Friday, October 12, 2007
A Digital Currency, like Pecunix, is about as-close-to electronic cash as we are going to get in this decade. Just like any cash transaction, it is impossible to regulate ‘who’ uses the currency or what it is used for….
As your local bank teller does not ask you what you are planning to do with your cashed paycheck, its impossible for digital currency operators to police all users, all the time and ask them how they plan to spend their electronic money.
This kind of supervision over a system has always been a big problem for the DGC industry. Many people expect that all DGCs should be operating like the super regulated PayPal or the paperwork intensive Western Union.
Advocates of regulation all say these plans and time tested regulations prevent misuse of the system. However, most experienced users will tell you that while these regulations and restrictive activities definitely help its not a 100% solution. People still misuse the PayPal system and steal from users [phishing] and the crooks still use Western Union to funnel out proceeds of their online crimes.
So digital currency operators are stuck between massive restrictive regulations or turning a blind eye to destructive fraud and criminal activity. This is NOT an easy problem to solve.
Consequently, if an operator identifies a grey area, not specifically a crime in progress, but a questionable transaction, what action should a responsible operator take?
- Should they act as judge and jury forcing people to obey their opinion (like the Christian Coalition-we feel its right so you must follow our rules) even though it may not be a disagreeable transaction in the actual users’ jurisdiction?
- Should the digital currency operator ignore the problem and pretend it does not exist, stating they are not responsible for what people do with their money?
What should the DGC operator do to prevent their digital currency from being used by scammers, crooks and con men?
After all, this is currently a self regulated industry and we want to keep it that way. We see that over regulation not only does not work, it spoils the free market.
Its a very tough question, but one that needs to be addressed.
For the last 6 weeks, Pecunix has been ‘piloting an experimental scheme’ and taking a very unique proactive approach to this problem.
They[Sidd & team] deserve some real credit and praise for their solution. Without being judge and jury, Sidd has taken a large step in the right direction and addresses this issue head on… and I like it.
Anyone attempting a payment through the marked account will meet a large warning screen with the following text:
This account has been identified as a likely HYIP Ponzi scheme or SCAM. If you continue there is a strong possibility that you will lose your money!
It is not too late to cancel this payment.
Cancel Payment Button]
If you decide to continue with this payment, you must accept full responsibility. Please carefully read section 6 and 7 of the Pecunix User Agreement before continuing.
Identified HYIP Ponzi accounts and ‘investments’ will now get this warning, and customers trying to send money to them must read and agree, thus accepting full responsibility for their actions if they continue.
You can click the following link which is a payment link to the A3union Pecunix account and see what happens.
I think this is a fantastic move for any digital currency to make towards preventing their system from being used for fraudulent investment schemes. If a user progresses past this warning and spends money, they accept the responsibility in the case of a loss they are 100% responsible and acknowledge that they were warned.
For further reading:
"Pecunix Digital Gold: Top Security and 100% Offshore", Mark Herpel, September 12, 2006