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.)
I reiterate my previous theory. As he moves more money his counter party demands a lower margin (but still insane for banking). BTC is not subject to AML/KYC for in person transactions like art, jewelry or annuities/life insurance. He could COMPLETELY LEGALLY take a suitcase full of cash, and give his customer bitcoins EVERY WEEK. FYI 1,239,316.26 BTC were sent in the last 24 hours. That's $8 Million USD today!
He then can go to his bank, with said suitcase full of cash and deposit it. Most likely he has set up an LLC or some other business account. Sure, they'll flag it and ask him where he got it. He'll say I sell bitcoins. The bank will record that on the ticket and make the deposit.His buyer or buyers don't come in to it at all. They could be selling perfectly legal items or not, it doesn't matter. Because bitcoin is not a prepaid access under the FinCEN regulations and he is not a broker dealer according to FINRA he's AML exempt. This will go away when FinCEN and FINRA correct their regulations to include bitcoin.
