Pirate on the other hand has willingly given his identity to his customers.
Did he give one, or has his identity actually been verified?
Further he has given his customers a basic explanation of how the business works: selling bitcoins locally to people who do not wish to use the established exchanges.
Unfortunately, I dont see how that makes any sense. It would be way cheaper for Pirate to buy bitcoins - if needed with borrowed money. At least initially, but if his business is as profitable as his payouts suggest, he would need less and less loans. At this point, he shouldnt need any really. Moreover Pirate pays his lenders in bitcoins, so he needs to buy more bitcoins than he sells anyway, its not like he can avoid exchanges, so whats the advantage for him?
Its interesting to point out two parallels; First Clipse, who made the same claim initially to explain why he paid 115% on his pool. That explanation made even less sense than Pirate and after being thoroughly debunked, he withdrew that claim and instead mumbled about a secret business model. Now unlike Pirate, Clipse doesnt hold a lot of coins of others, and more importantly, his business model is easily explained by poolhopping, forwarding to gpumax or both. Done properly, that should allow him to pay 115 (or now 105%) easily, and make a nice profit on top of it. There is no big mystery as far as Im concerned. Quite unlike Pirate. But the story about selling coins locally was a big fat lie to cover up something else.
The second parallel is the quote I wrote above:
Red Flag No. 4: Cheaper to borrow
Doing business the Madoff way was expensive. He returned about 12 percent a year to investors, and this percentage was his cost of doing business. Madoff could have borrowed money at a much cheaper rate, and then done any trading and investing that he chose and could have kept all the profits for himself. This red flag is so obvious that it’s hard to believe Markopolos is the only person who figured it out.Pirate is paying FAR more than 12% annually. But I guess you would have been happy with Madoff's explanation too.
Any theory about Bitcoin Savings and Trust needs to take into account GPUMAX as well.
I completely agree.
Pirate makes something like 10% on every purchase of hashing power made on GPUmax. I don't know exactly how many purchases go through GPUmax every day (perhaps one of the miners could clarify this) but i believe it to be a substantial number. People are chomping at the bit to get in to GPUMAX and get in on some of this action. My question to all the naysayers - why would somebody start both a ponzi and a legitimate business from the same bitcointalk account?
Recently Ive tried auctioning shares of a 80GH consortium of miners, not unlike gpumax, but I didnt get anything like what GPUmax is getting price wise. The same goes for just about anyone else who tried. When is the last time you saw short or medium term mining contracts sell for >140% of expected revenue anywhere else as on gpumax? Youd be lucky to get 110%.
So how can GPUmax find so many buyers for so much higher prices, when at the same time, it offers less flexibility than most other mining contracts?
The only plausible explanation I can think off, is that the main person buying at gpumax is no one else as Pirate himself. And that would also answer your question about why a ponzi would be completely complementary to GPUmax, and not a contradiction.
Im not claiming to know to how it all fits together exactly or what the end game would be, but I can see some possibilities for trying to combine a ponzi with a huge double spend attack. If anyone can come up with sensible alternatives that explain both his trust and gpumax, Im all ears.
