On Thu, Dec 28, 2017 at 8:47 AM, Philip Hands phil@hands.com wrote:
On Wed, 27 Dec 2017, Luke Kenneth Casson Leighton lkcl@lkcl.net wrote: ...
(3) this is quite LITERALLY the opposite of a ponzi scheme. they are LITERALLY making the bitcoin that underpins the entire scheme. this is a completely unique approach which is actually extremely clever.
It seems to me that one way of looking at this is that they are using other people's money to bet that the BTC price will go up on average, and then using the resulting profit to do a spot of mining as cover.
interestingly they just had to double the commission payouts from $100 to $200. i was watching the pages describing the commissions: one day they were $100, the next it was $200. i believe this is in response to how drastically the exchange rate for BTC went up.
this is one of the indicators, to me, that they're legit. it's also extremely clever of them, to link the commissions directly to a currency that is anticipated to continuously fall. what's hilarious is that the equipment shares is priced in the same currency, so *that* falls in value relative to BTC as well.
basically as BTC goes up, the value of the commissions and the relative cost of the equipment - which are in fixed USD amounts and *converted* to BTC - go *DOWN*.
which is also an interesting salutory lesson to people that as crypto currencies go up, the value of fiat currencies go DOWN. can you imagine if this was BTC/EUR changing 1000%?
Whether they are paying people back from the speculation profit and/or in the traditional ponzi manner from later investor's funds doesn't seem to make much difference to me.
Most of the people involved in this to date would almost certainly have been better off simply buying BTC at the start, and selling them some time later on.
... which i've already determined to be risky and unethical. it's too close to the exploitation i've witnessed - and my friend has recently uncovered clear and blatant evidence of. mining however is *completely* different, not least because it, in no way, *actually* involves actual cash, and it is not directly related to "exchange rates" or the trading of currencies, at all.
Likewise, saying that you're only putting BTC in, and hence its only pretend money (or some such) ignores the opportunity cost of no longer being able to sell those BTC for cold hard cash.
... which i don't feel comfortable doing. as in, i don't feel comfortable interfacing officially with one of the exchange sites. i'm happy basically to keep a very clear division that i will only cross reluctantly and very indirectly between BTC and fiat currencies. there are good reasons for doing so.
also the risk-benefit analysis came up, for me, from *my* experience and ability to assess these things (in the face of unknown and unknowable information such as "how many people, how much have they invested" etc.), as "take the opportunity and throw both oxygen tanks and napalm on it"
So this looks to me like a ponzi built on a speculation bubble, which might be a way of making the ponzi survive longer than it would do otherwise, but if and when the BTC bubble bursts[1] investors are going to discover that the people in charge have done a runner with the remaining assets and that any balance still held within the scheme is just gone.
Luke, given your repeated assertions about the importance of ethics I'm astonished that you'd be willing to be anywhere near such a scheme.
the definition of an ethical act is:
* to increase truth, awareness, love or creativity (those being synonyms for the same underlying principle) for one or more people (including yourself) WITHOUT decreasing ANY of those same four qualities FOR ANYONE.
that's a very very specific and flexible definition of an ethical act that, for example, perfectly well permits people to go to war in defense of their country, and many other things that others might, without such a clear and flexible definition, consider "unethical".
it's also... really quite challenging to "unpack" that definition (it's in effect a "4th normalised form" if you get the SQL database analogy).
i'll be tracking the behaviour of this group closely to ensure that it meets that ethical criteria. any sign of unethical acts on their part - more to the point any sign that by MY actions and decisions *I* am causing harm by leveraging this opportunity - and i'll drop them instantly. i have to. my committment to that definition takes absolute precedence.
l.