Topic: A Theory on what pirateat40 is doing - page 7. (Read 40018 times)

I'm sorry to be this blunt but your theory is down right stupid.

Not only is he borrowing BTC that could be on an exchange sitting in an ask wall, suppressing the price but he is borrowing to pay back interest at a rate of double what he borrowed in just 10 weeks. So not only is there less supply available for exchange then there could be otherwise but there's even more demand because he needs to buy BTC to pay interest.

And now under these circumstances you think that his tiny little wall of 30kBTC is going to stop the price from rising? Is that why we went from $5 to $9.2 in the last month and a half? Is this him being successful?? 


Please, give it a rest already, whether money laundering or buying in at a certain price NO THEORY MAKES SENSE ANYMORE GIVEN THE RECENT PRICE CHANGE.

I have neither money nor desire nor need to make any bets. All "bets" I wanted to make are made already (long before most of you heard of Bitcoin for the first time).

This is a new kind of hedge. Let's now borrow at 3000% APR to hedge some insignificant risk. This is some genius hedging here, lets pay 3000$ to remove risk of losing 100$ Right! Here is a simpler option, get idiots greedy brainless "investors" to give you BTC, sell half on open market, keep fiat, pay the rest back to those greedy brainless "investors" in weekly instalments  until there is no money left.

Now look, no need to waste a few pages to explain some convoluted unworkable and completely pointless scheme. Just one-two sentences and it is all simple and clear.

I dont know if i follow this correctly .........
everyone gets bought out of the pyramid with their stake  + interest  but pirate stays in alone to reap further benefits  ?

Another possibility is that he stops accepting new deposits and pays out all interest. Then he can go on indefinitely.

+1

Pirates operation will have to end sooner rather than later. Just like Vladimir said once...you could in fact get all the bitcoins (21million) in three years with just starting with...i think it was 1000BTC and compound that for 3 years at 7.5%....

yeah yeah yeah his interest rate will go down soon...and will likely go down again 1, 2, or 3 months after that again.

If history is any guide then one of three things is likely to happen:

1) Interest decreases to a sustainable level as the market adjusts and reacts to the trader with all the coins.  This is the best case scenario.

2) The market moves against the trader in a way the trader didn't anticipate, realising a large loss of customer bitcoins.  Not everyone can be paid out.

3) The trader disappears / gets hacked / whatever and the customers lose their bitcoins.

If it sounds too good to be true, it probably is.  It's not really different this time.  It's not a new paradigm where all the old rules no longer apply.

Watching the market action with interest.

the fact is ,he is paying these rates at the moment and you are still free to walk at anytime with you coins + interest

how long it can last is anyones guess ,i believe market manipulation is a major factor and as long as pirate has an enormous  share of  BTC  then he can continue to apply the scheme for a while yet

(that doesnt mean im saying he wont run with all the coin at some stage ,just not yet     )

If you compound, you double the investment in 10 weeks (if you are lucky).
http://en.wikipedia.org/wiki/Rule_of_72

You're assuming his scheme will last 4 months...  Are people seriously expecting a 7% return on their investment per week?  LOL

This is very true, but only for the last 7 months. Why? What changed in the market?

Let me explain: pirateat40 is fundamentally a bear. He has however built a business that involves selling BTC to his clients who are bulls. In order to run his business he needs an inventory of BTC estimated from more than one source to be say 250000 BTC. Now like any business he needs to finance his inventory. He has two choices:
1) Borrow USD
2) Borrow BTC
(1) is cheap; however he runs the risk of a sudden drop in the BTC price leaving him with a warehouse full of worthless BTC and 2.5 million USD in debt. Let us remember we are dealing with a bear here. So instead he chooses option (2) and pays a premium rate of 7% a week to borrow BTC. He has now effectively hedged his downward risk. If the price of BTC were to drop to zero tomorrow he can repay his lenders in the now worthless BTC together with the 7% per week interest also denominated in BTC.

Now when a buyer comes along he sells the buyer BTC from his inventory and then goes into the market buys back the sold BTC. He needs to generate say 10% a week in commissions in a flat market in order to pay his lenders and make a profit. This is actually not that hard to do. In a bear market July 2011 - December 2011 he makes an additional profit because he is effectively short the market between selling his BTC from inventory and buying them back in the market in order to replenish his inventory. Now in a bull market is where the situation starts to get interesting. I suspect he can tolerate a small rise in the market, but not a sharp sudden rise so he has to use ask walls in order to moderate a rise in the market and apparently has been doing this quite well for the last 7 months. There is a serious risk here. A long term well capitalized investor who does not mind paying a small premium say 10% - 15% over market comes is out of the blue and buys out his ask wall. Now he is effectively short not only the BTC sold to the client but also the BTC from the now sold ask wall in a rising market. This is when the fun and the real risk of a short squeeze starts.

There is no need here for a ponzi or any kind of money laundering to explain this theory.

By the way I have deduced all of this from pirateat40's own comments, the comments of both his supporters and detractors and correlating these comments with the historical market behavior, as part of my own due diligence on Bitcoin.

Here is another view on things  :

1. Move all your disposable cash to pirates 7.2% deal

2. Enjoy the interest rates while they last ,every 4 months  you double your outcome

3. If you are worried pirate will default ,withdraw the interest every week and invest it in something safer until you have 100 % of your stake back (then your only gambling with money
 you made from pirates "program " anyway )

If the wheels fall off ,pirate may return your coins or he may steal them but show me some deal that has no risk attatched and similarly enormous weekly  payouts  ? didnt think so.....

bitcoin broke a record yesterday

Most Volume in Currency in a 6 hour time frame

he needs all these coins to put put huge ask walls / sell some, when he needs the price to go down

Is not 7% per week that pirateat40 is paying? As for the 250000 BTC that is approximately what it would take to drive the price down on MtGox to 1.80 USD to 1 BTC.

I wanna borrow 250k btc!

who borrowed 250000 BTC ?

But why borrow 250000 BTC at 7% per week in order to do this?

Adam, I had similar idea posted somewhere on the first page of this thread


It makes a lot more sense for big money to move in into bitcoin with slow strategy without effecting market much, and then ride it for interim profits with ability to purchase more at lower rates. The tricky part which is hard to figure out is re-buying what is owed to lenders.