> > The fact is, e-gold has a Ponzi problem. > > I disagree. The fact is that Ponzi schemes are fraud, > and a problem.
Again, Jim, thanks for the opportunity to clarify. When I say that e-gold has a Ponzi problem, I mean first and foremost that it has a PR problem. When I say that this problem makes e-gold look shady, I mean just that: that it makes e-gold *look* shady. I don't mean that e-gold *is* shady. Or that Doug Jackson et al are breaking the law or doing something unethical, or that they should be shut down or investigated. Quite simply, I mean that as long as outsiders look at e-gold's user base and see it chock full of Ponzi players and operators, they're going to be wary of getting anywhere near it. Big retailers will shy away because they don't want their brands tarnished by association. And consumers will shy way because they suspect that Ponzi playing is all e-gold's good for. Think about it. If e-gold is ever going to break out of its ghetto, it's going to be because of practical advantages like instant clearance and nonrepudiability. The fact that it's gold-backed, I'm afraid, means nothing to anybody but goldbugs (and with all respect, I just don't think there are enough of you to put DGCs over the top on your own). But what's going on right now is that instant clearance and nonrepudiability are drawing scammers in droves -- and nobody else in similar numbers. The message: these are advantages only to people who want to put one over on you. Or put it another way. Jim, since you brought up the old a-tool-is-just-a-tool chestnut (i.e., hammers can be used for killing people, guns for saving lives, and so forth), let's give those analogies a stress test. Say I've got some home repair to do, and I'm in the market for a hammer. My friend and neighbor, Harry Callahan, gets wind of this and shows up at my door with a Deluxe Turbo-HammerTM he'd like to sell me for a mere $300. He demonstrates the tool by hammering a nail into my living-room wall -- thunk thunk thunk, pretty much like you would with a normal hammer, only a little more awkwardly. But man does this thing look great. "Note the craftsmanlike nickel-plated surfacing, the fine ivory siding on the hammer's head," Harry tells me, with a connoisseurial glance. "And how about this fabulous automatic hole-punching feature?" says Harry. He grabs the hammer by its head, points the base of the handle at the wall, presses a tab just beneath the head, and voila -- with a loud bang, a six-inch hole appears instantly in the sheetrock. Impressed, I tell Harry I'm interested but just want to do a little shopping around first. "No problem," says Harry. "An informed customer is the best customer." So I head downtown, walk into a shop whose window is full of hammers like Harry's, and find out that the generic name for Harry's model is ".44 Magnum." I come home, look that up on the Internet, and find that almost everybody who is buying Harry's type of hammer seems to be doing so for the purpose of either (a) killing someone, (b) severely hurting someone, or (c) convincing someone that they are capable of (a) or (b). Oh, plus there's this one mailing list where a few wingnuts, apparently all friends of Harry's, sit around extolling his hammer's virtues as an instrument of home repair. I conclude that Harry's hammer is probably not very well suited to my purposes -- at least not as well as the old-fashioned hammers I'm used to. Besides, it is awfully expensive, and using it does seem to entail considerable risk of automatically punching a large hole in your foot. When I tell Harry I'm taking a pass, he is crestfallen. "No one understands," he says, staring glumly at the Deluxe Turbo-Hammer in his hands. "This is a revolutionary product. It's a paradigm shift. It's going to bring undreamt-of efficiencies to the universal practice of putting nails into boards. It's going to change everything!" "Oh you bet, Harry," I say. "Can't wait. Tell you what: come the revolution, I'm gonna buy one. And another for the wife. Hell, I'm gonna buy a gross. OK?" Anything to get him away from my front door. I mean, I like the guy and all, but he was starting to wave the hole-punching end of his hammer at me, and frankly, I'm not so sure about his mental health anymore. Plus, has Harry stopped bathing or something? When did he start looking so dirty? MORAL: A tool is not just a frickin' tool. If it's a tool worth having, it's optimized for a particular use. Otherwise we'd still just be carrying all-purpose rocks around. CORROLARY: If a thousand people use a tool for purpose (a), and a dozen people use it for purpose (b), reasonable observers may conclude that the tool's optimal use is (a). RELEVANCE TO E-GOLD: Left as an exercise for the reader. > > took four kinds of payment: OSgold, Evocash, PayPal, > > and e-gold. > > So, why are Ponzi schemes a problem for e-gold and > not for PayPal? Because Peter Thiel can offer convincing evidence that gazillions of people are using his product for purposes other than playing Ponzis, whereas Doug Jackson cannot. Or will not. Which in the court of public relations comes to the same thing. On the other hand, though: > You seem to think that PayPal doesn't look shady, > despite the way they seem to screw over merchants > without recourse, even though PayPal is used by > thousands of Ponzi players. I think you are engaging > in the application of a double standard. I never said PayPal didn't have its own problems. PayPal, it seems, is impaled on the opposite horn of e-gold's dilemma. While not as liquid as e-gold and therefore not quite as attractive to scammers, PayPal is nonetheless scam-friendly enough that its managers feel obliged to resort to fascistoid overkill to keep the sleaze away. This is clearly turning into a slow-burning PR problem of their own. > Money is just money. It is the love of money, and > the behavior that love of money causes, which is > the root of evil to be torn out root and branch. Oh, man. How could you, Jim? I'm no libertarian, but even I know that you have just run afoul of one of St. Ayn's most central teachings. For your penance I suggest you pick up your well-worn copy of "Atlas Shrugged" and copy out by hand Francisco D'Anconia's interminable speech on the inherent virtue of money and those who truly love it. It may be found on pp. 380-385 of the Signet paperback edition. > So, what? Answer JP May's question: how much money > in e-gold is actually spent on HYIPs? Exactly > what percentage of e-gold's $3 million in daily > activity is spent on HYIP activities? How many, > exactly, of the 11,000 spends per day is going > through an HYIP program of any sort? Because, > if you are going to assert that the basis for > your criticism is entirely that you perceive a > low percentage of FRNs used for fraud and a high > percentage of e-gold use for fraud then: > > YOU SHOULD PROVE IT. Jim, the only people who could conceivably give the exact percentages you and JP want are the good folks at Omnipay/G&SR/e-gold. Unfortunately, they can't or won't. Which leaves us with the next best thing: the educated guesses of the experts, the ones I already gave in my article. To review: JP May, major exchange provider: 30 percent of daily velocity is spent on or by Ponzis Eric Gaither, major exchange provider: no, more like 50 to 60 percent Claude Cormier, major exchange provider: no, 90 percent Steve Foerster, former CTO of G&SR/Omnipay: hey, if it weren't for Ponzis, there wouldn't be a gold economy Now, I guess none of that is the proof you want, but surely you'll at least concede that these kinds of estimates make it e-gold's burden to come up with counterassertions about what generates the bulk of e-gold activity. So what happens when I confront Doug Jackson with these figures? Does he calmly break down the non-exchange sectors of the e-gold economy for me, rough percentage by rough percentage? He does not. He tells me that if I stress the Ponzi angle, e-gold will fail, the dollar will implode with no monetary alternative available, and people may be forced to eat their own children. And I swear to you, Jim, he was not just exaggerating for effect. > A huge amount of the activity on e-gold, a very > large proportion of the $3 million in daily activity > and 11,000 spends per day is being undertaken by > so-called market makers. And market makers are > not HYIPs. I'm willing to admit that I don't know > if market maker activity is a majority of all e-gold > activity, and I'd like you to admit that you don't > know that HYIP spends are a majority of e-gold > activity, either, or show your evidence that they > are. All right, I admit it: I don't know that HYIP spends are a majority of e-gold activity. Also: I do believe market-maker activity accounts for close to the majority, if not *the* majority, of e-gold activity. However: I don't believe market-maker activity tells us much about who's using e-gold and why. It tells us that a lot of people are buying into and selling out of the e-gold economy on a daily basis. It doesn't say what they're doing once they're in. And: I do believe that expert guesses like those mentioned above -- as well as circumstantial evidence like the SEC complaints against E-Biz and Cole Bartiromo -- tell us that what people are doing once they're in is pretty much playing those Ponzis. > > the far greater interest of my editors in money-mad > > Muslims -- > > Let me take a moment to say that I really did like the > details you offer on the e-dinar and the individuals > who are courageously promoting it. And let me take a moment to say that the folks at Wired, in particular my editor Adam Fisher, did a spectacular job. I wholeheartedly agree with their stressing the e-dinar angle, and I'm in awe of how deftly Adam helped me hone an unwieldy, overlong story down to its essential elements. > > The first question is Doug Jackson's horn of > > the dilemma. > > No, it isn't. Doug Jackson can grow the market for > DGCs, and e-gold in particular, by now spending some > quality money on a well researched and executed > marketing program. I would be happy to explain the > details of marketing research, publicity, and > advertising that should go into such a program for > my customary fee. In the name of all that is holy, Jim, please just waive your fee and tell those guys how to handle their publicity. Like I said, their only real problem is a PR problem. But it's a serious one. Julian _________________________________________________________ Do You Yahoo!? Get your free @yahoo.com address at http://mail.yahoo.com --- You are currently subscribed to e-gold-list as: [email protected] To unsubscribe send a blank email to [EMAIL PROTECTED] Use e-gold's Secure Randomized Keyboard (SRK) when accessing your e-gold account(s) via the web and shopping cart interfaces to help thwart keystroke loggers and common viruses.
