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How the Man finally brought e-gold down
- notauser 18y agoWhich is a better commodity to back a currency? - Gold, where quantity is dependant on the supply of a single good dug out of the ground. - Debt, where quantity is dependant on the supply of all goods (including labour).
- swombat 18y agoIs quantity of debt dependent on any supply? How does it depend on the supply of labour?
- khafra 18y agoIt's dependent on the supply of labour log (discretion of the banks)
- pelle 18y agoI used to think Gold, but fundamentally I've come to believe that debt is probably the better choice as it promotes growth. Paraphrasing Neal Stephenson debt based currencies are backed by the ingenuity of the people, which is always growing and improving. Asset backed currency such as gold are backed by a finite amount of gold. Where gold still has it's value is in it's transparency. No one controls gold, but with say the USD or EUR corruptable entities known as governments can either print more money or take more loans devaluing the currencies. The history is littered with cases of this happening. I'm personally pretty bullish on the dollar, but who knows. Another problem is that they have government enforced monopolies, which kills competition on the local level. Just look at the current attacks by the US DOJ on e-gold and on the http://www.libertydollar.org/ld/legal/raidalert_11_27_2007.htm http://www.libertydollar.org/ld/legal/raidalert_11_27_2007.h... .
- Prrometheus 18y ago>Asset backed currency such as gold are backed by a finite amount of gold. Currency units are somewhat arbitrary. If you don't believe that the market needs a central technician for it to run properly (I don't, but I'm in the minority), then I'm pretty sure a modern economy could be run on currency backed by almost any commodity. What most people fear and distrust about fiat currency is putting one legal monopoly in charge of such an important part of the economy. It's too much power. A gold-backed currency takes that power out of the hands of any one man. I advocate that we should use whatever currency the market chooses. I want the market to have the legal rights to make that choice. Historically this was the case until legal currency monopolies were created to fund wars.
- deleted 18y ago[deleted]
- lupin_sansei 18y agoI agree. Society would be much better (fairer, wealthier, more peaceful) if there was a separation of economy and state.
- byrneseyeview 18y agoThe problem with picking just one asset with which to back your currency is that you have two options: a) pick something your country is a net producer of, knowing that producers will create more than the industrial demand to accommodate savings (this is the case with gold). b) pick something you're a net consumer of, so saving more money hurts consumption (if some people are right and oil is being used as a proxy currency to hedge against the dollar, this is happening now). I don't know what the solution is -- I see nothing wrong with highly liquid index funds, against which someone can write checks denominated in whatever unit they choose. But a deregulated market would probably out-innovate me pretty fast.
- abcde 18y agoI wouldn't agree with "debt based currencies are backed by the ingenuity of the people". Debt based currencies are backed by the trustworthiness of the debt issuing entity. It doesn't matter how ingenious Americans are as long as the Fed prints money to fund the welfare and warfare state.
- TacticalGrace 18y agoHey, I have a great idea - why don't we take the service of money out of the hands of government and place it in the hands of private citizens on the free market? Then the market will decide which is best.
- pelle 18y agoIt used to be that way in the US and to some very watered down extent still in Scotland. These were all privatly issued USD notes from the 19th century: http://unenumerated.blogspot.com/2008/05/bank-notes-from-free-banking-era.html http://unenumerated.blogspot.com/2008/05/bank-notes-from-fre...
- aston 18y agoA whole new generation of people could learn the original meaning of "Your money's no good here."
- LogicHoleFlaw 18y agoWell, I'll be the first to set up a NuYen<->KongBucks exchange then.
- Prrometheus 18y agoHow about choice number three: "Whatever commodity, or commodities, the market chooses?"
- gamble 18y agoIt's incredible how quickly HN has transformed into reddit.
- fallentimes 18y agoCan you elaborate? I thought this was an interesting read.
- ars 18y agoIt was an interesting read, but it wasn't 'brought down by the man'. A better title should be: know and follow the applicable laws before making a startup.
- davidw 18y agoThere is a realm of things that are 'interesting' but 'very controversial', in the sense that most mainstream economists, right or left, view the gold standard as more or less nutty, and of course, the 'nuts' don't like being viewed as such. The ensuing discussion is never pretty, and is completely unrelated to hacker news. Some of us would prefer to just not see it here. You can talk about that kind of thing here: http://www.reddit.com/r/Economics/ http://www.reddit.com/r/Economics/
- pelle 18y agoWhether you believe in the gold standard or not, this article was not about that. There are many things they did that are very applicable to current startups. In particular governance models and transparency are very much issues that current startups need to worry about. The point about Know Your Customer is also an important one. In the 90's when e-gold started there was a lot of experimenting with this. Most people in the industry were weary about government involvement, but didn't think it was going to affect them. At some point it isn't inconceivable that social networks, email service providers and others will be required to follow similar Know Your Customer procedures to banks. Several countries are already starting to institute this.
- attack 18y ago
- Prrometheus 18y agoeGold was a remarkable financial institution in that it focused so much on providing a service to their customers. They were a servant, not of the government, not of the regulatory powers that be, but of their customers. This is rare. Try to make a payment to an online poker site from your bank account if you want to see how your bank's commitment to their customers stacks up against eGold. Sadly, eGold was shut down. It was too dangerous to the authority's power for it to be allowed to exist. Epiphyte corp. can only exist in a fictional universe outside of the watchful gaze of Uncle Sam.
- tsetse-fly 18y agoWhat's with all of the conspiracy theories? I don't think people grasp how easy and widely e-gold was used to launder money. It was THE premier way to move money if you were involved with any sort of electronic fraud. All you had to do was cash-out someone's bank account then wire the money to an e-gold affiliate, who deposits it into your online account. All transactions are irreversible. e-gold kept minimal records and after the money enters an offshore account, the government has little chance of recovery. There were millions of dollars being moved through e-gold with fraud. They purposely made the process easy with as little verification as needed. Their market was criminals. I'm sure most of their profit came out of transaction fees related to fraud. Where's the innovation? Their site looks like shit. They just managed to find a loophole to look legitimate and survive this long. I'm not surprised that the owners plead guilty to conspiracy to engage in money laundering.
- ivankirigin 18y agowe at Tipjoy are painfully aware of this story
- michael_dorfman 18y agoWhy "painfully"?
- jcl 18y agoI'd guess that any service that transfers funds between people would be susceptible to charges of money laundering. Tipjoy doesn't currently make it easy to transfer funds, but they would like to: http://tipjoy.com/faq/#q8 http://tipjoy.com/faq/#q8
- ivankirigin 18y agoThe regulation here in question and our policies are a cause and effect. That's why it's painful. We'll solve this soon though. It's a top priority.
- patrickg-zill 18y agoWhat is surprising to me, is how no law enforcement exists at any level for individuals who get scammed on the Net. I am talking about eBay scams, all those spam emails etc. Yet create a company where the IRS might not get every penny due either to e-gold's actual gold appreciation or money transfers, and see how rapidly the Feds react.
- blastomere 18y agoBit gold will provide a safer alternative: http://unenumerated.blogspot.com/2005/12/bit-gold.html http://unenumerated.blogspot.com/2005/12/bit-gold.html
- wmf 18y agoCan't botnets generate a near-infinite supply of bit gold?
- byrneseyeview 18y agoThe bigger problem is that everyone has a incentive to run their computers day and night cranking out solutions, which burns up lots of natural resources and processor time for a zero-sum result.
- blastomere 18y agoThe economics in this regard are the same as for gold. With gold only the most efficient gold mines can make a profit, so only those profitable operate -- nobody tries to mine all the gold in the world. With bit gold, only those with the most efficient processors and most spare time will be able to make a profit, so again there will just be a handful of a few powerful computers, or many small computers but just using the spare CPU cycles (like SETI@home), solving the mathematical puzzles to generate the bit gold.
- byrneseyeview 18y agoBut an algorithm is easier to share than a gold mine. Fixed and marginal costs are lower. If you could find gold by scraping your bathroom tiles or filtering water for gold dusta gold standard would be terribly inefficient.
- blastomere 18y agoNo, the bits are solutions to hard computational puzzles, and they are securely timestamped and published, so that you always know exactly what the money supply is. More on the markets and economics of bit gold here: http://unenumerated.blogspot.com/2008/04/bit-gold-markets.html http://unenumerated.blogspot.com/2008/04/bit-gold-markets.ht...