably in cold storage or even better, escrow.  No one should trust "insured" funds that have all of their assets with pirate.

[dust]

Hashking's insured pirate fund is just a worse version of putting half your investment with pirate or a full passthrough and keeping the other half in your wallet.

[Shadow383]

There is in fact a ton of investment schemes like this

There's the gamma one apparently in the pipeline, hell I'll buy in if I can find out what the insurance fund consists of. That one's supposed to be 2.5% and 100% insured.

As for the hashking one as far as I can see he's taking no personal risk, just taking half of his clients money and putting it in a cold wallet and the other half with pirate, with enough interest earned to pay out on the full amount at the offered rate.

So, if BTCST goes under, he loses nothing, but his depositors lose 50%.

YARR is an insured pirate bond.  The problem with insured bonds is that you have to trust the issuer to actually pay out when pirate defaults.  If an operator wants to reliably insure a pirate bond for its principal/face value, they need to keep that many BTC out of pirate, preferably in cold storage or even better, escrow.  No one should trust "insured" funds that have all of their assets with pirate.

If you were to, say, have an "escrow" GLBSE, holding various mining company shares and the like, you could have a way for the insurance funds to still earn interest.
But yes, I understand your point about it requiring more startup capital.

A more pure way to do it would be for those with escrow/cold storage funds to sell CDS. You'd get customers that won't invest in pirate, and if you really don't believe he's going under you can make easy money from them.

Also, isn't the owner of YARR trying to sell it?

[CoinCidental]

[Frankie]

A question to all the pirate pass-through operators:

If you're so confident in pirate's investment scheme, why don't you sell insured bonds?
There seems to be a great market for insured pirate bonds paying around 2-3%, and if you let the 4-5% you collected each week compound you'd be in profit by Halloween.

I mean, if you can make an extra 4-5% on the entire sum of all your deposits every week, at absolutely no effort, why aren't you doing it?
The rewards are massive, so if the risk/reward ratio isn't there for you then you clearly perceive an absolutely astronomical default risk  

Alternatively, you could sell pirate bonds paying 2-3% interest compounding over say 4 weeks where just the principal is insured - that cuts your exposure by about 20% and you still make a profit of about 15-25% on your entire fund every single month.

If we're extremely likely to get all invested funds back then why not?  

Er. Because if you believe he won't default you can make more by just "investing" in pirate?

Lotta things you can say about the pass through ops, but faulting them for not providing a free lunch isn't one of them.

[dust]

YARR is an insured pirate bond.  The problem with insured bonds is that you have to trust the issuer to actually pay out when pirate defaults.  If an operator wants to reliably insure a pirate bond for its principal/face value, they need to keep that many BTC out of pirate, preferably in cold storage or even better, escrow.  No one should trust "insured" funds that have all of their assets with pirate.

If you were to, say, have an "escrow" GLBSE, holding various mining company shares and the like, you could have a way for the insurance funds to still earn interest.
But yes, I understand your point about it requiring more startup capital.

A more pure way to do it would be for those with escrow/cold storage funds to sell CDS. You'd get customers that won't invest in pirate, and if you really don't believe he's going under you can make easy money from them.

It's not that it requires more startup capital, it just doesn't work.  Say you have two guys, one who is sure pirate will never default and the other who is sure pirate will default, each with 100btc.  The pro-pirate guy wants to make more easy money, so he offers a 100% insured bond that pays 3.5%, taking the other 3.5% for himself.  The anti-pirate guy considers investing 100btc in this bond.  However, if he invested, the pro-pirate guy would put 200btc with pirate.  If the anti-pirate investor truly believes that pirate with default 100%, he has no reason to believe that the insurance would ever be paid out.  If the pro-pirate guy had any funds to spare, he would just invest them with pirate because he thinks a default will never occur.

Also, isn't the owner of YARR trying to sell it?

Yes, it is terrible risk/reward for the owner

[Shadow383]

It's not that it requires more startup capital, it just doesn't work.  Say you have two guys, one who is sure pirate will never default and the other who is sure pirate will default, each with 100btc.  The pro-pirate guy wants to make more easy money, so he offers a 100% insured bond that pays 3.5%, taking the other 3.5% for himself.  The anti-pirate guy considers investing 100btc in this bond.  However, if he invested, the pro-pirate guy would put 200btc with pirate.  If the anti-pirate investor truly believes that pirate with default 100%, he has no reason to believe that the insurance would ever be paid out.  If the pro-pirate guy had any funds to spare, he would just invest them with pirate because he thinks a default will never occur.

I wonder though... I bet if you had a free-floating CDS market on pirate you'd see rates of 7%+ quite regularly...

[hgmichna]

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.

So my advice for everybody who, against all common sense, believes in pirateat40, but is still looking for a bit more insurance, is to switch your account to interest auto-pay-out and keep your fingers crossed for 10 weeks.

Another variation of this is to reinvest about half of the gains and have the other half auto-paid-out. That would have worked pretty well for the very early adopters and would return the principal within 20 weeks. Of course all such schemes would be a catastrophe for pirateat40, who can continue only if people withdraw less than other people pay in. He is banking on the compounders.

Just to be sure that nobody takes the above advice too seriously, my real advice is, of course, not to trade with pirateat40 at all and, if you have already given him money, withdraw it immediately. I don't think you'd have another 10 weeks.

Addendum: Nobody seems to have noticed, so I will do the correction myself. Without compounding it takes, of course, a bit over 14 weeks to recover your principal and 28 weeks if you compound half of your interest.

[miscreanity]

Do you really not understand the simple fact that there has never, in the history of humanity, been anything remotely resembling a low risk investment that can promise to return 3000%? However, the list of things that have claimed to be such and have actually been Ponzi schemes is quite long. Even his supporters admit that the scheme cannot last (this is simple mathematical fact). The only question is whether it ends with Pirate paying people back or with Pirate not paying people back. And Pirate basically has no incentive to pay anyone back.

This isn't rocket science.

That's the only part I disagree with. The assumption that there is no incentive to return funds involved in a highly public operation that has multiple facets, all of which are heavily invested in supporting the Bitcoin system, simply doesn't hold up as strongly as if it were a completely silent effort.

Assuming Pirate had invested USD$100,000 at $2.50/BTC around the time BTCS&T began, at 7% returns he would now have about 600,000 bitcoins and by one year almost 1.2mm. Why bother dealing with the hassle of a Ponzi when those kind of gains would be achievable quietly and with no accusations directed at him?

If we look at his motive from a more pragmatic perspective, his actions make sense. The most valuable asset for a business is its reputation. Bitcoin has been observed by many as a revolutionary system. Anyone looking to be a mainstay in such a new system might do what Pirate has done in order to solidify himself as a valuable participant, whereas the traditional view steeped in greed is to extract as much as possible, as quickly as possible, and everyone else be damned. Instead, Pirate is now poised to be one of the prime go-to names for anything Bitcoin related.

The result of wealth extraction practices is what we're seeing with animosity and civil unrest toward those whom have pursued exactly those destructive behaviors for the past several decades. That is, destructive actions are unsustainable and end violently. They have especially permeated the traditional financial realms. Responsible, long-term views founded on commitment to core principles can result in longevity through stability. Some examples, both old and new, are Costco, W. L. Gore & Associates, Google, IBM, Jim Sinclair's Tanzanian Royalty Exploration Corporation, etc...

Bitcoin being new, it has certainly attracted its share of questionable and unscrupulous individuals. At the same time, anyone recognizing its greater potential has the opportunity to create a legacy that could rival the Du Ponts or Rothschilds or Vanderbilts. From everything that I've seen regarding Pirate's community involvement and operations, I see an effort to do something greater than himself that benefits the world, and secure an admirable place in history.

I also PMd you an outline of how the various components work together to bolster BTCS&T.

[miscreanity]

Don't you guys love it when one guy admits he fell for scams and tries to convince everyone he can spot a scam? LOL, just LOL "I can see a scam because I fall for them" <--- Doesn't compute.

Classic!

[miscreanity]

One thousandth post! Thanks for providing the amusing material with this thread.

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.

So my advice for everybody who, against all common sense, believes in pirateat40, but is still looking for a bit more insurance, is to switch your account to interest auto-pay-out and keep your fingers crossed for 10 weeks.

Another variation of this is to reinvest about half of the gains and have the other half auto-paid-out. That would have worked pretty well for the very early adopters and would return the principal within 20 weeks. Of course all such schemes would be a catastrophe for pirateat40, who can continue only if people withdraw less than other people pay in. He is banking on the compounders.

Very sensible. Glad to see you're finally catching on to what's been suggested repeatedly in countless posts.

Just to be sure that nobody takes the above advice too seriously, my real advice is, of course, not to trade with pirateat40 at all and, if you have already given him money, withdraw it immediately. I don't think you'd have another 10 weeks.

Your decision, herr Diktator! I am again in awe of your magical guessing abilities.

[Frankie]

Do you really not understand the simple fact that there has never, in the history of humanity, been anything remotely resembling a low risk investment that can promise to return 3000%? However, the list of things that have claimed to be such and have actually been Ponzi schemes is quite long. Even his supporters admit that the scheme cannot last (this is simple mathematical fact). The only question is whether it ends with Pirate paying people back or with Pirate not paying people back. And Pirate basically has no incentive to pay anyone back.

This isn't rocket science.

That's the only part I disagree with. The assumption that there is no incentive to return funds involved in a highly public operation that has multiple facets, all of which are heavily invested in supporting the Bitcoin system, simply doesn't hold up as strongly as if it were a completely silent effort.

Assuming Pirate had invested USD$100,000 at $2.50/BTC around the time BTCS&T began, at 7% returns he would now have about 600,000 bitcoins and by one year almost 1.2mm. Why bother dealing with the hassle of a Ponzi when those kind of gains would be achievable quietly and with no accusations directed at him?

If we look at his motive from a more pragmatic perspective, his actions make sense. The most valuable asset for a business is its reputation. Bitcoin has been observed by many as a revolutionary system. Anyone looking to be a mainstay in such a new system might do what Pirate has done in order to solidify himself as a valuable participant, whereas the traditional view steeped in greed is to extract as much as possible, as quickly as possible, and everyone else be damned. Instead, Pirate is now poised to be one of the prime go-to names for anything Bitcoin related.

1. Because Pirate cares just too damn much about his reputation! That didn't seem to stop bitcoinica and mybitcoin from disappearing (or being "hacked"--I'm sure some true believers will insist that Pirate was hacked or suffered a bad trade when this is all over).

2. If you're trying to benefit a fledgling revolutionary system and you also happen to spot a lucrative trading opportunity within it, how do you best benefit the system?  Do you: (a) share your profits with the lucky faithful people who give their money to you in spite of your investment having all of the warning signs of being a HYIP, or (b) spend your profit on, you know, actual charity and development for the revolutionary system.  In the alternate reality where pirate is running an actual investment, it seems like the only reason for pirate to pick (a) is if he has aspirations of being a cult leader.

3. To be pedantic, Pirate made it clear that he couldn't accept that much "storage" (such as $100,000) early on. https://bitcointalk.org/index.php?topic=50822.msg615031#msg615031 He had to gradually ramp up a balanced set of "investors."  This is inconsistent with a market trading or arbitrage scheme, where more capital could be used instantaneously, but by remarkable coincidence it is completely consistent with a Ponzi scheme (where a large investor early on can imbalance the scheme and cause it to fold prematurely if he pulls out to test the system).

[miscreanity]

1. Because Pirate cares just too damn much about his reputation! That didn't seem to stop bitcoinica and mybitcoin from disappearing (or being "hacked"--I'm sure some true believers will insist that Pirate was hacked or suffered a bad trade when this is all over).

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.

2. If you're trying to benefit a fledgling revolutionary system and you also happen to spot a lucrative trading opportunity within it, how do you best benefit the system?  Do you: (a) share your profits with the lucky faithful people who give their money to you in spite of your investment having all of the warning signs of being a HYIP, or (b) spend your profit on, you know, actual charity and development for the revolutionary system.  In the alternate reality where pirate is running an actual investment, it seems like the only reason for pirate to pick (a) is if he has aspirations of being a cult leader.

Charity gets people by for a day. It's the government way of doing things. Business allows others to participate, making an endeavor that much stronger. The former is sunshine and ponies in the short-term, but disastrous in the long-term. The latter is consistent and tends toward longevity.

I like how you so nonchalantly threw in 'cult leader', as though that's the only option for anyone to aspire to.

3. To be pedantic, Pirate made it clear that he couldn't accept that much "storage" (such as $100,000) early on. https://bitcointalk.org/index.php?topic=50822.msg615031#msg615031 He had to gradually ramp up a balanced set of "investors."  This is inconsistent with a market trading or arbitrage scheme, where more capital could be used instantaneously, but by remarkable coincidence it is completely consistent with a Ponzi scheme (where a large investor early on can imbalance the scheme and cause it to fold prematurely if he pulls out to test the system).

Of course not, the market couldn't handle that much then. If you were to dump $10mm into Bitcoin when the total market value were $25mm, he would be working against himself because there wouldn't be enough flow to provide earnings at the margin. It's the same in the commodity futures markets where the banks control a majority interest and have to be careful not to trade against their own positions, trapping themselves in losses. Once again: from what I see, as long as the Bitcoin economy is growing, Pirate will be able to generate a return.

I don't know Pirate, nor do I have access to his information. It could still be a Ponzi. At the same time, there are a number of methods which could be aggregated to provide greater return than 7% weekly. If you haven't been able to already from the nearly explicit descriptions of how it works, then it's up to you to figure out what those methods are. There is likely at least a handful of individuals other than Pirate doing the same thing.

[Shadow383]

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  

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...