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Comment by bnr | Hacker News Reader

Another possible explanation for the increasing rate is that someone is offering 7% interest on BTC: https://bitcointalk.org/index.php?topic=50822.0

If that offer is really enough to make the price rise, this might be exactly what this guy is speculating on.

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You mean 3372% interest— The 7% number is _per-week_.

I'm not sure why anyone would believe him enough to send him money. Perhaps they don't understand how absurd that claimed interest rate is? :x

I'm not sure either, but apparently the person running the scheme has a 32,000 BTC ($250k USD) wallet so I'm guessing a lot of people must've bought in enough to send him a lot of money:

https://bitcointalk.org/index.php?topic=91653.0

If the money were funding a payday loan shop, that's the kind of interest rate they charge to their customers.

ie, take in money via Bitcoin, loan out dollars to poor people as payday loans at very high rapidly compounding interest rate, pay somewhat smaller interest rate to Bitcoin funders.

I don't think payday loan shops are ever constrained by the amount of capital they can loan out, though. If they were, it would be trivial for them to borrow money at normal rates (say 10%) from a traditional bank and solve that problem. I'm sure they are much more constrained by the physical locations/marketing/accessibility of customers/etc and no money at 3000+%/year is going to help them solve those constraints.

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