Financial Innovation

I am glad to hear that Douglas Jackson and associates manage to avoid jail and get probation, community service and a fine instead.

I still think it’s extremely unfair that a service as innovative as e-gold were punished like this. Apparently so does the US District Judge Rosemary Collyer:

According to cnet:

U.S. District Judge Rosemary Collyer said the men deserved lenient sentences because they did not intend to engage in illegal activity. Even though, Collyer said, the U.S. Justice Department wanted to use the cases to show “this new day of Internet crime is going to be…vigorously prosecuted,” that alone was not enough reason to incarcerate the defendants.

While the courts don’t always do the right thing in this country, I am glad to see that they still serve their function as a safety valve against over zealous government.

Look at the situation the financial system is in right now. It is based on ancient technology and an ancient operating system. The government is throwing trillions of dollars against an unsound system and sending the Patriot Act against innovators.

E-Gold were one of the players, who truly attempted innovation in the financial space. Douglas Jackson’s genius and insight in his quest for sound money is seen in that even after all of this has happened to them, they core value of e-gold still hasn’t changed much.

For more read this article I wrote earlier e-gold innovated and were finally brought down. Also read the DGC Magazine interview with Douglass Jackson here.

update Several people have mistakenly thought my slightly tongue in cheek title to mean that I’m one of the part of the fringe paranoia groups here. While the USDOJ did bring down e-gold. The term “The Man” as well as the use of references to Black Helicopters were an attempt to caricaturize those paranoia groups. Now where did I put my tin foil hat.

e-gold is an 100% gold backed electronic currency. It revolutionized the electronic currency world using pretty simple double entry book keeping technology backed by currently 2.54 metric tons of gold and innovative legal structures to keep it safe. They are in the news today and there are lots of things startups can learn from their story about trust, innovation, legal structures, transparency and how not to deal with regulators.

It is with sadness I today read Douglas Jackson’s blog post outlining the final blow to e-gold by the US government. It felt like this wasn’t written by Doug, but by Doug with the NSA’s secret alien mind control device implanted. In reality the mind control device used was the threat of 20 years of jail and a half million dollar fine.

Also as I write in the Agree2 User Agreement:

We are men of principles, but stronger men than us have changed principles with 3 hovering black helicopters over them. If you know what I mean.

This is a case where probably a bit more than 3 hovering black helicopters were hovering over them. So I guess we can only feel sad and hope the best for Doug and his family.

Please, please, please get with the program. Checks are ancient pre industrial age relics that still hang around in a few places in the world. Unfortunately the worlds most dynamic economy the US is still addicted to checks. This makes this article extremely US centric, but it also affects non US readers who do business with US businesses.

I also want to say that I am not in anyway targeting any specific clients of mine here. This is a generic problem and based on conversations I have had with other US based freelancers. That said, with the exception of one client all my US clients have insisted on using checks.

I am targeting web 2.0 businesses here in particular. We are constantly asking other people to “think outside the box” and do things transparently and online. Paying people with checks is basically the least transparent and online thing we do as part of doing business. There are great alternatives that we can and should use.

What is so wrong with checks you might ask?

Everyone uses them? First the obvious:

• Snail mail is so 1980s
• I have better things to do than go stand in line at a bank (thats such an old fashioned activity)
• Relatively high risk for recipient
• Slow clearing. In particular for international payments.
• For international payments the recipient (and his bank) is likely to say “what is this thing you call a check?” (See Jarkko’s experience trying to deposit a US check in Finland)