Law enforcement never fails to unintentionally entertain

You may know of the existence and then demise of e-gold (1996 - 2007). It proposed to be a way for "sound money"ⁱ to be circulated among interested parties, which in principle is a good thing. In practice however it quickly devolved into a viper's nest of criminal activityⁱⁱ which like it or not poses some very practical problems for "da police", the courts and the state in general.

Leaving alone the issue of "child porn", which is indisputably a red herring in any serious discussion of criminal activity, there's the problem of wire fraud and there's the problem of access device fraud.

Specifically, as to the first, people are too stupid to correctly use money, the banking system or wires. They are, it's a point of fact. They can't be bothered to educate themselves, they can't even begin to control their impulses, they routinely are seduced by cold readers and in general the average person left to fend for himself in a perfectly neutral environment would not be able to support himself to the level of poverty as established by the World Bank. If you don't believe me read some 419 scam reports, get all uppity about how "it could never happen to you", then read up on Dunning-Kuger and run away screaming.

As to the second point, people are too stupid to correctly make access control devices, and then they are too lazy to learn how to correctly use them.ⁱⁱⁱ Microsoft Windows still exists to this very day, in spite of it having never actually worked. If we lived in a correctly organised world everyone who ever worked for Microsoft would be either in a jail or in a cemetery for having written bad code and conspired with a bad code writer to write bad code, which in turn allowed vulnerabilities in online systems to exist (yes, spam exclusively exists as a concept because of Microsoft Windows, yes viruses exclusively exist as a concept because MS-DOS etc).

So that's the sad story : we're too stupid, as a population, for the incredible complexity that numeric machines allow. This is it, no use pretending. That leaves us with some choices : a) no wires and no credit cards of any kind ; b) wires as they are and credit cards (+ the entire system they rely on) as they are and two thirds or more of every dollar ever earned being scammed away ; c) wires as they are, credit cards as they are and some attempts to hinder and control fraud ; d) a different population. Until such a time as we're suddenly flooded with intelligent people who aren't lazy, the practical solutions will have to come out of a, b or c. On the strength of this, there's nothing wrong with c, even if you (or I) may find it in principle objectionable.

That's why I am neither aggressed nor inflamed by statal attempts to hinder online fraud, be it of the social engineering line that results in wiring money to Nigeria or of the technical line that results in sharing your secret PIN with some scruffy douche in his late twenties who installed some ingenious camera near the ATM you use^iv. What would you have them to do ?

Idiots vote, and for all the tough talk starting with "let's take the labels off of everything and allow the problem solve itself" and ending in whatever repugnant fascistoid crap there's very little action that anyone actually condones. So, if you're not willing to butcher idiots with your own hand starting with for instance your mom you might as well stop whining about why the state is expending some effort trying to not allow them getting themselves raped raw.

It's kind of sad that I even have to go through a thousand words' introduction explaining why law enforcement isn't specifically out to get you and serves a useful purpose at times. Tough crowd, what can I say. Moving right along, from sadness shall come joy : here's the Roy Dotson affidavit which was pretty much the only proof relied on by the state in their (succesful) attempt to prosecute in rem^v the gold of e-gold. Allow me to select :

18. Search warrants were conducted on the business location of the e-gold operation as well as the location of the operation’s computer servers in December of 2005. Approximately three terabytes of digital evidence (three quadrillion characters of information) and 100 boxes of documentary evidence (approximately 288,000 pages) were seized.

The e-gold operation maintains Microsoft SQL server databases housing customer profiles and transaction histories of e-gold account holders, as well as OmniPay customers. Your Affiant obtained copies of these databases by imaging servers located at AT&T in Orlando, Florida1 and seizing back-up tapes at the Melbourne offices of the e-gold operation pursuant to a December 16, 2005 search warrant issued by a Magistrate Judge in Orlando, Florida.

20. From these images of the servers and copies of the databases, I was able to reconstruct the customer profiles and transaction histories for e-gold account holders by transferring the database information on each account holder into a Microsoft Excel spreadsheet.

Do you get me ? This guy is, and I quote,

1. I am a Special Agent (“SA”) of the United States Secret Service (“USSS”), and have been so employed for approximately three and one half years. I am currently assigned to the Orlando Field Office. Among my duties as an SA, I am charged with the investigation of financial crimes, including check fraud, identity fraud, credit card fraud, bank and wire fraud and the manufacturing, possession and passing of counterfeit United States currency. Prior to my employment with the USSS, I was employed by the Brevard County Sheriff's Office for nine years. My last assignment was that of a Federal Task Force Agent with the Drug Enforcement Administration. Among my duties as a Task Force Agent, I was charged with investigating large criminal organizations that distributed and sold controlled substances and financial crimes involving money laundering. Several of the investigations resulted in the seizures of criminally derived property, including, but not limited to, monetary instruments.

Say it with me now : Is a secret agent, reconstructs 4 Tb of data by putting it in Excel spreadsheets.

This is what I'm talking about. We are too fucking stupid, as a population, to correctly handle computers. People get all inflamed about all the heists, losses and general drama going over in Bitcoin and publicly and loudly deride the poor mental quality of Bitcoin site ops. One dood had an unencrypted wallet laying around. Another dood opensourced code which contained sensitive passwords. Another dood kept his wallet in a RAM disk which wasn't in any way permanent. On it goes. They're really fucking stupid, aren't they ?

Yes, they are. So are you. So are the banks. Earlier this year (not last decade, this year) it came to light that a Romanian PSP managed to lose something a little under a million credit cards. They were locked preemptively, right before Xmas. I screamed bloody murder following which they cut off some heads. Did you even know or at least suspect a million credit cards actually exist in Romania ? Do you even have a clue about how often this happens, or what's the total count of credit cards lost in the wild ? They were reluctant to fire anyone and probably wouldn't if I hadn't pulled a stink (the Romanian press is about on par with the Bitcoin Magazine) for the very simple reason that... well ? They've fired this idiot. Now what ? They have to hire someone. Who are they going to hire ?

Yes, they're stupid. So are you. So is everybody. People are pretty fucking stupid, or in other words the situation is rather complex and we fail to cope.

Secret agent. Solved the case. By Excel spreadsheet.

1. A term of art for people in certain ideological camps, usually denoting some approximation of gold-backed currency.

   For what it's worth it's my considered & educated opinion that gold or in general metal or in even more general item-backed currency does not in fact constitute sound money, for a multitude of practical reasons that can only be ignored through sheer headstrong ignorance.

   For an example : imagine tomorrow deep ocean exploration discovers one cube 100 meters along the edge which consists of ~90% pure gold buried somewhere under the ocean floor. What now of your "sound" currency ? If that find is taken to the surface gold is suddenly devalued by more than 90% through sheer accident. How do you account for the "risk of accidental gold discovery" in your "sound money" financial institution balance sheets, and how do you account for the compound risk and probability of various pieces being taken to surface over time ? Does it all boil down to something like the fabled "Bitcoin Service Operator's Self Issued Immunity" (BSOSII) aka "pretend it doesn't exist", yet another re-hash of "what we ignore can't hurt us" ? Please. [↩]

2. This is my own opinion, formed through having been alive at the same time. It is not particularly informed by US court proceedings and in any case is anterior to any such proceedings. [↩]
3. You may think I am talking out of my posterior on the first count, sure. When it comes to the second however it may be that I know what I'm talking about, seeing how MPEx is pretty much the only actually secure Bitcoin service/website which is a point that five out of five thousand "engineers" understand and ten thousand out of ten thousand "customers" complain about : it's too difficult and why is it not more like broken! [↩]
4. Hey, it's a free country, why shouldn't he be allowed to put up cameras wherever, right ? [↩]
5. The very notion of actions in rem against money and property with known owners is so repugnant to anyone even halfway informed as to the matters of law and so contrary to both practice and logic that only that rogue state could have come up with it. [↩]