Here's why BTCST won't last for one year

[Mageant]

LOL 1 YEAR?!?  Something like that wouldn't last 3 MONTHS hahah

FYI, it has been up and running for 8 (eight) months so far, sir.

Actually at least 10. He started in November in these forums last year.

He claims he actually started the business even a few months before that with his personal money and that of friends.

[farfiman]

MtGox has probably sent more BTC than exists.

According to bitcoincharts.com MtGox's 1 year Bitcoin volume is 22,110,652.92!

Everybody knows Mtgox is a ponzi as well 

[CoinCidental]

MtGox has probably sent more BTC than exists.

According to bitcoincharts.com MtGox's 1 year Bitcoin volume is 22,110,652.92!

Everybody knows Mtgox is a ponzi as well 

ponzi no ,but manipulating prices with "glitches" ? maybe

[makomk]

It's not impossible for him to pay more BTC than exists over a long period of time. He could, for example, pay out 1 million BTC, buy that BTC back using USD, and repeat until he's paid the ~13 million BTC. Something like that could happen legitimately with a gigantic, extremely productive company (the company would buy the BTC back with its products instead of USD). MtGox has probably sent more BTC than exists.

He'd have to be making even more money than would be required to pay back the 7% weekly interest in order to manage that, though. Think about what someone buying up a substantial proportion of Mt Gox's normal annual volume would do to the Bitcoin price...

[mb300sd]

Buying/selling BTC at a 10% profit is very much a possibility. as seen in https://bitcointalk.org/index.php?topic=99286.0

just sayin..

Also see the prices the moneypak vendors on silk road sell for..

Pirate could very possibly be doing the same on a much larger scale, and it wouldn't show on the exchanges.

[Maged]

Pirate could very possibly be doing the same on a much larger scale, and it wouldn't show on the exchanges.

By making this claim you are saying that the offers that are publicly posted are a very small minority of all such transactions that take place at that valuation. As such, you are also claiming that many people exist that are directly using Pirate or there are a few mega-investors who give away 10% just because they can. Either way, not one single person has ever claimed to use Pirate's business. Additionally, if that is his business, why have none of his competitors who are doing these transactions more publicly not making this kind of money?

Seriously consider those thoughts. We can speculate what his business is all we want, but we need to wonder: why haven't we heard of a single customer?

[finkleshnorts]

Pirate could very possibly be doing the same on a much larger scale, and it wouldn't show on the exchanges.

By making this claim you are saying that the offers that are publicly posted are a very small minority of all such transactions that take place at that valuation. As such, you are also claiming that many people exist that are directly using Pirate or there are a few mega-investors who give away 10% just because they can. Either way, not one single person has ever claimed to use Pirate's business. Additionally, if that is his business, why have none of his competitors who are doing these transactions more publicly not making this kind of money?

Seriously consider those thoughts. We can speculate what his business is all we want, but we need to wonder: why we haven't heard of a single customer?

Great point.

[imsaguy]

Seriously consider those thoughts. We can speculate what his business is all we want, but we need to wonder: why haven't we heard of a single customer?

Why doesn't the mystery miner that controls an extreme amount of hash and shows up periodically ever surface making claims or even interact on this forum?

A lack of interaction on this forum certainly doesn't mean something doesn't exist.  Contrary to some opinions, this forum isn't the center of the bitcoin universe.

[Bitcoin Oz]

Theres only one entity that would waste 10% irrationally and thats the government.

 

[P4man]

Why doesn't the mystery miner that controls an extreme amount of hash and shows up periodically ever surface

He has surfaced. I talked to him on IRC, and even posted some screenshots of his alleged botnet on the forum somewhere.

But thats besides the point. Someone controlling a botnet has no reason to interact with the bitcoin community. Someone buying or selling coins on a massive scale and overpaying, literally, to the tune of hundreds of thousands of dollars, would have every interest in seeking competitive alternatives.

[imsaguy]

But thats besides the point. Someone controlling a botnet has no reason to interact with the bitcoin community. Someone buying or selling coins on a massive scale and overpaying, literally, to the tune of hundreds of thousands of dollars, would have every interest in seeking competitive alternatives.

Or perhaps said buyer doesn't want to deal with the flakes on this forum, instead dealing with a specific person who might cater to their specific needs and doesn't ask a bunch of questions and therefor paying them well for it.

[mp420]

But thats besides the point. Someone controlling a botnet has no reason to interact with the bitcoin community. Someone buying or selling coins on a massive scale and overpaying, literally, to the tune of hundreds of thousands of dollars, would have every interest in seeking competitive alternatives.

Or perhaps said buyer doesn't want to deal with the flakes on this forum, instead dealing with a specific person who might cater to their specific needs and doesn't ask a bunch of questions and therefor paying them well for it.

Even if that were true it's not plausible that Pirate would pay such a generous interest. His "benefactor" could have gotten him a fiat loan of $2 million at less than 3% annual interest rate and he's choosing to pay a thousand times that, in a currency that's continually appreciating against fiat.

[Bitcoin Oz]

But thats besides the point. Someone controlling a botnet has no reason to interact with the bitcoin community. Someone buying or selling coins on a massive scale and overpaying, literally, to the tune of hundreds of thousands of dollars, would have every interest in seeking competitive alternatives.

Or perhaps said buyer doesn't want to deal with the flakes on this forum, instead dealing with a specific person who might cater to their specific needs and doesn't ask a bunch of questions and therefor paying them well for it.

That is irrational behaviour. Something only an entity that doesnt care about the cost would do such as the state.....

[Maged]

But thats besides the point. Someone controlling a botnet has no reason to interact with the bitcoin community. Someone buying or selling coins on a massive scale and overpaying, literally, to the tune of hundreds of thousands of dollars, would have every interest in seeking competitive alternatives.

Or perhaps said buyer doesn't want to deal with the flakes on this forum, instead dealing with a specific person who might cater to their specific needs and doesn't ask a bunch of questions and therefor paying them well for it.

By saying this you are then claiming that Pirate's business is only used by a few very rich people, not many moderately rich people. I don't know about you, but whenever I've done business with just a few large customers, they very quickly pushed me into receiving lower and lower profit margins by percentage. In a real business, that's not that big of a deal since I'm still making more money in terms of amount I'm making, but Pirate needs to pay people back in terms of a percent. Now, again, in a normal business, that isn't a big deal because you advertise and find more customers, but there is no evidence that Pirate is doing that.

I'm not claiming that everything happens on this forum, but like with the mysteryminer example, I'm claiming that someone here would know something.

[imsaguy]

I'm not claiming that everything happens on this forum, but like with the mysteryminer example, I'm claiming that someone here would know something.

Not everyone has a big mouth and goes blabbing..  There's probably money to be had to keep one's mouth shut.

For a while there was a guy named rubberchicken on irc who claimed to control (and seemed to back it up) a large number of coins.  He was around a bunch and then disappeared.  There's nothing to say there aren't more of those types of guys out there.

Oh and if I had to guess just based on the estimated volume of pirate's business, I'd tend to say it was skewed towards fewer, larger persons, but I really have no idea.  If there were only a few, it would explain why there aren't people talking about it. 

[rjk]

For a while there was a guy named rubberchicken on irc who claimed to control (and seemed to back it up) a large number of coins.  He was around a bunch and then disappeared.  There's nothing to say there aren't more of those types of guys out there.

Hey I remember him; he claimed to have purchased dollars.com for some exorbitant amount and was pretty awesome (and foul). Wonder where he went.

[Maged]

Oh and if I had to guess just based on the estimated volume of pirate's business, I'd tend to say it was skewed towards fewer, larger persons, but I really have no idea.  If there were only a few, it would explain why there aren't people talking about it. 

My thoughts exactly. It just isn't possible that he's dealing with many people. So, let's assume that he is dealing with 20 people. We know that Pirate needs to use most of his reserves, otherwise he wouldn't have borrowed anything. For simplicity, let's say that is 90% of his investments. My guess is that 90% is around 400k BTC right now. Let's assume that he charges 10% on all transactions within his business. Let's also assume that transactions are only done with people once a week.

That's 20k BTC that each person is transacting per week, or almost a quarter of a million dollars. Again, this is per person, per week.

Ok, so maybe this is happening more than once a week. In that case, he can get away with charging lower fees. However, he could also get away with having a lower reserve, so that means that far more money than that is going through him each week. You can see how quickly this gets insane

[imsaguy]

My thoughts exactly. It just isn't possible that he's dealing with many people. So, let's assume that he is dealing with 20 people. We know that Pirate needs to use most of his reserves, otherwise he wouldn't have borrowed anything. For simplicity, let's say that is 90% of his investments. My guess is that 90% is around 400k BTC right now. Let's assume that he charges 10% on all transactions within his business. Let's also assume that transactions are only done with people once a week.

That's 20k BTC that each person is transacting per week, or almost a quarter of a million dollars. Again, this is per person, per week.

Ok, so maybe this is happening more than once a week. In that case, he can get away with charging lower fees. However, he could also get away with having a lower reserve, so that means that far more money than that is going through him each week. You can see how quickly this gets insane

At one point, someone mentioned futures, or some twist of the concept, as a possible explanation.  That'd explain the reserve requirement.  He might not need to have them on a daily basis, but must have a large quantity on the off chance someone actually wants to take possession of said coins.