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

[CoinCidental]

More Smoke ,More mirrors ASAP  

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[Vladimir]

Relax, everyone with a brain here believes that pirate's op is a ponzi. It is just a bunch of shills is trying their best (which is not much) to convince new marks to part with money.

I doubt anyone on these forums gives a crap one way or the other where you invest your money Vladimir

 

They'd better don't give a crap about my investments. Coz it is non of their damn biz. And anyway whatever I had to invest I've spent on lifetime supply of carrot muesli.

[miscreanity]

These patronizing koans remind me of the Apocryphal Gospel of St. Thomas.

"The disciples said to miscreanity: Tell us what the business of Pirate is like. He said to them: It is like a grain of mustard-seed, smaller than all seeds; but when it falls on the earth which is tilled, it puts forth a great branch, and becomes shelter for the birds of heaven."

When direct explanation remains incomprehensible, things have to be dumbed down to the lowest common denominator. Rational, independent thought is sorely lacking from team Ponzi. And I find more patronizingly arrogant attitudes from their camp than from BTCS&T supporters - the reactions to Ponzi claims have simply risen to counter the amount of ignorance and emotional accusations being spouted.

does anyone believe pirates secret  business is growing at a scale faster than facebook was /did  ?

Bitcoin is growing at a faster pace than Facebook.

Relax, everyone with a brain here believes that pirate's op is a ponzi. It is just a bunch of shills is trying their best (which is not much) to convince new marks to part with money.

I don't see how any of the Pirate supporters are advocating newbie deposits. Have any of them explicitly told anyone to deposit with Pirate or the PPTs?

No.

The issue is with Pirate's operation being proclaimed a Ponzi when there is substantial information to suggest it is not. Why isn't there much dispute regarding hashking or PatrickHarnett? Is it just because they don't offer as high a rate of return? Does that make them not Ponzi's?

And anyway whatever I had to invest I've spent on lifetime supply of carrot muesli.

Mmm, carrot muesli. I've never pooped better.

[Frankie]

The issue is with Pirate's operation being proclaimed a Ponzi when there is substantial information to suggest it is not. Why isn't there much dispute regarding hashking or PatrickHarnett? Is it just because they don't offer as high a rate of return? Does that make them not Ponzi's?

I've seen a lot of denigration of Ockham's razor, and I've seen claims that there is no evidence it is a Ponzi, but what is the evidence that it is not a Ponzi?

As for this thread, I believe the reason that Pirate is always discussed is that he has many more big investors who have to defend the scheme from attack. You will notice that OP suspects most of the high ROI "loans" are slower Ponzis.

[aq]

...

miscreanity, are you paid for constantly trying to educate them? You seem to have endless patience.
See, in the Dark Ages, everything someone did not understand had to be done by the devil, so they had to burn the witch.
Just imagine, Vandroiy or Micon or the like as simple people from the Dark Ages, and suddenly a huge Antonov 225 flies over them. This thing weights more than 500 horses, so would you expect they can believe such a heavy thing can fly without help from the devil?
The same today, a business that is not understood, has to be a ponzi.
Just 2 years ago, everyone would have told you that Bitcoin itself is a scam, while in fact, it was a huge lost opportunity for those that dismissed it. But today everyone is jealous and whines about those early adopters.
The pirate business is the same. In the end, a lot of people will whine about the lost opportunity.
History tends to repeat itself.
Just ignore those losers.

[Bitcoin Oz]

Are the mining operations on glbse a ponzi scheme ? Some of them pay the equivalent of what the lenders pay in interest.

I would like to see people argue that they are without losing any credibility.

[Stephen Gornick]

The authors of a study to measure the Silk Road estimate the volume to be about $1.9 million USD per month.  
 - http://arxiv.org/abs/1207.7139

So, let's say about 42,000 BTC per week flows through SR, or about 6K BTC per day.   You don't need hundreds of thousands of bitcoins to mix 6K BTC per day, and the fees for doing that are maybe -- taking even an extremely high percentage, 5% or just 300 per day earned.

At one point in time there was a shared belief that a chunk of the profits for this supposed lending were coming from serving as a mixer for SR.  At one point in time that was plausible.

I've no idea if these monthly SR volume estimates are accurate but even if the real volume were double or triple the estimated numbers, there's still just not all that many bitcoins that could be coming from SR business to where it could even possibly be a significant source of profits to any "lender" or mixing provider at the current scale.

So cross SR off the list as to one of the potential reasons that BS&T could be functioning as a business (versus being just a ponzi)

[dust]

Are the mining operations on glbse a ponzi scheme ? Some of them pay the equivalent of what the lenders pay in interest.

I would like to see people argue that they are without losing any credibility.

Mining ops have transparent business models and are back by physical hardware. Keep in mind the value of fixed Mh/s mining bonds goes down over time.  For example, a mining bond paying 2%/week might lose 1% of its value per week due to rising difficulty.

[miscreanity]

I've seen a lot of denigration of Ockham's razor, and I've seen claims that there is no evidence it is a Ponzi, but what is the evidence that it is not a Ponzi?

As for this thread, I believe the reason that Pirate is always discussed is that he has many more big investors who have to defend the scheme from attack. You will notice that OP suspects most of the high ROI "loans" are slower Ponzis.

That's the thing - there is zero direct evidence, only circumstantial information. Neither side can irrefutably prove its case at present, only state suspicions and preliminary conclusions based on deductive reasoning. Micon and team Ponzi refuse to acknowledge the impossibility of arriving at absolute certainty by repeatedly stating the only possibility is that Pirate is running a scam. I don't think anyone has seriously said that BTCS&T is definitely not a scam.

It is certainly possible that Pirate is running a Ponzi scheme, and it is also possible that there are supporting fraudulent structures. I have yet to see anything definitively linking these postulations through exhaustive blockchain analysis or any other rigorous efforts; for now, they are only being supported by specious claims. The behavioral pattern alone is being used as the foundation of assertions that BTCS&T is a Ponzi.

On the other hand, there is an alternative possibility aside from the Ponzi assumption. The precedent of market management resulting in systemic stability that has been extremely profitable for participants is involvement by the BIS in the gold market, along with other major banks, for the past several decades (other examples exist, but aren't as correlated). Direct evidence for this is scattered and has been defended by secrecy, but it's concrete and gaining wider awareness. The similarities are major, although there are some significant differences as well, the greatest of them being BTCS&T's open access to all (mostly through PPTs) instead of exclusion. What's of particular interest is that Bitcoin and gold are alike in many ways, especially their monetary functions. When applied to Bitcoin, this type of method would be much simpler than that involved with gold, although it would still require a good amount of work and technical financial understanding.

The inclusion of other services also degrades the Ponzi argument, as they could conceivably be used to buffer the primary BTCS&T operation and maintain a consistently high rate of return. At first glance, the interplay between the various components is not obvious. Nor is the market management process. A shift of perspective to capital flow highlights dynamic movement at the margins, while obsession with the core of static holdings distracts from where the real action is. It's still beyond the ken of most people in regard to the gold market, let alone Bitcoin. There are few easily-related examples, and none that most are familiar with. This inability to grasp the functioning is probably why the Ponzi accusations persist so vehemently and without balance.

[Frankie]

I've seen a lot of denigration of Ockham's razor, and I've seen claims that there is no evidence it is a Ponzi, but what is the evidence that it is not a Ponzi?

As for this thread, I believe the reason that Pirate is always discussed is that he has many more big investors who have to defend the scheme from attack. You will notice that OP suspects most of the high ROI "loans" are slower Ponzis.

That's the thing - there is zero direct evidence, only circumstantial information. Neither side can irrefutably prove its case at present, only state suspicions and preliminary conclusions based on deductive reasoning. Micon and team Ponzi refuse to acknowledge the impossibility of arriving at absolute certainty by repeatedly stating the only possibility is that Pirate is running a scam. I don't think anyone has seriously said that BTCS&T is definitely not a scam.

It is certainly possible that Pirate is running a Ponzi scheme, and it is also possible that there are supporting fraudulent structures. I have yet to see anything definitively linking these postulations through exhaustive blockchain analysis or any other rigorous efforts; for now, they are only being supported by specious claims. The behavioral pattern alone is being used as the foundation of assertions that BTCS&T is a Ponzi.

On the other hand, there is an alternative possibility aside from the Ponzi assumption. The precedent of market management resulting in systemic stability that has been extremely profitable for participants is involvement by the BIS in the gold market, along with other major banks, for the past several decades (other examples exist, but aren't as correlated). Direct evidence for this is scattered and has been defended by secrecy, but it's concrete and gaining wider awareness. The similarities are major, although there are some significant differences as well, the greatest of them being BTCS&T's open access to all (mostly through PPTs) instead of exclusion. What's of particular interest is that Bitcoin and gold are alike in many ways, especially their monetary functions. When applied to Bitcoin, this type of method would be much simpler than that involved with gold, although it would still require a good amount of work and technical financial understanding.

The inclusion of other services also degrades the Ponzi argument, as they could conceivably be used to buffer the primary BTCS&T operation and maintain a consistently high rate of return. At first glance, the interplay between the various components is not obvious. Nor is the market management process. A shift of perspective to capital flow highlights dynamic movement at the margins, while obsession with the core of static holdings distracts from where the real action is. It's still beyond the ken of most people in regard to the gold market, let alone Bitcoin. There are few easily-related examples, and none that most are familiar with. This inability to grasp the functioning is probably why the Ponzi accusations persist so vehemently and without balance.

So when you say there is "substantial information to suggest it is not" a Ponzi, you mean:

1. There's a super-secret market management technique that you think he could be using.
2. Offering other services (what, GPUMax?) "degrades" the Ponzi hypothesis because "they could conceivably be used to buffer the primary BTCS&T operation and maintain a consistently high rate of return."

Am I missing anything?

[Shadow383]

It is certainly possible that Pirate is running a Ponzi scheme, and it is also possible that there are supporting fraudulent structures. I have yet to see anything definitively linking these postulations through exhaustive blockchain analysis or any other rigorous efforts; for now, they are only being supported by specious claims. The behavioral pattern alone is being used as the foundation of assertions that BTCS&T is a Ponzi.

By the same argument, there is nothing to suggest that Madoff was a ponzi, because nobody knew how he was offering his returns and there was no evidence of the trades required to generate the profit to fund those returns.
We all know how well that went  

When a scheme that needs to generate somewhere in the region of $1 million per month in pure profit to operate legitimately, I'd like to think we'd have some evidence to suggest that business is doing a serious amount of trade.

Can anyone present evidence of trade that BTCST is doing?

Why isn't there much dispute regarding hashking or PatrickHarnett? Is it just because they don't offer as high a rate of return? Does that make them not Ponzi's?

I avoided investing in Hashking's ventures precisely because he doesn't give away enough details, and I wouldn't be able to find him if he ran with investors' cash.

Patrick's easier to find, more willing to communicate information and has transparent financials for his BTC payday loans operation if you ask for them.

Even Hashking gives out an awful lot more info than Pirate though.

Are the mining operations on glbse a ponzi scheme ? Some of them pay the equivalent of what the lenders pay in interest.

I would like to see people argue that they are without losing any credibility.

They have the potential to be...
For most, however, it's pretty clear what their business model is, their income source is well-known and the risks are well understood.
They are transparent, rather than being a "magical get-rich-quick black box that isn't a ponzi honest guv'nor".

There are one or two which are suspect, but there are plenty to choose from and most are perfectly transparent (Cognitive is a good example).

Even better than a Ponzi!  I need to set up a 'mining' operation that gets its coins from the subsequent investment in pirate.  Then I pay diminishing returns from my 'mining' based on difficulty ± 'luck factor'.

So long as you have the means to buy-back mining bonds at above the average daily trade price in the event of a BTCST default, I see no reason why you couldn't do this - take investment, pay out based on whatever earnings would be with set Mhash/Share and do whatever you like with investors' cash.

[miscreanity]

So when you say there is "substantial information to suggest it is not" a Ponzi, you mean:

1. There's a super-secret market management technique that you think he could be using.
2. Offering other services (what, GPUMax?) "degrades" the Ponzi hypothesis because "they could conceivably be used to buffer the primary BTCS&T operation and maintain a consistently high rate of return."

Am I missing anything?

That's the bulk of it. I should clarify the points.

• It isn't 'super-secret', only unfamiliar when not versed in capital flow dynamics, and it can be very difficult to implement initially.
• A Ponzi simply rotates incoming funds to earlier participants; potentially being backed by productive services means that it either wouldn't be a Ponzi, or not exclusively one.

[Frankie]

And as a balance to this "substantial information," BTCS&T has basically every hallmark of being a Ponzi scheme including:

• Ridiculously above-market rate of return.
• Consistent high returns no matter which way the market goes.
• Completely inscrutable business model.
• Rate premiums for larger deposits and bringing in even larger deposits.
• After the ramp-up, a feigned reluctance to take on more deposits.
• Early adopters promoting the scheme to others and defending the "businessman."

So, as between the hypotheses that BTCS&T is (1) a Ponzi scheme or (2) running some crazy Illuminati trading technique and inexplicably paying 3400%, you can surely forgive "team Ponzi" for finding the latter hypothesis much, much more likely. Right?

[miscreanity]

By the same argument, there is nothing to suggest that Madoff was a ponzi, because nobody knew how he was offering his returns and there was no evidence of the trades required to generate the profit to fund those returns.

Correct, however there was much more substantial proof surrounding the Madoff situation, in addition to several opportunities for direct access to records by regulators. As far as I know, there were no other profit-generating business operations than the fund.

When Markopolos got his hands on a copy of Madoff's revenue stream, he suspected problems almost immediately. To his mind, Madoff's strategy was so poorly structured that on paper, it couldn't possibly make money. Additionally, his return stream rose upward with only a few downticks—a nearly perfect 45-degree angle. Markopolos knew that the markets were too volatile even in the best of conditions for this to be possible. He believed there were only two ways to explain the figures—either Madoff was running a Ponzi scheme (by paying established clients with newer clients' money) or front running (buying stock for his own account based on knowledge about his clients' orders). Either way, Markopolos believed there was no legal way for Madoff to deliver his purported returns. Markopolos later said that he knew within five minutes that Madoff's numbers didn't add up. It took him another four hours to prove that they could have only been obtained through fraud.[14][15]

Despite this, Markopolos' bosses at Rampart asked Markopolos to deconstruct Madoff's strategy to see if he could replicate it. Again and again, he could not simulate Madoff's returns, using information he had gathered about Madoff's trades in stocks and options. For instance, he discovered that for Madoff's strategy to work, he would have had to buy more options on the Chicago Board Options Exchange than actually existed.[14] He also couldn't find any evidence the market was responding to any Madoff trades, even though by his estimate Madoff was running as much as $6 billion—far more money than any known hedge fund even then. In Markopolos' mind, this suggested that Madoff wasn't even trading.

From the bolded sections above, a Ponzi was not the only possibility, despite all of them being illegal. What Pirate is doing may well be illegal in traditional markets, but Bitcoin is unregulated and even if it were, proof would be difficult to come by.

If I am correct in that Pirate's operation is similar to the gold and other market management being executed by the BIS, and his actions would be considered fraudulent according to contemporary finance, then the entire traditional system is fraudulent.

Finally, is such activity (not the Ponzi) necessarily fraudulent if it serves to promote growth and provide stability in a market? Is it possible that this may even be a natural progression? Not a black & white issue anymore.

Can anyone present evidence of trade that BTCST is doing?

There's no way to directly link blockchain transactions to all BTCS&T related activity when taking into account offline exchanges. What we can estimate within a reasonable level of confidence is the volume necessary, and that is within the realm of possibility as far as current levels go.

I avoided investing in Hashking's ventures precisely because he doesn't give away enough details, and I wouldn't be able to find him if he ran with investors' cash.

Patrick's easier to find, more willing to communicate information and has transparent financials for his BTC payday loans operation if you ask for them.

Even Hashking gives out an awful lot more info than Pirate though.

It's been pointed out that all of Madoff's information was public record for the duration of the fraud...

This all comes back to trust - counterparty risk. There's never any way to be absolutely sure of any investment until it either fails, blows up, or you end the involvement.

[miscreanity]

And as a balance to this "substantial information," BTCS&T has basically every hallmark of being a Ponzi scheme including:

• Ridiculously above-market rate of return.
• Consistent high returns no matter which way the market goes.
• Completely inscrutable business model.
• Rate premiums for larger deposits and bringing in even larger deposits.
• After the ramp-up, a feigned reluctance to take on more deposits.
• Early adopters promoting the scheme to others and defending the "businessman."

So, as between the hypotheses that BTCS&T is (1) a Ponzi scheme or (2) running some crazy Illuminati trading technique and inexplicably paying 3400%, you can surely forgive "team Ponzi" for finding the latter hypothesis much, much more likely. Right?

That is a solid counterpoint; a few emotionally-charged bits, but sensible

Accusations are one thing; assertions are another. I can admit and respect suspicions leading to the former, not the latter with lack of definitive proof.

[Bitcoin Oz]

Are the mining operations on glbse a ponzi scheme ? Some of them pay the equivalent of what the lenders pay in interest.

I would like to see people argue that they are without losing any credibility.

Mining ops have transparent business models and are back by physical hardware. Keep in mind the value of fixed Mh/s mining bonds goes down over time.  For example, a mining bond paying 2%/week might lose 1% of its value per week due to rising difficulty.

Even better than a Ponzi!  I need to set up a 'mining' operation that gets its coins from the subsequent investment in pirate.  Then I pay diminishing returns from my 'mining' based on difficulty ± 'luck factor'.

It has crossed my mind to do that but I decided its not ethical to claim you have a mining farm when you dont. Some of the bond issuers will tell you they get accused of this very thing all the time....

[Bitcoin Oz]

There are 50,400 BTC mined each week.  Where do they go?

To the miners.
Rhetorical question?

Nope.  Perhaps Pirate's tapped into some of the largest miners for a supply of coins that would never appear in Gox volume?  Perhaps Pirate is mining (I'm not talking about gpumax)?

If pirate funded a mining farm using USD which pays out in bitcoins that would be immensely profitable. As long as you have a LOT of USD  to set that up it easily explains the returns. Imagine if you setup a mining farm using USD then bitcoin prices rose 3000%

Further, if you have a successful fiat based company with excess profits which you funnelled into bitcoin mining the only exposure you have is the cost of production.

TL;DR the pirate had a fat USD wallet to start with 

[dust]

There are 50,400 BTC mined each week.  Where do they go?

To the miners.
Rhetorical question?

Nope.  Perhaps Pirate's tapped into some of the largest miners for a supply of coins that would never appear in Gox volume?  Perhaps Pirate is mining (I'm not talking about gpumax)?

Half of the miners could give pirate all their coins FOR FREE every week and it wouldn't even cover the interest payments.

If pirate funded a mining farm using USD which pays out in bitcoins that would be immensely profitable. As long as you have a LOT of USD  to set that up it easily explains the returns. Imagine if you setup a mining farm using USD then bitcoin prices rose 3000%

Further, if you have a successful fiat based company with excess profits which you funnelled into bitcoin mining the only exposure you have is the cost of production.

TL;DR the pirate had a fat USD wallet to start with 

Hoping something goes up 3000% in value is a terrible reason to offer 3000% anual interest.  Also, pirate pays out BTC, so even if he profited a bunch of USD from setting up a cheap mining rig, he would still need to pay out in high priced BTC.

[Bitcoin Oz]

There are 50,400 BTC mined each week.  Where do they go?

To the miners.
Rhetorical question?

Nope.  Perhaps Pirate's tapped into some of the largest miners for a supply of coins that would never appear in Gox volume?  Perhaps Pirate is mining (I'm not talking about gpumax)?

Half of the miners could give pirate all their coins FOR FREE every week and it wouldn't even cover the interest payments.

If pirate funded a mining farm using USD which pays out in bitcoins that would be immensely profitable. As long as you have a LOT of USD  to set that up it easily explains the returns. Imagine if you setup a mining farm using USD then bitcoin prices rose 3000%

Further, if you have a successful fiat based company with excess profits which you funnelled into bitcoin mining the only exposure you have is the cost of production.

TL;DR the pirate had a fat USD wallet to start with 

Hoping something goes up 3000% in value is a terrible reason to offer 3000% anual interest.  Also, pirate pays out BTC, so even if he profited a bunch of USD from setting up a cheap mining rig, he would still need to pay out in high priced BTC.

As long as he is profiting more than  in usd terms and pumping usd profits into more mining he could theoretically make enough btc each week from those rigs that explains where he makes coins from. People here are claiming there is no actual business model that explains where he is getting the coins from to pay interest. Im  showing them there is a possibility that explains the source and makes the pirate NOT a ponzi.

[FreeMoney]

Imagine if you setup a mining farm using USD then bitcoin prices rose 3000%

That would suck a lot compared to buying bitcoins since the difficulty increase is going to eat up a lot or all of the gains.