Topic: Pirate v2.0: Unravelling the Bitshares Ponzi - page 3. (Read 12720 times)

What? Someone asked, I just added my opinion of the motives of rs. Not sure what that post was all about.

What on earth does mcxNOW have to do with this?

Scammers are more rational than academics because they function in the Real World.

If you have revenue of $50,000/year in an exploding niche...
And a Market Cap of $7,000,000 = very high Price to Revenue of roughly 135...
And only 5% of your Market Cap has been monetized...
What is your next move?

It's definitely not something that would hurt your business.

With all due respect do you understand what a dividend is ?

I know that recent financial history has tainted the world but , come on , here is what I was talking about , without getting into it , your design is at best Transference Vehicle inside the Bitcoin equation, that's being very generous... now.

Equities  - (similar in manner to bonds) have a Dividend. so lets go though this :

Jon buys equity in "Knight Knives" (they sell knives) Jon knows the dividend , so the two aspects here are:

"Knight Knives" is producing a product and then a demand is receiving it , the part of the production goes back as a "dividend" - for the capital raised to add on the extra Knife factory that is now needed since so many Christians are getting their heads lopped off in Syria by Terrorists.

So,  Capital went to increase production (the new Knife factory warranted by the Terrorist extra demand) and a Dividend was paid back for expansion and work done.

you see the difference between a "vehicle" i.e the liquid and the "product" and the "work" and the "dividend".
 
So even in the world where 85 Billion "dollars" a month goes directly into equities and the Federal Reserve Czar rules with an Iron fist, we still can't quite call any "payment" derived from the design you propose a "dividend" .

You or someone else said that the interest was derived from the "fees" then you say above "It is a 'variable interest' rate paid to the longs by the 'shorts' which must 'borrow' the asset from the network 'society' and the cost of borrowing from 'the network' in order to 'short' is the dividends paid on the collateral. " these things just quoted are somewhat far apart no ?


Of course there is not a contract - becasue there is really no counter-party (not in any relevant sense of that term) - a contract is always the basis of any honest agreement .

David Bowie issues "Bowie Bonds" - for capital for an up and coming Record.

The trust is in the "David Bowie" brand , and the bond is paid with the interest for the work of the album and live shows etc.

the contract is between the two counter-parties .

Sally borrows money from a "bank" - she signs a piece of paper and creates credit in the form of a loan - the Bank commits fraud and Sally's signature creates new money. , which then can be deposited and treated as "reserve" - there is still two counter-parties and still a work derivative (all be it one way)

the 0 game I was talking about is the fact that every thing you propose is occurring already , People can create an actual viable contract to Borrow Bitcoins, that's becasue you (Well as of this month) still hopefully live in a semi free society -

A quick search of the white paper does reveal the word 'interest' can be found, but not in the definitions section and only in a few sections using analogies.   We recognize the need to define this better and will make it clear long before launch.

Haha, you're right. The word gets  thrown around in here so much I think I implanted the memory.


Great, that is much needed. You should consider having tiered white papers with varying levels of complexity. Right now all you have is the coindesk article for the less econ-inclined.

Actually carefully reading the white paper you will notice we never used the word 'interest' once and always refer to everything as dividends.    That said, there is no perfect analogy to these financial assets in the current market.   When you are talking to the common man they consider any return on their savings 'interest', when you think of equities you think dividends.    It is a 'variable interest' rate paid to the longs by the 'shorts' which must 'borrow' the asset from the network 'society' and the cost of borrowing from 'the network' in order to 'short' is the dividends paid on the collateral.   These are all just analogies so don't get to caught up on what it is called and instead just look at who is transferring value to whom and why.   

 We also place a heavy focus on eliminating any expectation for contractual obligation of any party to any other party and thus there are no 'bonds' in the traditional sense.  We ask no person to trust any other person to do anything.  There is no way for any person to 'default' because all rules are automated and execute predictably by the block chain entirely out of the control of any one individual.  If there is a way for someone to 'default' or violate a 'contract' then I would love to see it.

If you choose to speculate on the behavior of the chain, you might be able to make money.   It is an experiment with a solid foundation in economics being peer reviewed well known economists in reputable positions who are working to rewrite our white paper.  We are working with professionals from across the Bitcoin space and you will quickly learn that calling us a scam is tantamount to calling all of Bitcoin a scam.   

I encourage you to find a series of transactions / trading algorithm that would allow you to make a profit while systematically crashing the system rendering it insolvent.  It cannot be done because there are no contracts nor ability for anyone to default.   

Scams usually involve breach of trust.  Show me the trust that is being broken, and I am sure we can find ways of resolving it.

I am having trouble following you entirely. Are you implying that the the messaging and ID system should not be included? And how does this follow from your equation?

What do you think is the appropriate definition of a bond? And how does BitShares (if that is what you are talking about, I am not sure) violate that definition? And can the current implemetnation be changed to accommodate the "real" bond? The whole point of this open source thing is to collaborate and share ideas, not make absolute statements then walk away.

Yep, the analogy breaks down if you take it too far though. mcxnow (which, btw, is probably a long con - run by a scammer) shares fee profits with holders of mcxFEE. BitAssets pay dividends in a similar manner, but mcxFEE doesn't have a predictions market or even a fraction of the features BitShares has.

Mastercoin is also in a different boat because it is leveraging the blockchain and is limited by the constraints of the Bitcoin network. This is not to say that Mastercoin basket currencies couldn't be supported in the BitShares network. Oddly, the method by which JR went about presenting and collecting funds for the project are right in line with some kind of scam; he either didn't care or just simply didn't know any better. Even OT/Praesto are different beasts altogether.

C's argument, to some extent has merit, however he(or she,idk) seems to abstract the problem in such a manner that it fatigues his capacity to judge without bias. The fact that he has conceded that some BitAssets are not a ponzi is evidence of that. Take for example this quote:


Here is is making a valid point, but in the wrong context. Nowhere does BitShares imply (explicitly or otherwise) that it can break the laws of physics. Note what bytemaster says:


There is no more value there then there is in the real world. You must give to take. It's not a one way street. Think of it this way: just like you can't get Bitcoins for free, you can't acquire BitAssets for free either. If people choose not to participate in the predictions market then the system will not maintain its viability. Like I said earlier, there is risk that investors will think the system is flawed or not up to snuff; in this case your BitBTC goes to 0. Or perhaps the tech is flawed and it breaks. Again, 0. If people do invest, money is not created, it is redistributed following trade activity. That is all.

He also makes claims like this:


Ironically, many of the arguments c makes are reminiscent of the early-days of Bitcoin when people claimed it was a ponzi, creating value out of thin air. Those claims usually came from economists who didn't take the time to think through the proposition value of the system and the mechanics of how it works. Satoshi certainly could have premined Bitcoin, but then what? No one would use it. Likewise, if BitShares did not offer some return to participants why would anyone bother to use it. It's not about generosity, it's about practicality.

With quotes like this (and, as others have mentioned) I am beginning to think there are issues with semantics. A bitBTC is not in fact generating a return, the network is being fed money via fees generated from the prediction market, which are divided and distributed amongst participants in the network holding bitBTC. Why the word "somehow" needs to be used is beyond me.

He also likes the word interest, and with good reason (Daniel uses it, the coindesk article uses it, etc...):

BitAssets do not provide interest in the traditional sense, so I think it is best the word is removed from the white paper. Perhaps finding a word that has better parity (yea, i used it) with the concept of being rewarded for participating in and supporting a network is needed ASAP. Someone said this I think.

The only thing I can see that would support a claim that this is a pump and dump is the short mining period, which c hasn't even mentioned yet. The whitepaper argues:

If c could break down these motives then I would be more inclined to believe him. However, he won't be able to. When you compare BitShares to Bitcoin which has a >100 year mining, you begin to see why a short mining period is not indicative of a ponzi. The dividends replace the long mining period. In this sense BitShares has greater longevity and absolute scalability when compared to Bitcoin.

As of right now it *appears* that his claims are a peculiar mix of gaining a competitive edge and applying theories of economics to aspects of the system in a vacuum without having a complete picture of how the system works and why it will generate profit. Like he read the first few pages of the whitepaper then stopped; or perhaps his head was filled with too many thoughts to objectively critique the content. Or perhaps I am just too much of a 'tool' and am completely missing the point. Either way if things were kept civil in here it would make this discussion a whole lot easier. But wild behavior and personal attacks are usually indicative of someone trying to shift focus from the important points of the discussion - at least in my experience, the perpetual dicks on this forum are usually partially right but fail to see the big picture because they are blinded by emotional attachments.

c, before you reply take a deep breath it will do you a world of good brother. like i said earlier, I could be totally wrong about these guys and you could be right. But I'm still not convinced! Please prove me wrong

Knock yourselves out .

After some thought , I feel I have found the problem , the people designing these systems do not understand what a " Bond" actually is , its purpose and its intent .

That does not suprise me in the least , its been " taught out" or "educated out".

But how does the saying go ?  

" ignoring reality will not protect you from the results of reality "

Mostly  in this case , just wasted time .

Isn't this exactly what MCXNow is doing with fee shares?

I don't see why both your ideas can't co-exist and compete in the market place without getting the SEC involved. That could be bad for the community. And what about Mastercoin?

In case you are missing the point here ....

this system i just looked at is "wrapped up" in a "useful human purpose"

and that I believe was suggested at , "to be used as a decentralized payment system"

unfortunately i will suggest that , in a digital system , (as opposed to say as i explained Commodities )

these "useful human purposes" can be overcome easily without "risk" and thus the equation again simplifies .

so you see what we are talking about is "Human work", , "useful purpose" and "risk"

Humans do like to take risk,  but usually when related to benefit, but as that equation equalizes  this aspect, the aspect that you people here are talking about will be in a sense "equaled out"

become zero. it won't be needed , there will be no useful human function for it .

but i could be wrong...

I'm very well versed with politics - but we are playing a political 0 game here , so yes indeed , I didn't look at the paper it ended on page 9  i haven't had time , but indeed enlighten me.

if there is a suggestion that these are not bonds issued , then what simply are they ?

in any other term they are a "promise to pay" otherwise there is no "leverage" in the system.

I understand the human incentive to  leverage , but I think we are heading in a different direction .

I believe you guys have missed the boat in a sense.

Who pays the bond and can they run away?   Are these bearer bonds?  How to you ensure interest is paid?

There is a huge difference... he took assets, Bitcoin, and issued financial instruments (promises to pay).     We never take any assets nor issue any promises to pay.  

Just super quick browsed over Cunicula's idea white paper - , you see my talent is one in seeing though to the source - i have no time here , but i will say that this idea will be at least as successful as yours. . . .

looks like he is issuing bonds for both USD and Bitcoin , (Hopdollars, and ah Hopbits)  Bonds always contain risk .

Again I will always ask where the risk is derived ?

When a bond is paid (upon 7 months?) where does the Interest come from , and work derived.  

I'm working on a different level of this system here , I know some people coming from a financial background will find these things attractive - that is a tiny minority , I fear you guys might have this all backwards , but that's just my opinion here...

we can only see in the future ?

Right, I'm sure you are following Pirate's trial closely...

Don't worry you're doing a fine job.

I'm sorry, which version of the bible are you using? Mine doesn't say anything about the price of bitBTC.

You should submit a resume to the Chinese ministry of railways. Next time they bury people alive to hide the number of deaths in an accident, they could put you up there to explain your eternal beliefs to the press.

What we have would have to be considered a financial instrument under the law...


Legal Classification of BitShares and BitShare-derived BitAssets
Before offering our opinion on the legal classification of BitAssets we want to remind the reader that we are not lawyers and the following does not constitute legal advice.  Please consult a legal professional in your jurisdiction before taking any actions based upon our opinions expressed below.

Throughout this paper we make reference to short, long, margin, call and put options and other traditional financial terms and instruments, however these are only analogies used to explain the behavior of these new BitAssets.  In our opinion these instruments do not meet the legal definition of a financial asset, instrument, bond, or anything else on the books aside from the most generic term 'asset'.  Before attempting to classify these new BitAssets lets review the current definitions.

A financial asset is an intangible asset that derives value because of a contractual claim.

A financial instrument is defined as "any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity" according to IAS 32 and 39 (International Accounting Standards Board)

A contract is a voluntary agreement by two or more parties, each of whom intends to create one or more legal obligations between them. A contract is a legally enforceable promise or undertaking that something will or will not occur.

Elements of a contract include:
 Offer and acceptance and Meeting of the Minds
 Intention to be Legally Bound
 Consideration

Additionally the parties to a contract must have capacity to contract, its purpose must be lawful, the form must be legal, the intent must be to create a legal relationship, and the parties must consent.

Under European Union Law you must consider the MIFID (Markets in Financial Instruments Directive). This directive defines a regulated market as a multilateral system operated and/or managed by a market operator which brings together or facilitates the bringing together of multiple third-party buying and selling interests in financial instruments - in the system and in accordance with its non-discretionary rules - in a way that results in a contract in respect of the financial instruments admitted to trading under its rules and/or systems, and which is authorised and functions regularly in accordance with the provisions of Title III.

The common denominator behind all existing financial assets and liabilities (including cash) is a contractual obligation. If there are no contractual obligations made by any party to any other party then by definition BitShare derived BitAssets are not financial instruments. So lets see if we can find anything within BitShares that satisfies all or even most of the requirements of a contract.

1) Bid / Ask Transaction Published to the Block Chain.
A bid or ask is a cryptographically signed transaction by a single, anonymous party. There is no signature by any other party and no obligation to perform. The bid or ask transaction has no legal standing and creates no legal relationships. This bid or ask is processed by a network of anonymous individuals who have no capacity to contract with the anonymous party submitting the bid or ask. In theory, the bid includes payment to anyone who includes the bid in a block and could be considered signed and accepted by the miner. However, once the transaction has been included in a block there is still no outstanding obligation or legal relationship between the two anonymous parties. Furthermore, simply including the transaction in a single block by a single miner does not actually cause the transaction to be executed. It must also be accepted by all other nodes in the network and even if it is accepted there exists no legal relationship or obligation between any two parties.  Furthermore, the result of the accepted transaction is merely an anonymous update to a global shared database and could constitute free speech.
2) Short Sell Transaction Published to the Block Chain
These transactions have all of the properties of a Bid / Ask transaction with the only difference being the type of BitAsset used as the input to the transaction and the nature of the resulting outputs. It is still signed by a single anonymous party and is never signed by any other party. There is no legal obligation created nor legal relationship between two or more parties.
3) Margin Calls and Covering executed by Miners
No party has a contractual obligation to provide additional margin nor to force covering; however, no party has the ability to prevent their position from being covered when the majority of the network agrees. As a result there is no obligation of any party to enforce the margin nor legally enforceable consequences if they do not.  In fact, no entity is able to enforce the margin and therefore no one to hold liable for failure to act.  
4) Contract between Developers and Users
BitShares is a protocol for exchanging information that could be implemented by any number of individuals. The developers release the software open source without warranty or promise of any specific behavior. Users of the software get to choose which version to use and which network to join and therefore are in complete control over how they react to the information they receive from the network.  Users are even free to modify their software at will and therefore any actions or decisions made by the software are entirely an extension of the user’s will and not that of the developers.

Lastly, the developers of BitShares have only created an accounting system that manages a decentralized database.  The value of any particular entry within this database is not under control of the developers.

Let me be clear, we believe firmly that the floor will be at or above 1 btc. We have always claimed that and always will believe it. The other end of the tail will vary based upon the interest rate value. But the market peg should keep the value above 1 btc for BitBTC. We are going to launch more than one chain in the TestNet to better understand the dividend rates impact upon prices.

You just can't seem to get this through your head and continue to attack us. What is the SEC going to put us away for? BitShares are mined the same way Bitcoins are mined. We are not selling BitShares to consumers through a premine. We have to acquire them like anyone else in a free market and have no built in advantage. We are also investing a massive amount of our resources in building the supporting infrastructure which is a total loss if BitShares was some machiavellian ponzi scheme. Just nothing makes any god damn sense in your arguments Cunicula.

I mean let's honestly think this through:

To accomplish a ponzi we are going to do the following:

Rebuild Bitmessage and NameCoin for a completely new type of Web of Trust and decentralized email > Give away for free
Build the best Bitcoin Wallet on the market where you send money to names not addresses >Give away for free
Release the testnet of BitShares to test assumptions > Give away for free and pay community bounties to try to break the system
Hope to god no one discovers the secret flaw in the system???
Then release BitShares into the wild with no vendor advantage and trading against people who have had several months to learn BitShares > SOMEHOW PROFIT??
Run away with money??

Either this is one of the worst scams in the world or it's not one. Could you honestly tell me how to scam people. I'm just at a loss here.