Topic: How did people fall for this Pirate scam? - page 3. (Read 7070 times)

"i'll invest $1 and in 7 years it'll be 49 billion!"

1.07^(52*7) = 49 billion

I invest in more mining (hardware) with my bitcoins... Works out good IMO.....

Brannigan's Law is like Brannigan's love: hard and fast

Bitcoin attracted people looking to make money. Some people will risk everything to make a bit more and will totally ignore the risk involved. Happens in poker a lot.

pirate did not end with 500K in coins. the coins were used to pay out interest
and he was probably left with a small fraction of the original invested amount.

Look at it from Pirate's perspective: in order to be a market he only needs a set amount of liquidity in a given week to match what business he does in that week.  Because he's borrowing that money he needs to keep the amount of liquidity on hand close to the amount he needs otherwise he's paying a very large interest expense for something that just cuts into his profitability and doesn't help his business at all.  Projecting how much he needs in a week + a bit of wiggle room is trivial for Pirate and if you or I were in Pirate's shoes we could do it in a few minutes in a spreadsheet.  Given that Pirate's rolling with hundreds of thousands of dollars a tiny bit of savings here translates into a huge profit.

Why didn't Pirate fiddle with interest rates or deposit amounts week to week?  Are you saying that his business grew proportionally to the amount of his deposits?  Imagine that Satoshi himself thought Pirate was legitimate and decided to deposit his secret stash of 100,000 BTC from the early days.  Pirate was accepting deposits from anyone and now has to pay the 7% a week to this huge amount of money that he didn't need.  Either Pirate's a terrible businessman who doesn't make simple calculations to maximize his own profit or he's running a scam.  Either way he's a terrible investment.

On the USD side where does he find these borrowers without advertising everywhere?  Remember that he's got to grow his business in proportion to the unchecked growth of his borrowing.  Yes, he's got a top otc rating but why would someone smart enough to accumulate tens of thousands of dollars for an investment of bitcoins sent it to a single individual with no registered business?  Why use PayPal instead of a registered check?  MtGox does a better job of giving an illusion of trustworthiness than Pirate does.

In the other thread you said you went around and talked to people to get a feel of how Pirate works.  That's how confidence scams work, Pirate gets people to believe in him and that starts a web of people who believe in him.  You need to work the math out yourself, you can't just trust other people (especially pirate lenders).  Sorry to hear you got scammed.

That actually makes a lot of sense.  You have to get burnt once or twice, I think, before you are really capable of being realistic about investments.  I remember getting all exciting by the tech bubble, and losing money when it burst.  Fortunately not more than I could afford to lose, but until you've got caught up in the hype at least once; until you've let yourself believe all the very plausible-sounding reasons why "this time it's different", it's very difficult to really appreciate how utterly wrong the majority can be.  I'd frame it not so much in terms of greed but rather in terms of wishfull thinking. It's an important lesson to learn, and not an easy one, nor a pleasant one.

Lets consider a much simpler investment: simply holding a bunch of bitcoins in your wallet.  I periodically think long and hard about whether it's sensible to hold coins long term.  Whether it's realisitic to be bullish about the value of BTC or just wishful thinking on my part.  I'd do that even if BTC was appreciating and everyone was confident it was a good investment.  In fact, I'd do it especially if BTC was appreciating and everyone was confident it was a good investment.


BFL, on the other hand, is a completely different kettle of fish.  Seems like a typical start-up to me.  I think a lot of people here are so used to mainstream present day tech companies and they either weren't around or don't remember the days when pretty much all tech was built by companies stuggling to complete and ship cutting edge products on time.  The Sinclair ZX80, the BBC Microcomputer - the even earlier single board computers.  All suffered from slipping dates, production problems, etc.

Yes, dealing with a start-up like BFL involves making some calculated risks, particularly if you choose to preorder a product knowing that it's not yet in production and therefore the final specs aren't yet known.  It's the nature of start-ups that some businesses fail; and it's even more the nature of designing technology products that things don't always go according to plan, and often (some might say almost always) takes longer than expected.  I happen to think these risks are acceptable, and I took them (with money I can afford to lose) and preordered an ASIC Single.  For me, though, it's just a bit of fun; whether investing in mining equipment (or any kind) is sensible thing to do as a serious investment, I'm far from sure.  The days of easy money from mining are gone, I think

well, it's a web. lot of folds used paypal to trade with him and are not so well hidden. go, ask them. last time I checked tens of paypal transactions.
just my 2 cents

Uh, because a lot of people were greedy, thought Pirate would give them lots of coins, and gave him their coins? (See the irony? )

https://bitcointalksearch.org/topic/m.1138804

Read that and the following messages.


-It's easier to get a high volume
-Protection against devaluation of your stock

How do you think pirate was able to end with 500k BTC in 9 months? Do you really think that if he took the time to buy all of them, he would have that much Bitcoins? This game was all about having liquidities, about the capacity to move Bitcoins. Borrowing was the easiest way to do it.

Also, if BTC goes up in price, well, it can affect the profit margin, but it's manageable, because customers are still there. But if the BTC crash completely and become worthless, customers disappear, because they don't want to trade worthless coins. If you borrowed the coins, you simply buy them back, since the price is so low, give them back to the lenders and that's it. If you yourself bought your own coins, well, you're stuck with a worthless pile of code that nobody wants.

+1.

What thought process led you to believe that a new currency could eliminate greed?

Bitcoin is designed to circumvent financial oppression, not greed. Greed is a human emotion, can't be solved by humans.

1. All the shills worked the crowd very hard indeed.
2. The crowd had significant deficit of critical thinking capabilities.
3. Profit?

Pretty sure it's not the best place to ask that, but does anyone have heard about someone ready to lose 10-20% (feel free to correct, just a guess) to get clean coins, and using gpumax to do that ? I always wondered about that... Not asking names, just asking who is the kind of person who could use it ?
Does anyone have an estimate about how much coins went through gpumax since it opened ?

Because let's suppose that pirate borrowed coins, used gpumax to get clean ones, and now go into bankruptcy (hiding the coins obviously), then i might think he's really clever.

^ LOL......

LALALALA WE CANT HEAR YOU LALALALA ITS NOT A PONZI LALALALALA!

*covers ears with hands*

which link exactly? more then a dozen people came up with hypothetical ways for pirate to have a legit
business.

all of them fail when a tiny bit of logic is used against them.

probably the best way to defeat every single one is this:

if you can make so much money and afford such ridiculous interest rates per week why in the
world would you need lenders for so long? Use their money for the starting time frame until you
have enough profits to get rid of them so you can enjoy the profits yourself.

Basic common sense here. But nope! He kept taking in more and more new investors because that
is how a ponzi operates. When a rush of people wanted to do a withdrawal it totally collapsed as pirate
himself admitted.

it is pretty simple.

Please, give us a hint or link or something as to what you think Pirate's business model is.  Many different ones have been discussed and there's no way for any of us to find out which one is the one you think he used.

Sorta like matthew's bet right now.

He shows up during/after the peak. Newbie. Seems unstable/crazy as all get out.
Appears to have no real BTC resources.
Tries his fucking hardest to be noticed and part of the in crowd.
Goes to any length to get involved in anything possible. Especially stuff that gets you fame. (bitcoin magizine anyone?)
Even if he did buy BTC at ~2 a pop during a low it would require 70,000 USD to have more then 35K in BTC right now.

Now has a bet on pirate's default for up to 10-35K in BTC. 350,000 USD dollars in a bet.

Major voices in this forum step up and start placing bets. Many others follow suit.

matthew calmly acts like this is somehow normal, he is not a fool, and it will all just work out
for every party involved. Sept 9th he says. Wait until then. I will not prove I have 35K BTC. Take
my word for it. Very little to no escrowing going on.

People who question the sanity of the situation are overwhelmed by the bettors.

Pointless to preach to people who just do not give a damn. matthew gets attention and others
get their bet which is probably never going to be paid in either direction.

So many people got involved because most of the major voices on this forum were supporting Pirate offer.  Anyone who tried to question the logic of it all got shouted down.