so now does pirate's business model include buying bitcoins constantly? haven't found any answer yet around here... beginning at the lows last winter, did he perhaps even rescue Bitcoin singlefootedly?
I pretty sure that the last thing the pirate does is buying bitcoins
He obviously lends them out to some other people at higher interests, without being nosy on where they get the bitcoins from.
Ot it's a ponzi...
Either of the two - feel free to choose your believes, I'm still not quite sure about mine
Isn't it clear what he does? He's said as much on other threads. People lend him bitcoins that he then sells for hard currency locally at a (significant) markup. Whoever buys those coins more than likely sends them to a third party, who converts them back to fiat (possibly another fiat).
Pirate moves his currency back into bitcoins. More than likely Pirate is never in fiat more than a day or two, leaving him minimally exposed to bitcoin / fiat pair volatility risk.
Pirate's customer has a steady need to send currency through bitcoins on a regular basis, for payment for some ongoing good or service. These customers are paying a significant premium for this service, likely 10% or more. That's why Pirate can afford to pay 7 points per week. As long as pirate's customers' business grows (or they move more bitcoins through him) he can afford to keep paying 7% indefinitely. It is likely that at some point he may have to close to new deposits (as he has done in the past).
Bitcoin is a easy way to move
large amounts of currency without the use of banks or walking large amounts of cash through airports. Hell, it's better than diamonds or art. Sure is more liquid.
He's doing exactly what he says he does, arbitrage with a very short term loan (The loan is as fast as he can turn hard currency to bitcoin).
(If I've stepped a little too close to home, please let me know and I'll edit / delete my post.)
Regarding waltmarkers' theory on the nature of pirate's business... Why would his clients pay such a high premium for this service? Why wouldn't they e.g. directly buy bitcoins from mtgox? I'm kinda new to this, and theories regarding pirate's operation are in my opinion nice case studies on how the bitcoin ecosystem works. Any shedding of light on this question would be appreciated, also I hope I'm not hijacking this thread much (just a little
).
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