Tuesday, June 14, 2011

And another nice example of attempted internet-fraud....

It's not always nice to be subject to Internet fraud. Last weekend I heard about a couple that had their hotmail account hacked. And I asked for the example at hand. The result was that suddenly, their friends and family got the e-mail below. Which evidently was a scam (asking for a quick money transfer) but still got some of their friends fooled.

So for prevention purposes I thought I better put the e-mail on the web. So be warned, don't fall for this !!

I am sorry i did not inform you about my trip and I do hope that you receive this email in good health. I am presently in Great Britain,London to be with my ill Cousin. She's suffering from a critical uterine fibroid and must undergo a hysterectomy surgery to save her life . I am deeply sorry for not writing in our usual language or calling you before leaving, the news of her illness arrived to me as an emergency and that she needs family support to keep her going, I hope you understand my plight and pardon me..

Hysterectomy surgery is very expensive here, so I want to transfer her back home to have the surgery implemented there am wondering if you can be of any assistance to me with her hospital bills including ticket fees, I need about €2,300(euro)) to make the necessary arrangement; I traveled with little money due to the short time I had to prepare for this trip and never expected things to be the way it is right now. I'll surely pay you back once I get back home, I need to get her home urgently because she is going through a lot of pain at the moment and the doctor have advised that it necessary that the tumor is operated soon to avoid anything from going wrong,she is currently taking care of at the Intensive care unit of the hospital and currently I am with her in there and i am restricted to make or receive any calls due to the patients in there but i have access to the Internet.

I would appreciate anything you can do to help me,i promise to repay the money back to you as soon as I get back home safely with my cousin. Please if you have a western union office around you send the money to my name and address below, i know this is not in your budget now but i promise to refund the money to you as soon as i get back home and have access to my account.

Name: Anon. Ymus
Address: 70 Margaret Street
London W1W 8TF
Great Britain

I await your mail as soon as possible so that i can be able to receive the money today, Please let me know any information given to you after sending the money or preferably scan the receipt of the western union money transfer so that it will be safer for me to receive.

Please I await your early reply
groet XYZ (wife of ANON. YMUS)

Saturday, June 11, 2011

Bitcoin.... dubious payment mechanism

Every now and then, Bitcoin keeps on popping up in posts (including mine). At first I only looked at the technical bit, but I've come to understand that essentially the amount of coins issued in the system will be fixed. Furthermore, in terms of governance, there is little known about the developer and designer.

So that leaves us with a payment instrument with:
- security by obscurity, both in technical and governance terms,
- uncertainty as to legal rules/jurisdiction applied,
- a limited amount of coins to be issued.
And let me be clear. All of the above mean that it is unfit for use and essentially only an activity that may somehow benefit or amuse the owner.

So, we can be brief about what it is. If presented as a solid payment mechanism, we must officially consider it a mere scam, designed to fool some subcultures in this world to believe that there may be something as a free unregulated worldwide anarchistic form of money that can work. History shows that while some of these systems may work for a while, they will never work for similar time periods as regular currencies do, and the reason for that is the lack of governance, security and legal underpinning.

To illustrate this in a simple way. Bitcoin has a fixed amount of coins. Now imagine a country with a limited amount of money available. This country cannot sustain the use of a limited amount of coins to pay for ever increasing trade and a growing economy. Unless it has a central bank monitoring the amount of money in circulation in relation to economic growth. But Bitcoin doesn't come with a central bank, so the coins will continue to increase in value until they become unpayable. As such it has all the characteristics of a ponzi-scheme. Which means: the last owners of IUOs will pay for those that have exited early.

[Update June 13, 2011: I've come to understand that in technical terms the scheme is open and transparant, yet I'm still struggling with the monetary and governance side of it. And it does take more than pure trust in technicalities to get a payment system to survive.]