Topic: Why I used to trust Patrick Harnett - page 6. (Read 32654 times)

If lenders are long on bitcoins, the last thing they'd want to do is borrow money denominated in bitcoins. If bitcoins go up, they lose money. If you're long on bitcoins, you borrow USD and buy Bitcoins. That way, if Bitcoins go up, you make money.

A lot of people misunderstood this and thought that Pirate was long on Bitcoins. They figured he was holding some large number of Bitcoins and that therefore when Bitcoins went up, he made money. But of course the truth is the reverse. Every Bitcoin he held was owed to someone and then some, so when Bitcoins go up, he loses money. There's no conceivable way anyone who accepts interest-bearing investments denominated in Bitcoins could hold that fund with an amount Bitcoins that total equal to or more than the amount invested (except at a loss).

Definitely - so funny 

First off, the largest stability there was in price since it was <.25 was this spring/summer when BTCST was in full swing.  From June to July, it gained 20%.  July to Aug it gained 30%. Aug to Sept it gained nearly 50% before losing that much.  That isn't constant.

Most lenders here are long in bitcoins, which means they don't want to convert their position to USD and lose out on coin appreciation, so your scenario doesn't fit.  Convincing a traditional bank to fund your bitcoin business really isn't going to happen, not necessarily because its a bad business idea, but because bitcoin is an unexplored minefield and no bank wants to be the guy out there exploring it first.

As to the market arbitrages, there is certainly at least one other way to make more than 1% a week in bitcoins. 

I like this. Shows with "Impossible" in the title seem to be popular on syndicated networks these days.

"Lending: Impossible"

In this episode... Patrick follows through with a plan of action to take with a loud man - HashKing finds a not-so-happy potential lendee displeased by loan rejection - and James gets an unusual credit application. Find out what happens - tonight - on Lending: Impossible.

*Intro*
*fade out*
*Fade into Patrick... 'click, clack, click, clack' ... Patrick stares at a computer monitor*
[WifeOfStarfish]: Pat - whatever happened to that loud man on the Internet?
[Patrick]: I started using the ignore feature.
[Ben]: Pat - you know your mic's on? You know what's nice about the ignore feature on this forum? With some browsers, when you click "show," it doesn't reformat the post window, leaving just a few pixels in height for viewing the message. It's too tiny to read, so even if you're tempted, you can't easily/quickly view what they've written. Day becomes much more productive.
[Patrick]: Good to know. Time to do some cooking stuff.

*Cut out - Fade into James in a slouching position, reading email on a plane with his tablet computer. He turns to an unidentified man.*
[James]: Yesterday, someone sent me ... an unusual credit application.
*Zoom to lenders' faces showing concern, shock, and awe -- Fast fade out, go to logo*
[Narrator]: Find out what happens next on Lending: Impossible. Stay tuned!


... That's good enough to justify a pilot, right?

This kind of reads like word salad to me. The price of Bitcoins is roughly constant, just volatile. So all it does is add additional risk. Any additional profit potential could equally well be realized with loans in dollars. Just use the dollars to buy Bitcoins, profit with the Bitcoins, sell the Bitcoins to pay back the loans. Even the best arbitragers in the most volatile markets don't make 1%/week.

Bitcoin profit margins aren't like USD profit margins.  Bitcoin is throwing out tons of new coins out constantly.  When factored as strictly BTC and not USD loans, the opportunity for growth is much larger than your typical USD equivalency.  The reward halving will reduce this by a bunch, but its not going away entirely.

I agree that you could need to borrow money for a short period of time while building a business. However, if you borrowed it at way above market rates, your first priority as soon as you were making a profit would be to pay those loans off.

There is no such thing as being "good at it". The claims are *impossible*. But I guess I'm willing to give it a try. Why don't you invest $5,000 with me? I'll take it to Vegas and if I win, I'll split the profits with you.

+1 Imsaguy I love you (platonically - my heart belongs to Starfish)

Joel,
Man up - you're losing your mojo (are you using both hands?)

Ahhh.. right.  Every business makes tons of profit right away.  You never have to invest a shitton of time and effort to get it off the ground.    If you're so good at it, why are you spending so much time trolling these forums and not making money?

Maybe so.

That's an excellent point.

Sure, those would be the times when you aren't making a good profit. But if you're doing all this work and taking all this risk and not making a good profit, you're basically a fool.

Then I's sure you realize that your attitude (cultivated within this incubator of grifters) makes you an attractive mark.

If he's being conditioned by the moderators here on the forums, then perhaps its time we spent some time pointing fingers at them for fostering such a terrible environment.

Maybe so.

Here's where you fail..

First, if a rational businessman is taking on a bunch of risk and paying high rates, he must not have much capital of his own or else he wouldn't enter into such an arrangement in the first place.

Second, if a rational businessman is taking a large risk and has to pay high rates, he probably has a high gross return, but when factoring in the high rates he is paying, the net is probably much smaller.

Third, which relates somewhat to the first, is that a rational businessman knows that things come up.  Unexpected things.  When those unexpected things come up, typically, they're costly, meaning they need capital quickly.  When borrowing, you can't force people to lend to you.  A rational business man knows having a reserve of profit in those instances helps to fill those immediate need situations.

TL;DR In short, there are times where it makes sense to keep cash on hand vs paying off outstanding debt.

EDIT:  I forgot to tie this back to PH, since that's who seems to be who everyone has a hardon for lately..  He's not accepting any more deposits and honoring all outstanding obligations.   I'd say that's the largest evidence of 'not ponzi'.  I've not seen any of his customers (borrowers or depositors) dissatisfied, so unless you want to call them idiots too, I'd say things are working just fine.

Is your feigned fragility hurting you?

It sound like you are being conditioned.

Name calling is not a substitute for a reasoned response. One more time in case you missed it:


Is there something erroneous in that reasoning? You've done everything from getting offended to calling me names to making ad hominem arguments -- you've even tried to hurt my feeling and bully me into shutting up. But the one thing you've not done is shown that my argument is actually incorrect.

I know, it's the inevitable gauntlet. You are correct.


I wouldn't know. I'm not the one borrowing an appreciating asset at very high rates and subsequently repaying every last penny. Strangely enough, this is happening every day on these forums.


Hmm... Recently I lent 40 BTC to a moderator here, who repayed ~12% interest after about a month. It was easy peasy.

What do you have to say about that? If I had more bitcoins, I could make more loans. It's pretty simple.