Quote from: Stephen Gornick on June 22, 2012, 02:24:56 AM

Funds held by Bitcoinica totaled far larger amounts (perhaps by an order of magnitude larger) and Bitcoin didn't skip a beat.

Additionally, if some (or most) of these were to collapse, the bitcoins would presumably already have been spent, thus there's no selloff of bitcoins that would result.

Well... I expect that pretty much all of the vaporware bonds will not default, but actually run with the coins. This is somewhat different from Bitcoinica, which is chaotic, but seems to actually attempt a legitimate business and return customers' funds. Also, HYIP scams usually keep fairly large online wallets to keep looking solvent until fund accretion at the very end.

Most importantly, this sort of scheme requires growth of deposits above the paid interest rate. "Bitcoin Savings and Trust" appears to still keep pace! So if this might just arguably be becoming a problem now, it will be one with certainty in a matter of weeks. And there's no telling actual user base growth will be "just" 7% weekly the moment its size becomes critical.

I sometimes get the impression I didn't make myself clear. The "savings trust" is a Ponzi scheme. I'm not talking about "oh, but maybe the poor fella will default" or something on that level. Everything from the cheap building of trust, the friendly update messages and the time-scale of the thing is nothing but textbook fraudster routine. The funds are hardly flowing enough for good money laundering, there are cheaper means to do that anyway, and even if it were to work there's simply no reason to still pay out this sort of interest to lenders. Ever heard of "There Ain't No Such Thing As A Free Lunch"?

It's complete and utter bullshit, and if there were any viable financial instrument to bet on its collapse, I'd be using it. I'd offer bets, but the "trust" yield is supposedly so insane that anyone betting against me would rather throw the money directly into the infinite money production machine.