Topic: So, this is it: Bitcoin credit crunch. (Read 3023 times)

Credit is coming to the BTC economy. It happens to take time for those of us who actually own and run businesses to do things right.

The problem with most bitcoin financial institutions is they are run by people who don't know much about business, don't care and want to steal your money.

Also, the people looking to obtain money are not interested in going through a credible application process.

I am working on a solid long-term financial institution based on bitcoin which will be based on sound business and economic principles.

My software designer has spent the last few months making SURE we have rock solid security of all deposits. We have researched past and current hacks to avoid their mistakes.

We have spent the same amount of time working on our web platform planning for efficient usability and also security.

I have been working on the financial plan and economic underpinnings of our financial policies(My background is ten years owning a business and 2 years toward an MBA)

We will NOT rush because it has to be right from the beginning. We will be starting with secure, 100% backed(our reserves) savings accounts. We then will move to escrow services and finally lending.

So, I don't care who scams or produces garbage, we will be around as long as there are crypto-currencies because we will not be dependent on bubbles or any external factors except the risk associated with our lending portfolio. Our lending risk will never exceed our risk tolerance or ability to handle massive default.

You make several valid points, although as bitcoinbull states, you would not be happy, even if pictures and physical evidence were provided.  You will find a reason not to invest.  You need to do your own risk assessment and decide if its for you or not.  If you want to try a couple of BTC, go ahead and deposit.  If its not for you, look elsewhere.  Dont put all your eggs in one basket and ensure you are happy before you buy.

The nature of bitcoin is that whomever sends first is always going to risk being scammed and that applies to all transactions, not only this kind.

Fair enough.

I have also seen the pictures of the equipment.  It all looks consistent with what one would expect but I could certainly be fooled. 

The second and third points also make me cautious...

I don't see why one should need to have bitcoins deposited to see pictures. That would be like BFL not showing pictures until after you pre-order. And pictures alone prove nothing, they would also have to demonstrate that the rig performs as they claim.

And even if they did that, they could still run with all the deposits (or claim a "hack"). Bitcoin deposits are not to be done lightly, if at all.

I have seen pictures of their mining hardware.  If you ask, and you have bitcoin invested with them, they will send you a link so that you can see pictures of their hardware.

Pyramining says they use your deposit to buy Xilinx FPGA's. The amount of FPGA's bought depends on the price of coin. That's one factor which makes consistent, stable returns impossible. Future difficulty changes are another.



Yes, there is a pronounced evidence of absence

• No pictures of custom FPGA rigs
• No records of earnings from pools
• Apparently anonymous operator

Its impossible to estimate expected earnings with any degree of certainty unless you can predict the future price of bitcoin and difficulty. That's what traders do.

BFL profits from manufacturing hardware, not bitcoin trading. So they sell their hardware at a markup for guaranteed profits, not expected profits variant on future bitcoin price.

I guess this is the key question.  Is now the time when larger and larger commercial operations are going to develop?  I think so, and I think they are a good investment right now.  But I could be wrong.

Why would individual hobbyists not have specialized hardware.  You could say multi-GPU rigs are a form of specialized hardware.  Those hobbyists trying to compete using general purpose comuters and CPU mining have no chance.  BFL has entry level products.  The Jalapeno will be the 2013 equivelent of the single 5830 rig. 

Even if ASICs/FPGA were not possible one would see large mining operations.  Once the potential profits outweigh the risks you would see larger and larger commercial operations.  For example a biz getting 4.5 cents per kWh using warehouse space in say Oregon (nice mild summers and cold winters) and rack and racks and single purpose 8 GPU rigs would always be more efficient than some hobbyist with an ill-designed machine. 

Why wasn't there massive GPU farms (say 1TH/s or more)?   The risk of FPGA/ASICs. 

The only people hurt were those too greedy for their own good. They risked a lot and lost.

You know there is such a thing as personal responsibility. People who fell for Pirate were being told, by a great many of us, that it was a scam and too good to be true yet they bought into it anyway because the promise of a quick buck overtook what ought to have been a more informed and cautious nature. That's the free market for ya and I like it that way.

We got lines of credit for our business in about 72 hours.  We are able to issue both USD and BTC denominated notes.   Getting a SBA loan would require at least a couple weeks and still not been able to provide a BTC hedge. 

Since the Pirate collapse we have seen a large number of potential lenders asking if we are looking for expansion.  I don't see a credit collapse.  I see a ponzi/HYIP/idiot pyramid collapse.   If someone will giving you >100% APR and can't explain how/why both A) they can generate that kind of return and B) why they need your money to do it then .... it probably is a scam.  

I fail to see what was "ridicuolous" about my post.

You say:  Anyone who has BFL hardware will be a competitive miner.
I said:  Individual hobbyists who don't have specialized hardware will be unprofitable.

So we agree about that.

When I say mining operations offer real, stable returns, I mean return of bitcoin on bitcoins invested regardless of what it is worth in fiat.  That is how Pyramining works.  The thread started with a discussion of BCST which offered returns in bitcoin on bitcoin invested regardless of what bitcoin is worth in fiat, so that was the context for my post.

Do you have any evidence that Pyramining isn't an honest operation?  I'd like to hear it if you do...

Mining will always be competitive for some.  If the difficulty rises so high that its unprofitable unless you get free electricity, then those will be the only miners, and the difficulty will drop again.  New hardware will not change mining, it will simply mean those without it will be uncompetitive.  Those with ASIC or anything comparable will still be competitive!

I just don't see why BFL should sell their product for much less than you can expect to earn with it, so yes you'll be very competitive, but it is still to see how big what you compete for will be after factoring out hardware expenses... since marginal cost is low, miners will never drop out, so difficulty will keep increasing even if most miners operate at a loss overall. However, this has been discussed over and over I guess.

As for Pyramining, I have seen claims of 10% earnings... in what timeframe? For what I understand, various months. Compared to investing in GLBSE, this is really a LYIP 

I meant: prevent anyone from having the power to print and distribute new money at will.

Huh?  What feature of Bitcoin was supposed to prevent lying and scamming by its users?

Is it the non-reversible nature of its transactions, or the lack of identification required?

Seriously, why do people act as if cutting the Fed out of the picture imbues Bitcoin with superhuman properties?

This is ridicuolous. Anyone who has BFL hardware will be a competitive miner. There are no stable returns in mining, since it depends on the price of bitcoin obviously. Pyramining is just another HYIP.

It's also somewhat unfair to label this a "credit crunch" when, nine months ago, there was basically zero credit at all in the Bitcoin economy.  And the only appreciable credit aside from a handful of large loans since then, was a ponzi scheme.

Yes. I think he has conflated what service 'a working banking system' provides. Banking used to be bifurcated between payments and lending. The payments mechanism has not been impacted at all by Pirategate because it is built into the Bitcoin source code.

Sure, we have seen a credit contraction with the lending part of the Bitcoin economy but it is no big deal. A fool and his money is soon parted. Those who kept their bitcoins in their own wallet or in ventures where they had done adequate due diligence have not suffered losses beyond their risk profile.

Sadly, I tried multiple times to contact the blockchain to get a loan for a very promising business, but it seems it just keeps ignoring me... I guess we'll need something else for that