Re: [fc-discuss] Financial Cryptography Update: On Digital Cash-like Payment Systems
At 11:14 AM 10/24/2005, cyphrpunk wrote:
Note that e-gold, which originally sold non-reversibility as a key benefit of the system, found that this feature attracted Ponzi schemes and fraudsters of all stripes, and eventually it was forced to reverse transactions and freeze accounts. It's not clear that any payment system which keeps information around to allow for potential reversibility can avoid eventually succumbing to pressure to reverse transactions.
I don't think E-gold ever held out its system as non-reversible with proper court order. All reverses I am aware happened either due to some technical problem with their system or an order from a court of competence in the matter at hand.
Only a Chaumian type system, whose technology makes reversibility fundamentally impossible, is guaranteed to allow for final clearing. And even then, it might just be that the operators themselves will be targeted for liability since they have engineered a system that makes it impossible to go after the fruits of criminal actions.
Its not clear at all that courts will find engineering a system for irreversibility is illegal or contributory if there was good justification for legal business purposes, which of course there are. Steve
On 10/24/05, Steve Schear <s.schear@comcast.net> wrote:
I don't think E-gold ever held out its system as non-reversible with proper court order. All reverses I am aware happened either due to some technical problem with their system or an order from a court of competence in the matter at hand.
Back in the days of such companies as emutualfun.com and stockgeneration.com there were cases where e-gold froze accounts without waiting for court orders. I was involved with the discussion on the e-gold mailing lists back then and it caused considerable hard feeling among the users. E-gold was struggling to deal with the onslaught of criminal activity (Ian Grigg described the prevailing mood as one of 'angst') and they were thrown into a reactive mode. Eventually I think they got their house in order and established policies that were more reasonable.
Its not clear at all that courts will find engineering a system for irreversibility is illegal or contributory if there was good justification for legal business purposes, which of course there are.
Yes, but unfortunately it is not clear at all that courts would find the opposite, either. If a lawsuit names the currency issuer as a defendant, which it almost certainly would, a judge might order the issuer's finances frozen or impose other measures which would impair its business survival while trying to sort out who is at fault. It would take someone with real cojones to go forward with a business venture of this type in such uncharted waters. CP
-- Steve Schear <s.schear@comcast.net>
Yes, but unfortunately it is not clear at all that courts would find the opposite, either. If a lawsuit names the currency issuer as a defendant, which it almost certainly would, a judge might order the issuer's finances frozen or impose other measures which would impair its business survival while trying to sort out who is at fault. It would take someone with real cojones to go forward with a business venture of this type in such uncharted waters.
Anyone can sue for anything. Paypal is entirely located in the US, making it easy to sue, has done numerous bad things, but no court orders have been issued to put it out of business. If a business's main assets are gold located in offshore banks, courts are apt to be quite reluctant to attempt to shut it down, as issuing ineffectual or difficult to enforce orders makes a judge look stupid. People fuss too much about what courts might do. Courts are as apt, perhaps more apt, to issue outrageous orders if you are as innocent. as the dawn. Courts are like terrorists in that there is no point in worrying what might offend the terrorists, because they are just as likely to target you no matter what you do. Government regulators are a bigger problem, since they are apt to forbid any business model they do not understand, but they tend to be more predictable than courts. --digsig James A. Donald 6YeGpsZR+nOTh/cGwvITnSR3TdzclVpR0+pr3YYQdkG CY46prGSdN80nLrJL5G79zdH2Uu2lRjQHD9mlSsf 4JTEpYw1dnco9AMX6Fvv3Uce0bPsG1TJYg+qpwG5n
participants (3)
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cyphrpunk -
James A. Donald -
Steve Schear