Topic: How protected is the GLBSE from a pirate default? (Read 4083 times)

I love fair markets, and they will NOT previal.

Yes, you are right. The "pirate default" expression triggered it. I will stand back.

You are digressing from this thread to try and take it over with your point while totally missing mine.  Blacklist/Ignore here you come.

Do you have OCD or something?  Seriously.

Ah, we have a new concept here—the tainted bitcoin.

Please explain why exactly you think somebody needs to borrow bitcoins to launder money. Who came up with this ridiculous money laundering explanation anyway?

Um, you exchange tainted coins for clean ones and you take a large commission.  You pay a smaller commission out to your lenders.  That's how it works.  Is it out of the realm of possibility?  Certainly not.

Could it also be a giant ponzi?  Sure.  

Thing is, I really don't care how he's doing it as I'm not invested.  I've already stated what my concerns are.

Everyone? Mystery and confusion?

Ask some uninvolved people what they think of somebody who anonymously offers 7% per week (3,300% per year) interest on the amount you give him.

So much for everyone and for mystery and confusion. You will get a certain laugh and no trace of mystery.

Money laundering? Why do you need to borrow money to do money laundering? The people who want their money laundered will give you their money anyway. And if you try to pinch it, they will shoot you.

In fact, there is some truth to the money laundering claim. He launders your money on its way into his pocket.

There's always something to speculate on dude.  I don't think the GLBSE is a bad thing.  In fact, I think it's a great thing for Bitcoin.  It allows people to invest their bitcoins in anything, which is awesome!  People will make money.  People will lose money.  Just like in any money market.

As long as Pirate ≠ Nefario and Nefario isn't leveraged to his eyeballs in Pirate.  I'm all good, personally.

It's not odd because I'm not calling it a Ponzi.  You are.  

I'm neither defending nor attacking Pirate.  I honestly have no idea what the hell he's doing.  It could be silk road coin laundering for all I know (in which case I don't want to be involved either).  I'm not getting involved because of the mystery and confusion everyone has about who this person is and what this person is doing.

All I'm concerned about is whether GLBSE can weather the storm should something happen.


I think so too.

By the way, he may not be able to "disappear without damage". He will have to be a bit careful. Since the law may not reach him, some of the betrayed "investors" may well take the law in their own hands and gun him down.

In fact, he has to be extremely careful. To be safe, he would have to have made no mistake in many years. If his identity could be found out, I would not like to wear his skin.

Well, of course the fact that he could fly away with a great quantity of money does not mean he will be the richest man on earth... he will not pose a bigger threat, and possibly a much little one, than a corporation or hedge fund discovering bitcoin, and some way to make money toying with its markets.

It would be really intresting to see how many bitcoins Pirate he controls, however; at least a very rough esteem, to understand the impact it will have on the whole.

The problem is not how GLBSE is protected from Pirate, in my view; is how the Bitcoin economy is protected by GLBSE. Not that it is a problem in itself, but if you take down Ponzi pass-thoughs ...and miners soon to follow maybe, if you count ASIC + halving of reward, then there would remain very little. So, is there a "real" Bitcoin economy that will do with or without Pirate's 7% per week? Or are we all (or nearly) here to speculate, and will run to sell everything if financial speculation is no more profitable? Would the price of bitcoin be affected, or stay the same?

One conforting aspect I didn't consider before, at least


so yes, the pression of people buying bitcoins to invest them with him and of him selling them to buy tropical islands could have balanced all along, so that they can disappear without damage. After all it could be that if you invested in Bitcointorrentz, after the dust settles you will go almost unchanged. But for some kind of reason I can not get myself to be convinced of that...

I think the thread subject is odd. Ponzi scheme operators do not default. They take the money and disappear.

The effect will not be very strong, because he will not suddenly sell off all the bitcoins. He has done that already for the most part. There will be some loss of trust in bitcoin whenever a bigger Ponzi scheme bursts, but I don't think this will kill bitcoin.

It will be a catastrophe only for any idiots who put their pension savings into a Ponzi scheme.

An interesting question is when a Ponzi scheme bursts. The Ponzi operator takes new "investments" and has to pay out those who withdraw bitcoins. Pretty obviously the operator will shut down the scheme when the payouts outweigh the new "investments", i.e. when his take is at the maximum.

This depends a lot on the trust and belief of his followers. As long as he can convince enough people that he will keep and multiply their money, they will hand it over to him. How anybody in his right mind can possibly believe in interest payments of several percent PER WEEK escapes me. But then we all know that the two most prevalent elements in the universe are hydrogen and stupidity.

^not good short term, better for us long term

edit: unless having that many btc allows pirate to manipulate the market behind the scenes forever

looks like we are about to find out.

In order to know that what he does in unproductive wouldn't you need to know what he does?

Thanks for your reply.  I feel a little better having funds on the GLBSE but that quote is scary.  

Come on some random dude on the internet!  Don't mess this up!

^^^^^^^^ - Nefario, I really am warming to you.  Well put, you are well read I see as well.   I can't wait to do business with the GBSLE.   Just getting our ducks in a row.


Dakore

Don't tell me you never heard that the best way to get many friends is to pay for them?

I agree and I have no quarrel with that but I am just very much confused with why there is so much trust flying around for this person when I've yet to see what he's done to deserve any of it.

I personally don't invest in any assets on GLBSE or outside GLBSE apart from GLBSE itself (this has been my only investment in terms of time and money).

GLBSE as a whole does not invest in anything except GLBSE.

I and GLBSE are not invested in any way with BS&T or any of it's pass through bonds,shares whatever.

Is your BTC that is held in GLBSE safe?

Whatever the BTC balance is of your account is what we have in cold storage (of course, this number is the sum of all BTC account balances on GLBSE).

If there is a "run", i.e. if EVERYONE on GLBSE wished to withdraw all their BTC at the same time there would be a delay of one or two hours, as large withdrawal requests are checked and funds dropped into the hot wallet to fund these. Every bitcent and satoishi would be returned.

Regarding the effect of a complete default of BS&T, I believe it would have a negative knockon effect on the entire bitcoin economy in the same way the sub-prime mortgages fiasco effected stock markets around the world.

There would be something of a recession on GLBSE, and I think as a result trade volume would probably reduce(which means that GLBSE's revenue would also reduce).

The upside to all this is that uncompetitive businesses (that are involved) would probably close and capital would begin to be more effectively allocated to the productive parts of the bitcoin economy.

It would mean that there would be more funds available for new ideas and technologies instead of being wasted or tied up in an unproductive area of the economy.

I love markets, and they will previal.

Will GLBSE be able to handle the traffic/server load caused by panic selling and people watching the panic selling?

What did you expect to freedom tastes like? Something warm, softy, sweet and pink?
Freedom sucks with out the law, police, governments and the army 

http://bitcoinmagazine.net/ponzi-schemes-the-danger-of-high-interest-savings-funds/

for what it worth

there's some huge bitcoin crash ahead of us for sure. Bitcoin is totally unregulated. No one knows when shit will hit the fan, but it will for sure. Just take your popcorn, sit down and watch  Meanwhile you can earn some nice profit

It could be done via "open wallets" - disclosing each and every address you use for your business and using addresses as accounts like in accounting.

Combined with CoinControl patches, this could enable you to do proper open book accounting and the only thing needed to trust you is that these are really your addresses (and all of your addresses).

Pirate defaulting though would in my opinion rather have a psychological factor than real implications on GLBSE (aside from pass through products) and might be a nice "cleansing" and test for people claiming to have 0 pirate exposure.

Maybe we should create a listing of all assets and let asset owners confirm how much pirate exposure they currently have? Then, if it turns out they were lying, there might be the possibility to sue.

If we're going to talk about indirect consequences, though, maybe we should talk about how protected BTC is from a Pirate default. Pirate has hundreds of thousands of dollars worth of BTC, now. BTC market cap is ~$50m -- that includes coins (potentially a very large amount) which aren't at all involved in the BTC economy, yet.

Loss of GPUMax -> GPU mining less profitable (this'd come on the heels of the block reward halving, and ASICs coming in 2013 -- GPUMoney was supposed to have contingency plans to keep GPU hashing there profitable, even if BTC mining wasn't)
Loss of Pirate -> Miners (including GLBSE-listed organizations) may default -> various funds may collapse
Lendees who do Pirate arb will likely default -> lenders may default (those with significant liabilities, anyway) -> various funds and bonds may collapse

What happens from there will be interesting. Will investors have the outside capital and be resilient enough to continue on with BTC, perhaps buying back in? I'd guess it'd be a massive blow to morale (as an effect of a blow to profits) for a large portion of those using the BTC they've purchased for investment. Pirate may also sell the coins he's collected at that time, if he hasn't already. It could set crowdfunding way, way back, and for those with a large chunk in BTC investments, but not much USD, could cause them to cash out and drop Bitcoin entirely. It may cause a significant decline in the BTC exchange rate. Currently, almost nobody accounts for what they're doing -- with the rate Pirate offers, almost any business venture could be doing arb, and giving investors a minor amount of that and a pat on the head. Even for those of us who do disclose what we do, there's not much way to verify it. It's all online or on paper. It's not like I can point to a rental unit and say "yup, that's ours. Here's my key. We walk in, and everyone respects my claim on this property. Here are the checks we collected from last month." It's "nobody contests with my claim on the property I say I own, though nobody would really be able to, anyway." Even for those with services like BitCoinTorrentz (and I use them only for the sake of needing a name), they could be putting everything they earn in a Pirate account until it's time to pay dividends, when they pay only principal on what they put in Pirate. We have no idea how deep it goes, it's very difficult to verify someone's ownership of what they say, and that's what allows semi-drunken BS speculative posts like my own right here. It seems ironic, though, that Bitcoin, based on a zero-trust philosophy, currently requires full-trust for actual commerce (even if that full trust is placed in an escrow service, or perhaps later, an "independent" auditor).

3372% after 52 weeks, so yeah, much more than 2000%.

He does and he doesn't; my understanding is everyone is open to reinvest their profits, which is not as closed as forcing them to payout their profits (which is far more sustainable, since the amount of principle doesn't change).

There's no denying that they're making a fair return on all that, and I suppose if they're not reinvesting that profit into pirate then the rate of growth of capital in BS&T might drag things out a little longer. And the reinvestment level available through PPT bonds is fairly limited, which will keep things a little more under control as well.

That is accurate. Still, if you were to put coins into it now, only if pirate defaulted in 5 months’ time would you have little/no losses:



The principle with pirate would quadruple in that period of time.



Not logical? I think it's pretty logical; well, at least that the interest rate will be forced to decrease. 7% a week is >2000% a year, and given that you can't manufacture bitcoins, the sheer fraction of all bitcoins that would need to be passing through pirate cast a dubious light on how long this can continue. (That's ignoring that starting with 100,00 btc today - which seems reasonable - in 17 months there will be more btc owed than in existence, presuming reinvestment of interest.)
It is necessary for pirate to default or force payouts at some point, simply so he's not sitting on most of the bitcoin economy, and since the chance of that increases with time, it is logical to assign the probability of default a higher chance as time goes by.

What do you mean he's not anonymous? Care to explain who he is?

Because he is awesome !

He is not anonymous and everybody knows him and his real identity.

He won't default any time soon mate so chillax !

I appreciate yours and everyone's comments and thoughts.  Keep them coming.

I do disagree with you on this point though.  I think the GLBSE will be negatively affected.  The GLBSE economy is still young and fragile.  It is currently illiquid.  With all that money gone, I think it would affect trading negatively.


Stocks, bonds, bitcoins, it's all money to me.


Let's hope not, huh!


I'm not saying that they aren't.  Just opening dialogue.  

Cheers.

First, a single default does not mean total default.   It depends on what income was backing that income.

It's all very scary since there are absolutely no laws or regulations managing anything pirate is doing. He could get up and decide all this money is his overnight, steal it all and completely disappear and nobody would ever find him. It's strange the amount of money people are just trusting this random dude on the internet with. Where the hell did he even come from and why does he have all this apparent trust?

None of the funds raised from the various pirate offerings are even held by GLBSE. Those funds are withdrawn and sent to Pirate for whatever it is he's doing. If those assets crash it will have no impact at all on the investors account balances.

If Pirate defaults then all the PPT.X, PPT.DIV, FOO.PPPPT, etc will become worthless. If Pirate only half-defaults and gives some coins back then some of them will not be worthless, but their value will drop to a proportionate amount.

If a default happens then everyone loses their money; hopefully nobody is unethically holding other people's funds in a BS&T account to get some easy interest - if that's happening then the shit will hit the fan for those involved. If half the GLBSE bonds crash, GLBSE itself won't be negatively affected, but there will be a lot of people with a lot of worthless things associated with their account because they can't sell them.

GLBSE won't have 'a bank run'. It doesn't work like that. People might try and sell all their *PPT* stuff, but if nobody wants to buy it then they're just stuck with it. There's no real need to withdraw everything from GLBSE in that case. However, if people do try and withdraw everything, then there shouldn't be any issue at all if Nefario has been holding users' funds ethically. GLBSE is not a lending institution.

What money are you referring to? Any coins in GLBSE won't shouldn't be affected by a default.

I think a lot of people are thinking this; I recently sold anything I had to do with PPT. People are aware that it's unsustainable.

I don't see how a pirate default would effect anything outside of the pass-thru bonds on the exchange. 

You need to understand that it is investment money you talking about and in every investment their is risk .
But i know for sure that you'r money are more in risk when their in you'r bank of some imaginary paper asset that pays you 2% yearly with inflation of 15 % (informal of course).
use bitcoins ,and invest in bitcoins that way you can convert you'r assets to any form of papers or metals or services or goods that is why we need "money",bitcoins i mean. : for more info you can visit my website at: btcwallet.org

What happens if pirate defaults and half of the GLBSE becomes worthless?  Is my money safe?  Are my other stocks/bonds safe?

I've decided to sell my final pirate bonds and be done with it.  It's too risky for me.  But over half of the glbse is invested.  I'm sure mining operators are invested as well.  Maybe even Nefario.  What would happen should pirate default?  Is there a contingency plan if your servers are overloaded or there is a bank run?

It just seems like a lot of money is invested in this Pirate fund.  I'd like to know as a non-pirate investor.  Is my money safe?

No one else is wondering this?