Intro to Gold Digital Currency

[goldeconomy]

Gold bugs should take a more serious interest in gold digital currency, because this rapidly growing field is doing two very important things for the gold industry:

1. It is putting gold to use as actual money. Over $1.5 billion worth of gold metal transactions per year are conducted around the world using digital gold currencies. This is a signficant first step toward privately remonetizing gold and silver worlwide. The end idea is to have gold and silver coins that are used as money for daily transactions worldwide.

2. Gold currency is creating a significant demand that is taking gold off of the market. Currently gold reserves for gold currency systems stand at 100,000 ounces.

The purpose of this post is to introduce the subject and provide some links to articles for more information.

The five significant players in the gold currency industry in order of their gold reserves are:

e-gold (http://e-gold.com)
e-Bullion (http://e-bullion.com)
GoldMoney (http://goldmoney.com)
Pecunix (http://pecunix.com)
Crowne Gold (http://crownegold.com)

For a list of other articles about gold currency please see the following link:

http://goldeconomy.com/indexgc.html

[IrishGold]

Digital gold may be what will eventually be the new medium of exchange, but the problem with digital gold is the same thing that is the problem with other currencies, it is too easy to thwart the rules and have more outstanding than you have in deposits.

Oh sure, the guys setting these up will tell you that it will not be possible for them to do any of that. There will be too many checks and balances.

Well for my money as long as it is not physical it is not gold! It's just another "promise to pay" and you see where that has gotten us! Of course they will say, "But it is physical" and my answer there is, "Only when it is physically mine"

[G-khan]

Digital gold may be what will eventually be the new medium of exchange, but the problem with digital gold is the same thing that is the problem with other currencies, it is too easy to thwart the rules and have more outstanding than you have in deposits.

Oh sure, the guys setting these up will tell you that it will not be possible for them to do any of that. There will be too many checks and balances.

Well for my money as long as it is not physical it is not gold! It's just another "promise to pay" and you see where that has gotten us! Of course they will say, "But it is physical" and my answer there is, "Only when it is physically mine"I tend to agree with you - for now this will be good for the price of Gold - as time goes by they will figure out a way to make more digits than they have Gold in the vaults.

I also think this may be the way things are going as there needs to be a way to pay people. Think about it Irish if I want to send you some payment for 20 or 30 of your guns (just using something believable as an item you MIGHT be holding) do I ship you gold. What if you decided to sell me that ship full of guns you have. Big business will for sure need a way to transfer the payment..

Word digital is like saying cyberspace money - if we ever get back to having currency that is backed by physical my guess is this will be it. What I don't like and wonder about is who gets to enter the digits and how. These are questions the Founders of this country wrestled with and we may soon do so again...

Best part for the time being this should take more Gold off the table and increase the demand = make the Central banks sell till they can't sell no more........

This is a lot more pretty then a digit.........

[FoundingFathers]

A modern economy on a gold standard would require "digital gold".
I would have no problem carrying a gold "debit" card vs. a pocket full of
gold coins to pay for lunch. I would need a checkbook on my gold account
to pay my bills - I'm not going to send in a few Gold Eagles to make my mortgage payment.

In this vision, digital gold and physical gold would go hand in hand.

[goldeconomy]

the problem with digital gold is the same thing that is the problem with other currencies, it is too easy to thwart the rules and have more outstanding than you have in deposits.

Oh sure, the guys setting these up will tell you that it will not be possible for them to do any of that. There will be too many checks and balances.

Well for my money as long as it is not physical it is not gold! It's just another "promise to pay" and you see where that has gotten us! Of course they will say, "But it is physical" and my answer there is, "Only when it is physically mine"

Irish, your fears are well-founded. As I pointed out in the recent editorial "Flying Blind: Unaudited Digital Currencies" there are some players in the industry that are issuing gold currency without providing any checks and balances. Full article here: http://goldeconomy.com/ct/t.php?l=109 This is a problem that we are working on in the industry. There are the true-blue 100% gold backed and audited gold currencies, and then there are the mimic fractional scammers that we are trying to drive out of the business.

While you are right that generally speaking, it is safer to keep physical possession of your savings in the form of precious metal, the problem is, except in the USA you really can't send gold through the mail to complete a financial transaction.

There is a true and legitimate need for gold currency accounts that can be used to make payments at a distance. The entire mail order industry for gun parts and ammo is dependent on this kind of thing. Would you rather buy your Bushmaster XM-15 buffer spring using Visa funny money, or a transfer of 2 grams of gold? With the Visa transaction you have to worry about getting a bill a month later, interest and all that nonsense. With gold currency the transaction is FINISHED instantly. Also, put yourself in the shoes of Bushmaster. Would you prefer to receive payment via Visa, who doesn't like the gun industry anyway, probably donates PAC money to gun-control groups and reverses up to 10% of the transactions because of fraud? Or would you prefer to be paid in gold currency WHICH CAN'T BE REVERSED, before you mail the parts?

In the long run you are right: we need gold and silver COIN to serve as the daily transaction medium people call "money".

As Dr. Timothy Terrell pointed out in an essay (http://goldeconomy.com/ct/t.php?l=110) from a couple of years ago - the problem that gold/silver money advocates are up against is the "Regression Theorem". People think of money as what their parents considered to be money. The central banks have successfully weaned three generations of people completely off of precious metals money.

The question is where do we start the process of weaning people back onto precious metals for transactions?

It is actually more practical and less expensive to do it using the Internet on an international scale in the way that gold currency companies are now doing. Why? Because the advantages of gold/silver money are most obvious in the place where paper token currency is the weakest!

Locally, the gummint forces everybody to use their paper tokens and base-metal coins. But the USA can't force people in Britain to use Dollars, and the gummint of Japan can't force people in New Zealand to use Yen. So once you start dealing with the international community paper currency becomes a real pain in the neck.

One of the greatest failures of central bank paper money is that it causes all kind of exchange rate problems for international trade. This is why the Banks of Japan, Malaysia, etc., are all devaluing their currency as fast as the Fed devalues ours.

Gold currency steps into this picture and provides Japanese, Malaysians, Americans, Aussies and Canadians a way to make instant non-reversible payments, keep their financial privacy intact, and enjoy a common currency called grams of gold/silver. Gold speaks the language of all people. Men in Japan buy gold gifts for their wives. The same is true in India, Nepal, Russia, Argentina, Zimbabwe, and South Dakota. People instinctively know the value of gold, so when you're trying to sell something over the Internet to a guy in Egypt, the chances are pretty high that he would prefer to be paid in gold over US Dollars. The more Greenspan devalues the USD, the more this will be true in the future.

Consider the following comparison: (Anybody know how to make a table using BBCode since HTML is disabled?)

International Money Transfers
Bank Wire ::Western Union :: Gold Currency
Cost :: $20+ :: $40+ :: 50 cents
Time :: 1-2 weeks :: 2-3 days :: 2-3 seconds
XChg-Rate : 2-4% :: 2-4% :: zero

So we start there where gold & silver have the greatest advantage - international Internet transactions - hence gold currency.

Once a large enough body of people are accustomed to using gold and silver for Internet transactions they will be THINKING in prices in terms of grams of gold or silver.

Then it is a fairly easy step to start introducing local ATM machines that dispense silver coins drawn from people's gold or silver currency account.

Give it twenty to thirty years and national paper token currency will be obsolete...

Just to let you know how practical this really is, you can already get Visa/Mastercard Debit Cards that draw from your gold currency account. This means you can have gold in your GoldMoney account and use it to buy your groceries. You can also pay your bills using gold through services like Gold-Age.net (http://Gold-Age.net) who will send USD checks in exchange for gold currency payments.

[GreenFrog]

Hello goldeconomy

When you buy all your stuff with gold, do you need to transfer in paper money all the time? If so, how much does it costs you to transfer?

Also, do you know how I could do this from Canada since I can't buy with US dollars?

[G-khan]

I have a few questions... It is interesting that you say you live off of your digital Gold money. I get my paycheck sent to me electronic transfer into my account are you saying I could get this done and have my checks backed by gold. I do not understand how this works? How do they make money to run your accounts?

I am interested in this as I would look into it for myself - I would love to start using payment that is backed by real physical metal.. How do you set this up and what are the downfalls and costs that come with it...

Please give us a how to do it explanation?

TIA

[morgan]

All you need to do is send your pay checks to an exchange provider who will exchange it for gold in your e-gold account then transfer it over to a debit card to use as cash or use your e-gold to buy goods from merchants taking the currency as a medium of exchange.

[G-khan]

All you need to do is send your pay checks to an exchange provider who will exchange it for gold in your e-gold account then transfer it over to a debit card to use as cash or use your e-gold to buy goods from merchants taking the currency as a medium of exchange.
Do they except electronic transfer of my payroll checks and what are my choices. Who provides this - list of e-gold providers that have this? What are the costs and how do they make their profit?

Welcome to GIM by the way.. I like your handle - one of my favorite coins. In fact au-myn has decided to donate two of them to me...

[IrishGold]

Do they except electronic transfer of my payroll checks and what are my choices. Who provides this - list of e-gold providers that have this? What are the costs and how do they make their profit?

Welcome to GIM by the way.. I like your handle - one of my favorite coins. In fact au-myn has decided to donate two of them to me...http://goldismoney.info/forums/images/smilies/shine.gif
Hmmmmm! G-khan, I was not a party to the "exchange" between you and Au-myn, but I was a witness and I don't recall the word donate being used! If I remember right, you were trying to talk him into sending you some, and his answer was, .............. well if I leave out all the bad words, he didn't say a thing!
http://goldismoney.info/forums/images/smilies/lol04.gif

[G-khan]

http://goldismoney.info/forums/images/smilies/shine.gif
Hmmmmm! G-khan, I was not a party to the "exchange" between you and Au-myn, but I was a witness and I don't recall the word donate being used! If I remember right, you were trying to talk him into sending you some, and his answer was, .............. well if I leave out all the bad words, he didn't say a thing!
http://goldismoney.info/forums/images/smilies/lol04.gif
If the Packers lose the next game against the Vikings is when au-myn will donate..

[IrishGold]

I am hoping goldeconomy or morgan will answer some of these questions that have been asked here.

[G-khan]

I am hoping goldeconomy or morgan will answer some of these questions that have been asked here.
I do to - I would be interested in an account that at least says it is backed by Gold. I am sceptical though - not going to rush through this door...

[IrishGold]

Nor I, but I would like to hear more, a lot more!

Hey goldeconomy, morgan your audience awaits!

[morgan]

Check out http://cryforcash.com and http://merchantgold.com as those two I think would be able to help you and answer all questions you have.

[QUOTE=G-khan]Do they except electronic transfer of my payroll checks and what are my choices. Who provides this - list of e-gold providers that have this? What are the costs and how do they make their profit?

[GreenFrog]

Morgan, do you have any that works in Canada? I'd give a look if it exists :P

PS: Your first hyperlink brings no-where...

[goldeconomy]

GoldMoney is the only one that I know of that accepts direct deposit. (http://goldmoney.com) For more info on how they accept direct deposit see:
http://newsletter.goldeconomy.com/yaga1.html

I would recommend that you stick to the audited systems, which means:

GoldMoney (http://goldmoney.com)
Pecunix (http://pecunix.com)
Crowne Gold (http://crownegold.com)
Norfed Liberty Dollar

[FoundingFathers]

Goldeconomy:


Can I do the following?

Depost a check in a "gold account"
Write checks off of that account
Have an ATM card off of that account
Have a "debit card" off of that account (ie;VISA,MASTERCARD check card)


and if I can - how???

I would have much interest.

[goldeconomy]

* Depost a check in a "gold account"

Yes, through an exchange agent that takes checks.

*Write checks off of that account

Yes, through an exchange agent that writes checks.

*Have an ATM card off of that account
Yes there are several companies that provide this.

*Have a "debit card" off of that account (ie;VISA,MASTERCARD check card)
Yes, this can be done too.

and if I can - how???

See http://gold-pages.net where you can look up providers by product type. There are tons of them.

[Silver Shadow]

I cannot see how any of this is different to fiat currency, except we have some jokers word that all this paper and electronic blips are backed by gold.

The only way I can see any gold backed system working is if you can go into any bank at any time and exchange the currency in use for actual physical gold. You have a choice paper, electronic, or gold, but they must operate in parallel and be freely interchangeable.

An e-gold system with no visible gold in circulation is not really a gold backed system in my view, it is just fiat in disguise. The physical gold has to be out there, and visibly in circulation as well.

[goldeconomy]

Do they except electronic transfer of my payroll checks and what are my choices. Who provides this - list of e-gold providers that have this? What are the costs and how do they make their profit?

GoldMoney.com now accepts direct deposit for us customers.

[G-khan]

GoldMoney.com now accepts direct deposit for us customers.Here is where I have a problem.

Where and how do they make any money doing this.

I understand banks they take in some money and then loan out 10 to 20 times the amount in and charge interest.

They do all these great things for me for a reason..

How do they make money?

[jerry]

What a smorgasbord is this website!

Anyone that knows about this site and is not taking advantage of the postings is brain dead.

[worthatry]

Hi all,

I just found and joined this site today. Very glad I found it, as it deals in topics I am VERY interested in these days.

Answer to G-Khan's question about how all these digital currencies make money:

I can give you specifics about e-gold (the one I am most familiar with):

1) E-gold charges 1% annually to hold "my" e-gold. If there are 1,000,000 accounts holding on average $50, well this works out to $500,000 annually. This may go just to cover the cost of ACTUALLY storing the gold (i.e. a very valid expense)

2) The second, and very big potential I believe, source of income is when they take a percent of every transaction. E-gold charges the receiver of funds 1% a min of .000004 ounces of gold and a max of .50 cents (so about 1/6th of a penny to 50 cents per transaction) E-gold had 116,000 transaction in one 24 hour period (their own claims on a stats page) and if EVERY one was the min .000004 then they would have made approx $20. If every transaction was at $50 then they would have made $58,000 dollars. The same 116,000 transactions had a value of $1.96 million dollars, so I am guessing that e-gold made around $10,000 in this one day. That can work out to a nice 3.65 million dollars. NOT bad, and the more people using their service ... the more this goes up.


I believe that all the other DGC services are based on very similar models. I hope that helps.

[G-khan]

@worthatry Welcome to GIM and thanks for the info on this. Do you have an account and use this and how well does it work?

Enjoy our site.....:coolbeer:

[worthatry]

Thank you for the welcome G-Khan.

Yes, I do have a site at e-gold. I have some money in it (not a ton, but more than pennies) and I have watched it "grow" in worth. I have also paid a few people and accepted a few payments. I love it.

The biggest concern I have ... is what many have touched on already. How do I really KNOW that their is gold (in the exact amounts etc.) backing my (and everyone else's) e-gold. If it is "really" there, this is a GREAT way to handle money/investing.

I am in the process of getting ACTUAL gold from a coin dealer also, and taking it myself, not keeping it in a bank account. This will be the BULK of the gold I have (as I am still not 100% confident in e-gold, or any of the digital gold currencies.)

[kisa]

E-Gold has been around since 1999 & was the first of the digital currencies.

I have used them since 2000 to place funds in an off shore location as well as to make payments to USA sellers & in Europe. I do not keep large amounts with them but it is a reasonable amount. Plus my account grows in value everytime the gold price goes up! You can hold your funds in either gold, silver & I think platinum.

The problem for these digital currency companies is mainly one of governments changing laws & making them report individual account balances & transactions. As E-Gold is a registered off shore business it does not require reporting of transactions to the IRS etc.

Just do your own DD with these digital guys. Some piggy back off the legit companies & tell you they are backed by gold. One such failed business was Osgold.

Like everything some diversification is good & at the present time I find E-Gold easy for making payments on overseas purchases. I certainly do not use it as an investment vehicle.

[kleinphi]

Digital gold may be what will eventually be the new medium of exchange, but the problem with digital gold is the same thing that is the problem with other currencies, it is too easy to thwart the rules and have more outstanding than you have in deposits.

Oh sure, the guys setting these up will tell you that it will not be possible for them to do any of that. There will be too many checks and balances.

Well for my money as long as it is not physical it is not gold! It's just another "promise to pay" and you see where that has gotten us! Of course they will say, "But it is physical" and my answer there is, "Only when it is physically mine"

Don't you think you are being a little too emotional here? First of all: Didn't money work for more than a hundred years before someone got the idea to stop backing it by gold and silver? It would seem to me that the mistake was not made when they decided to write notes that were backed by gold, but when they decided to stop backing them by gold. We should be careful not to throw out the baby with the bath water.

Secondly, of course I am not going to have thousands of ounces of gold in an electronic account, but if you keep just enough in there so that you can comfortably make every day payments, I think the benefits outweigh the risks. Especially when you consider that walking around with or mailing physical gold carries with it certain risks that electronic accounts don't.

[Justin]

Secondly, of course I am not going to have thousands of ounces of gold in an electronic account, but if you keep just enough in there so that you can comfortably make every day payments, I think the benefits outweigh the risks. Especially when you consider that walking around with or mailing physical gold carries with it certain risks that electronic accounts don't.

Agreed. Money is really only useful at the moment of transaction, otherwise it's just a store of value (well, we hope it is :hmmmm:). So long as it's reasonably easy to move gold into and out of a digital currency, I see no reason to not reap the benefits of its numerous efficiencies.

[IrishGold]

Don't you think you are being a little too emotional here? First of all: Didn't money work for more than a hundred years before someone got the idea to stop backing it by gold and silver? It would seem to me that the mistake was not made when they decided to write notes that were backed by gold, but when they decided to stop backing them by gold. We should be careful not to throw out the baby with the bath water.

Secondly, of course I am not going to have thousands of ounces of gold in an electronic account, but if you keep just enough in there so that you can comfortably make every day payments, I think the benefits outweigh the risks. Especially when you consider that walking around with or mailing physical gold carries with it certain risks that electronic accounts don't.Give me this list of benefits that outweigh the risk of losing what I put into it.
Does it pay me to use it?
Is it safer than a checking account at a bank?
Is it more convienient?
Is it more acceptable?