Heart of E-Gold

Wired has published a fascinating feature on the rise and fall of E-Gold, the visionary libertarian enterprise turned unwitting bank to the underworld turned partner to the police turned target of an indictment itself.

Comments

[Elemenope]

You forgot to mention how depressing the article was.

[Mad Max]

From the article:

'A longtime student of economic history, Jackson was convinced that gold was a superior currency to paper money, despite the consensus among professional economists that a gold-standard prevented governments from responding quickly to monetary crises; when an economy faltered, treasuries couldn't easily manufacture gold bars to stimulate it.'

Bug or feature? Discuss.

[felix_jones]

how does money laundering actually work anyway?
*recalls scene in Office Space*

[SIV]

Once the feds got a taste of what Jackson could provide, the postal agents began peppering him with requests for more data on other accounts, promising Jackson they'd follow up with a formal court order or subpoena later.He cooperated fully, despite the fact that it violated his user agreement with customers.

We can only hope the little snitch,E-Gold founder Doug Jackson , gets what he deserves.
I have zero sympathy for this guy.

[24AheadDotCom]

Wait: a brilliant libertarian idea had unforeseen (by libertarians) side-effects? I am completely unable to comprehend even the barest possibility of that.

No, really. I'm not being sarcastic or anything.

P.S. In case anyone replies to this, their responses will almost assuredly be ad homs delivered through sockpuppets, thereby conceding my points and showing the cowardly, childish, anti-intellectual nature of libertarians.

P.P.S. Someone who appears to be located in Knoxville is posting Reason-style nastygrams about me. I don't really know who it could be, and I have trouble believing (for reals) that the person I'd first suspect would stoop that low.

Shut the fuck up Lonewacko

Your puny threats are no match for our MindRays

[John C. Randolph]

We can only hope the little snitch,E-Gold founder Doug Jackson , gets what he deserves.

Sounds like he did.

I think the lesson here is that electronic bearer bonds still leave a lot to be desired compared to coinage. Hell, if Elliot Spitzer had paid his hookers in Krugerrand, he'd still be persecuting people today.

-jcr

[Elemenope]

We can only hope the little snitch,E-Gold founder Doug Jackson , gets what he deserves.
I have zero sympathy for this guy.

He discovered a criminal conspiracy being enabled by his own business, and so acted to report the crime. WTF is your problem?

[Art-P.O.G.]

Oh noes! NastyGrams!

[goldmadrid]

Thankfully... in true decentralized fashion, a thousand flowers are blooming having learnt from e-gold's mistakes... most of them outside the US.

From highly encrypted igolder.com, to Costa Rica based libertyreserve.com, to i-phone enabled swiss-based goldmoney.com... together with other crosses between bullion storage accounts and online currency (like bullionvault)...

DGCs now hold over $1Bn and number millions of customers...

Many of them make a point of offering quick physical specie redempemption from very small aounts...

[fedbs]

If Elliot Spitzer had paid his hookers in Krugerrand...

...so true. Still, he would have found some e-payment system useful for internet pron... not all commerce is local/face-to-face.

[socialism can\'t calculate]

"...when an economy faltered, treasuries couldn't easily manufacture gold bars to stimulate it.'
Bug or feature? Discuss."

when an economy faltered, or you needed the cash to fight imperialist wars/bribe the proles with bread and circus...

definitely feature

[Silver to werewolves.. as gold]

Nobody mentions that e-gold got to 4 million users? Lasted more than 10 yrs?

Pretty astounding. There's definitely a market there...

[John C. Randolph]

DGCs now hold over $1Bn and number millions of customers...

It's a start. Of course, we'll need that figure to be pushing a trillion before competition between gold and funny money starts to pressure the banksters to dial back the counterfeiting back a bit like it did in the late 1800s.

-jcr

[John C. Randolph]

when an economy faltered, or you needed the cash to fight imperialist wars/bribe the proles with bread and circus...

definitely feature

Tell it to anyone in Zimbabwe.

There are powers that are too dangerous to give to a government, and counterfeiting is one of them. There's a reason why we prohibited it in the constitution.

-jcr

[matt]

Nobody mentions that e-gold got to 4 million users? Lasted more than 10 yrs?

Pretty astounding. There's definitely a market there...

Yeah, there is. The problem is that nobody's positioned to tap it. As Bob Dylan once said, "to live outside the law, you must be honest".

Sadly, there's simply no way to make sure that one's account-holders are depositing money they worked for rather than money they stole from other people.

If that problem (the problem of keeping ID theft out) could be solved, then maybe there really would be something, but I don't see it.

[goldmadrid]

"Yeah, there is. The problem is that nobody's positioned to tap it. As Bob Dylan once said, "to live outside the law, you must be honest"."

igolder is doing a pretty good job with their reputation system... it's the most web 2.0 of the e-currencies... of course goldmoney's system also works, but is inaccessible to most users as id requirements are very high.

[pecunia non olet]

"there's simply no way to make sure that one's account-holders are depositing money they worked for rather than money they stole from other people."

I don't care were the money came from... It's not my job to control the honesty of the whole world. As long as account holders don't cheat/steal within the system... and there is a way to expel them if they do... if you take KYC too far you paralyze trade.

[roy]

"It's a start. Of course, we'll need that figure to be pushing a trillion before competition between gold and funny money starts to pressure the banksters to dial back the counterfeiting back a bit like it did in the late 1800s."

As long as it helps users protect their wealth and carry out international trade, it's already a blessing... changing the whole world is just a positive long term externality... also, never underestimate logarithmic growth... take a look at a chart of no of paypal users...

[In Aurum Nos Fides]

The only way I'd participate in an electronic gold depository system would be if they offered true bearer bonds, denominated ONLY in weight of gold. Produce the number, the payout vendor checks if that number has ever been presented before, and if it's live then you get the coin (or the bar, for larger weights).

The numbers would be random 4096-bit values, which would only live for the duration between issuance and presentation. If you wanted to hand it to another person, you'd do it on line, and the transaction would destroy your token and issue a fresh one to the transferee.

[fretkiller]

BTW... I love the song.. specially the Neil Young version

[In Aurum Nos Fides]

Forgot to add, the system would also have to ensure that no record of transfer was kept beyond the time necessary to effect the transfer. it's got to be as good as handing someone a coin, or I'm out.

[BakedPenguin]

P.P.S. Someone who appears to be located in Knoxville is posting Reason-style nastygrams about me. I don't really know who it could be, and I have trouble believing (for reals) that the person I'd first suspect would stoop that low.

If they're talking about you, they've already stooped pretty low, Lonewhacker.

Since there's no way I (or most of the people here) will go to your shitty website, we're left to guess as to what the insult could be. The fact that you describe it as "nasty" makes it more intriguing, since you (deservedly) hear more insults in a week than most people hear in their lifetimes.

My guesses are:
"Die already, you worthless racist scrotum."
"I'd tell you to eat shit, but I hate cannibals." and
"God, I wish I'd aborted you when I had the chance."

Yes, you said you didn't know the perp, but I'm thinking that after she dumped you on the carny site, you would have disowned your mom.

[uncle sam wants ALL the gold..]

"....turned partner to the police turned target of an indictment itself."

swim with the Great White, end up as shark food... who've have thunkit!

[Tricky Prickears]

It sounds like he broke one of the top 5 rules for starting your own business. I think it comes in around #3. Keep a competent attorney on retainer. A good accountant is not enough. And with the type of business he was conducting, he would have needed at least 3 or 4 with different specialties. Now he needs one for sure. One who specializes in criminal defense. And really, as soon as he started "working" with law enforcement he should have had a good CD attorney. He got in way over his head, and they chewed him up, and spit him out. It's a sad commentary, when you need a good attorney to make sure your rights are not being violated when dealing with the government.

[Tricky Prickears]

If you accidentally kill someone, who do you call first? The police? No way. A good lawyer!

[andy]

"If you accidentally kill someone, who do you call first? "

a pig farmer

[Tricky Prickears]

a pig farmer

Dispose of the "evidence"?

[Tricky Prickears]

Where I live that's not practical. A few bags of Redi-Mix is what you need.

[Warty]

You know what else is short and vile, Lonewacko? Your penis.

Shut the fuck up, Lonewacko.

[hyperinflation...]

...is on the way.

Nice M1 chart linked.

[robc]

WTF is your problem?

It violated his terms of service, IIRC.

[R C Dean]

how does money laundering actually work anyway?

There are a million ways to launder money. A few:

(1) Borrow money against whatever money you want to launder. Put the borrowed money into something untraceable. Default on the loan.

(2) Buy a yacht. Sail it to another country. Sell it. (As far as I know, there is no international registry for yachts).

[hyper...]

2 years ago Zim Stocks boomed:

http://www.dailyreckoning.com.au/zimbabwe-stock-exchange/2007/04/12/

[dimwit]

"(1) Borrow money against whatever money you want to launder. Put the borrowed money into something untraceable. Default on the loan."

How is that laundering? that's the opposite of laundering! When you launder money you HAVE money from untraceable sources... what you want is to give it a false trail so it looks legit...

[dim]

what you want is to give it a false trail so it looks legit... and you can use it to buy stuff in the "white" or govt. approved market.... as in real estate, cars, stocks, companies... anything trading on a regulated, registered market.

[R C Dean]

How is that laundering? that's the opposite of laundering! When you launder money you HAVE money from untraceable sources... what you want is to give it a false trail so it looks legit...

The dirty money is what you borrow against. When you default, the lender takes it - the paper trail that makes it dirty dies there. What you bought with your loan is clean.

[dim]

you're right RC Dean... my apologies

[Joel]

My goodness, that's a depressing article. Think I'll just keep buying coins.

[SpongePaul]

We all loved e-gold, it made the MOM buisness so EASYPEAZY

[Elemenope]

It violated his terms of service, IIRC.

And so, uh, sue him for breach of contract. Other than that, I'm not seeing the complaint. imagine *they* were breaching the terms of service by using the service to commit felonies. I could be wrong.

[R C Dean]

I doubt the service contract allowed Jackson to turn over records for someone based on his suspicion that they were breaking the law. I would be surprised if it allowed him to do so based upon a mere request from law enforcement.

All he had to do was what I do every week here at the hospital when the cops want medical records - tell them to get a subpoena. If they have particularized suspicion and minimal supporting evidence, they can get one, I have to turn over the records, everybody's happy.

[Keith]

The lesson here is if you're going to become the choice service for criminals, charge higher fees.

[humph]

"if you're going to become the choice service for criminals, charge higher fees."

Second that! I don't object to counterfeiters, just to cutrate ones....