Indeed, there's no doubt that some of the lenders on here make substantial enough return on their capital to offer pretty tidy returns. I have started investing a bit with Patrick Harnett, but that's in part because it's really pretty clear who he's doing business with and where the funds are 

That depends on how you view Bitcoin. If you're prone to suggest that this Interwebz thing is just a fad and will end 'any day now' because you don't see any use for it, then Pirate is a guaranteed scam for you regardless of logic or proof. I don't think anyone here assumes Bitcoin is a force that will change the world within months, nor do any of us expect Pirate's operation to continue in perpetuity. So there's a fairly small range of views. I'm simply more inclined to think that Pirate is legitimate based on what I know about how financial markets are influenced and that he runs more than one operation, one of which provides an especially valuable service.

As BurtW said, a million dollars is a drop in the bucket. To add to that: a million dollars worth of Bitcoins makes you a big fish in a small pond. The former is a small fish in a big pond. With great influence comes the potential to do a lot more than could be done in the 'old world' of fiat currencies.

Consider that it's the equivalent of monsoon season for Bitcoin, but drought and famine for traditional currencies. Would you rather be that small fish in a shrinking pond, or a big fish in a growing one?

As for the 7% concerns, there's more involved than just BTCS&T. Similar to Wikispeed, multiple sources can combine to provide an higher aggregate return.

Let's look at a 7% per week, 3,300% per year scheme, i.e. one with an extremely high advertised yield.

Its debt grows at an exponential rate, but the debt plays only an indirect role here. What really matters to the Ponzi scheme operator is the heap of money he is amassing.

Initially this heap grows, as new "investors" pay in. The 7% per week interest rate aims at people who calculate (just barely, because they are math-challenged) that they can get rich quick by paying in a moderate amount, if they compound their interest. This is exactly what the Ponzi operator wants.

As the Ponzi scheme becomes more popular, more people "invest", so the money heap keeps growing at first.

Then, however, as "investors" see their imagined wealth grow exponentially, a few of them are bound to withdraw some money for one reason or another. One reason could be that somebody wants to buy a car or a house, but they also believe that they will get even richer if they delay their purchase and keep riding the exponential curve.

Another group of "investors" who withdraw money do it for one of two possible reasons:

• They become weary, because they begin to see the risk and try to withdraw, as long as that is still possible.
• They calculate that they could reduce their risk to zero if they withdraw at least their original investment. Some may also regularly withdraw some of their interest and let another part of it compound, reckoning that this is a slower, but safer way to get rich.

The unpleasant fact for the Ponzi operator is that this group of withdrawers, even though it is small, still creates an exponentially growing flow of withdrawals. Exponential growth means that, sooner or later, these withdrawals will grow beyond the inflow of newly "invested" money, so his heap of money will begin to shrink.

This is when an intelligent Ponzi operator will shut down operations and disappear with the money. Of course the point in time is difficult to determine with any precision, as both new "investments" and withdrawals have a random component. There is always the hope for another big "investor", there are ups and downs on both sides, there is hope, self-overestimation, pride, and, most of all, greed. A Ponzi scheme operator has to deal with his own personality defects as well as the day-to-day problems of running the scheme, convincing "investors", keeping associates happy, covering his tracks, prepare for his escape, etc. He may make mistakes.

But even if he delays the end, it is still inevitable. You cannot fight an exponential curve forever. He could lower the interest, delay payments, invent excuses for changing the rules, try to reassure investors and associates, spread confusing information, which would all be signs of the coming termination of the scheme, but this can only go on for a short time. At last, when he sees his heap of money shrink week after week, he has to shut down and disappear.

Carlos Ponzi did not have this choice. He believed in his own scheme. His mathematical abilities were very limited. He ran it to the bitter end. I do think the modern Ponzi scheme operators are somewhat stupid, because if they were as intelligent as they probably believe to be, why then would they have to resort to criminal means? They could instead earn good amounts of money legally, which is not that difficult. But they are not as stupid as Carlos Ponzi. Unlike that guy, they will not give up all the money they have amassed at the height of their schemes.

So when will our current, most popular one end? I cannot be sure, but exponential growth sets tight limits. Nobody can tell whether some biggish "investor" suddenly turns up and extends the scheme by another month. But it seems unlikely, because big investors are usually not that stupid either. There are also not that many potential "investors" out there, because the active bitcoin users are all here in the forum, have already heard of the scheme, and have made their decision to "invest" or stand back. Where should new "investors" come from?

So here is my prediction. Short of the big miracle "investor", the scheme may well end within very few weeks from now. Anyway, it is extremely unlikely to continue for the rest of this year at current interest rates, as you can easily calculate.

You're wasting your time/bits.  They really are 100% certain in their minds even though there is no publicly available certain proof.

The only other case Pirate's scheme would make sense is if he has inside information about the Bitcoin network collapsing in the near future so that the bitcoins he owes become worthless.

Sometimes it does make sense to borrow money at insane rates. But anyone who has a highly profitable business will want to pay off the high-interest debts as soon as possible.

And if we assume Pirate is well-connected (as those advocating his scheme seem to), he could certainly access some kind of LOC at less than 5% annually. Hell, even I can (within limits, of course), and I don't claim to be well-connected. For a financially successful, well-connected person it would never make sense to pay more than a few percent of real interest on one's debt.

And I guess your next argument will be that whatever Pirate does, he needs to do without moving the market too much, so he can't just get a loan from a bank and buy all the bitcoins he needs. This does not make sense at all. Now, instead of Pirate himself causing upward pressure on the price by buying bitcoins, he's causing upward pressure on the price by having other people acquire bitcoins in order to "invest" in his business.

ty to Vandroiy from continuing the arguing with the naive, denial, and outright evil scammers (BurtW - on to the "million dollars is nothing" scammer speech, eh?)

Ok so Micon said that BTCS&T is in its final week or two. And looking at the prices of PPT bonds of GLBSE it's clear that a lot of people are withdrawing.

So if in two weeks Pirate hasn't default, is still operating or has returned all the coins, will you stop with this ponzi talk or what?

If BTCS&T works the way some have suggested, withdrawals will actually help by allowing high rates to continue longer than they normally would. Maybe we should be thanking team Ponzi?

I do agree, I got some very good deal on GLBSE. A little more help and I might even get over 7%