Quote from: PatrickHarnett on August 15, 2012, 07:13:48 PM

Quote from: hgmichna on August 15, 2012, 06:59:16 PM

Quote from: nrd525 on August 14, 2012, 05:29:01 PM

I'm interested in developing a list of questions/variables that are associated with Ponzis.

Here is my short list. Please add items to this list and I'll edit the post.

Ponzi Indicators
1. High rate of return
Explanation: ponzi schemes typically offer very high rates of return that are not possible. Anything that is > 50%/year APR is suspicious. Anything > 500% APR is very suspicious. Ponzis can offer lower rates as well (see Maddoff - 10% APR), but these are less common. ...

I would add that quoting interest rates weekly or monthly, rather than the proper annual rate, is a sure sign of an illicit scheme. It aims at very inexperienced investors.

I'll disagree with that for two reasons.

1: Most of the loans are denominated in weekly or monthly rates and the way bitcoin works, an annual rate is less meaningful. People don't look for 12-month instruments, 4 or 10 weeks is heaps (months are still like years).
2: The APR system used in the USA is a very poor indicator that is quite confusing and misleading for non-US people - took me ages to work it out, and it is terrible.

In the WPW I settled on a one month equivalent rate to rank the interest or return being paid. Over one year, the difference between compounders and weekly payers would be huge.

^^^ That.... bitcoin is not (currently) like mainstream financial markets.