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Monday, May 16, 2005

What is Egold??

From Wikipedia, the free encyclopedia.
(Redirected from EGold)

E-gold is a modern privately issued digital gold currency. Its website (which has existed at the current URL since 1998 according to the Wayback Machine) claims that the system has existed since 1996. A simple WHOIS lookup reveals that the domain has existed since September 1995. It is a form of escrow [1] (http://www.e-gold.com/contracts/egold-bbsc.3.htm). E-gold account holdings at all times represent a claim to a specified quantity of gold. The user may take physical delivery of the gold upon payment of an additional charge. However, most users permit the operator to retain possession of the purchased gold. E-gold transactions are completed electronically, usually over the Internet, and they always settle by weight of the gold even if denominated in some other way. This ties the e-gold currency system directly to the value of gold in such a way that its value cannot be directly manipulated in the way that paper fiat currency can. Therefore, the value of any individual e-gold account fluctuates against national currencies according to the spot price of gold. Digital currency denominated in other precious metals besides gold is also offered, including silver, platinum and palladium. However, gold is by far the most popular precious metal used on the e-gold system.
Numerous third party web sites (http://www.e-gold.com/unsecure/links.htm) sell e-gold grams in exchange for a fiat currency, for a percentage transaction fee. Conversely, these third party web sites will sell fiat currency in exchange for e-gold grams, also for a percentage transaction fee. In this manner e-gold grams can be converted back and forth to a variety of fiat currencies of different countries. The amount of a particular fiat currency or e-gold necessary to complete a transaction is determined by the then current spot price of gold in relation to the value of the fiat currency.
Numerous merchants now accept payment in e-gold and other digital gold currencies. There are several directories of such merchants.
The e-gold system is an aspect of a libertarian movement to offer people an alternative to un-backed fiat currency since many libertarians perceive fiat currency to be a major vehicle for government control over their personal wealth. However, e-gold could also be classified as part of a crypto-anarchistic movement because of its higher degree of anonymity compared to other payment systems. The e-gold system offers more anonymity compared to other systems such as credit cards, because a minimal amount of personal information is required to set up a fully functional e-gold account. Anonymity is promoted, first,through strong encryption (http://www.e-gold.com/unsecure/aboutssl.html), which insures that no information that is sent to and from a user's computer and the e-gold servers can be stolen while en route, and, second, through e-gold's operational policy (http://www.e-gold.com/unsecure/aboutssl.html), which states that an individual's account information will not be revealed to a third party unless disclosure is "ordered by a court or arbitration body of acceptable jurisdiction."
Proponents of the e-gold system contend that it offers three potential benefits to the user:
1. A currency that protects against inflation, devaluation, and other possible economic risks inherent in fiat currencies.
2. Protection of assets from arbitrary and potentially harmful actions by national governments and central banks which diminish the value of those assets held in fiat currencies. Proponents of the e-gold system believe that it offers a truly international and decentralized currency which is unattached to a central bank of a particular country or territory.
3. An alternative to traditional forms of payment, which in some cases (especially in online transactions) may be less efficient or more costly. The e-gold system as well as other digital currencies provide a system where transactions clear instantly, this is in contrast to checks or credit card transactions which when used could take days for funds to be deducted from an account. Also, unlike other online payment systems such as PayPal, there are no distinctions between merchant and non-merchant e-gold accounts. All e-gold accounts carry the same fees (http://www.e-gold.com/unsecure/fees.asp) and have the same capacity to receive and transmit e-gold account holdings. At the time of this writing, e-gold is mostly used for online micropayments.
Detractors of the e-gold system contend that there is no way of knowing if the e-gold operators really have the gold, which backs up the currency in the e-gold system. This is despite e-gold's audits and examiner, (http://www.e-gold.com/examiner.html) which has updated statistics on outstanding liabilities and the total amount of each precious metal in its holding.
Many gold enthusiasts, also known as "gold bugs" are detractors of the e-gold system for a few main reasons. The reasons being their fear of potential fraud (as mentioned above), the fees that the accounts have (making the accounts less desirable as investment vehicles) and the fact that many of them would rather have the physical gold in their possession.

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