Following is a path of thought and the questions that arise with it. I am prone to error and if someone sees what i do not, please tell.
The rates he gives are just from a different planet, a first reaction to "7%... weekly..." should always be "hahaha ya right". Since it is seemingly necessary to refresh some people's memory, following is what it looks like within one year, estimating a start budget of 50 000
BTC (very low for the size of this operation) and a result for 80 weeks, taken because this has and supposedly will be running for a total time of over a year. Of course there are already signs that these rates will go down, this is just a display of magnitude of the growth we are talking about here:
http://i50.tinypic.com/2igm6wh.png for 80 weeks:
http://i49.tinypic.com/14nivyo.pngPlease note that from what i heard he intends to pay this back in BTC. What reason could there be to need money so drastically, that these interest rates are justified? If a bank charged ~3373% annually for a loan, people would assume it is a joke. Also remember that lowering interest rate in the future has nothing to do with validity of the current szenario - as long as the overhead of moving the BTC is negligible, the only relevant value is total interest per time. The shorter the time of the loan, the lower the total interest paid for it. As a side information, even 2% weekly would still amount to ~280% annually, which is still far from anything you would usually see.
If someone accepts this offer, he or she should at some point have gotten some questions and answered them to themselves in one or another way:
- Even 1% weekly would be far higher than any usual offer, why pay more?
- If there is a reason to pay more, it must involve some kind of risk for the investor. What is that risk?
- Why not ask a bigger investor instead of having the trouble with so many people? There are several people holding a lot of BTC and for 7% weekly without risk others would buy the required BTC from Mt.Gox immediately. Note that even if you double the price by instantly buying, after just ten weeks it will have paid itself off again, neglecting that you will not buy all coins at the peak of double the current price and that it is likely you can resell for a bit more than the current price after doubling it. (at time of post: Buy 100000 BTC for 842601.21 USD, ~8.43$/BTC average, taken from http://bitcoincharts.com/markets/mtgoxUSD_depth.html - then just wait until the order book refills if you want more, this is still not at double the price and surely not the best strategy to buy)
How does one answer those questions? I have seen people suggest that "large players" want to get BTC without moving the price. Then how do they pay back in BTC, and with those ridiculous rates on top? Also as suggested in the third question, it is simple to get large amounts by just buying them - in a much cheaper way than paying 7%. Where is the risk? Surely, if the risk involved is small, people will almost throw their money at you for those rates. Risk always means there is a chance of losing money instead of gaining. At this level, it should be very likely to lose everything, as otherwise even lower rates would be justified.
At some point, one wonders about the option that it is a scam. I have seen much arguing about Occam's Razor here and this is exactly where it fits in: trying to answer the questions above, no easy solution does the job. In fact, even absurd ones have failed so far (for example "large players" wanting to buy a lot of BTC) and the entire thing grows more and more suspicious. Now one is searching for an explanation how a scam would work, and is so far not convinced by anything, but just weighing all the options. Some people get paid back, why would a scammer do this? So surely it must be valid? But now one szenario almost jumps at you: a Ponzi Scheme. There are:
- Ridiculously high interest rates
- Forced withdrawals
- Noone (yet) has anything to hold pirateat40 by, no name, no address. Even if one had, with BTC he can just leave the country and never be seen again in case there are no securities for any of the money
- Appearance of a shadow team which noone has seen so far
- No explanation where the interest comes from or about the operation in general
and the list continues, just walk around on the forum and open your eyes.
Surely there cannot be any proof. There is always the chance that there is some explanation to all of this, some extremely non-standard, complex solution. However, if you meet someone on the street and he tells you not only some fake story, but that "there is a reason to explain this, now give me your money and wait here, i will come back in a week and give it back and even more!", will you really take out your wallet?
And I known that my argument contradicts yours. Damn quantum physics is so illogical. But note that inevitable ponzi's default does not turn a non ponzi to a ponzi. Right now, where we know the secret for sure or not, there cannot exists both underlying economic activity producing >3000% ROI and underlying economic activity producing way less than 3000% ROI. A ponzi is a ponzi is a ponzi, unlike photon is wave is a particle.
