Digital Gold Currency or E-Gold is a type of digital currency or electronic money that’s based in mass gold units. In actuality, it’s a representation of money like a gold certificate way back in 1873 to 1933 that can be exchanged for on-demand gold. Unit of measurement or account for this particular currency is in grams or troy ounces as well as in gold dinars. All that said, these digital gold currencies are supported by either allocated or unallocated gold storage.
A number of companies lets you buy gold online legally by issuing digital gold currencies along with a system that enables users to perform transactions and pay other users in units with the same value as that of gold bullion. The competitors also issue independent currencies. Let’s have a detailed look into e-gold for a more informed decision on whether to invest or find another alternative.
A Brief Intro to Digital Gold Currency (DGC)
As an electronic or digital form of money, digital gold currency is actually supported by gold reserves that are stored in secured private agencies vaults. Users or holders of any particular digital gold can easily pay another user in gold or even currency units at the time that represents gold in a physical form by issuing the company’s system.
Each of these organisations or exchange companies have a fully maintained physical reservoir, representing the client’s or owner’s account to a 100%. All that said, it was in the 1990s when the first digital gold currency appeared led by electronic gold or e-gold. Many other digital currencies have emerged ever since however, most failed to succeed in the long-run for lack of management and various other reasons.
How Digital Gold Currency Actually Works?
Certain risk is associated with digital gold currency being a form of electronic money that’s managed by private entities. These organisations protect the funds through physical bullion reserves whereas management risk in unregulated markets also poses a threat to individual holders of these DGCs mostly because of ineffective, underperforming and damaging administration.
With that, neglect, lack of transparency, weak security and online hacking are other such threats faced by digital holdings. Other than that, online purchase of gold from approved stores is a much better option for serious buyers and investors interested purely in gold and bullion stocks.
As a Universal Currency
Digital Gold Currency offers a total zero exchange rate variation and no political manipulation independent world currency system that lets you go truly global and borderless. Under ISO 4217, silver, platinum, palladium and gold, each comes with an internationally recognised currency code.
Safe & Secured Assets
The e-gold or digital gold as a currency reserves 100% clients’ funds as silver, gold and/or platinum that can be exchanged for digital certifications which isn’t available against a fractional-reserve banking system. Users of the system claim that their deposits are protected against various economic risks like possible inflation, devaluation of the currency as well as other fiat currencies. Certain risks that are included can be of monetary policies that vary from a country to another as well as territories that can harm the actual value of paper currency.
Exchange Policies with National Currency
Not all digital gold currencies are to be sold directly for which a digital currency exchanger is required. It works by accepting national/domestic currency via different means such as bank wire transfer, direct deposits, money order and cheques. That said, some of the exchanger system also sell as well as fund pre-paid debit cards which further eases clients into exchanging digital gold into spendable paper currency. What’s worth noting is that these digital gold currencies are also coined as private currencies because these aren’t issued by the state government.
Digital gold doesn’t support even the tiniest of error in transaction or reverse service charges which means any unauthorised use, failure to deliver from vendor against gold transaction and reversing false transaction is nearly impossible. Unlike the typical credit card industry, digital gold is more parallel to cash transactions. On the contrary, cash transactions like that of PayPal can be considered more akin to credit card transactions.
Operating cost of the digital currency has been reduced significantly due to lack of appropriate exchange system and payment disputes which makes irreversible transactions an advantage for some from a certain point of view. Plus, cross transactions performed using digital gold are cleared almost instantly thus making funds readily available to the users/owners. However, unlike credit cards, cheques, wire transfer and various reversible payment methods, clearance takes more or less 72 hours.
Political Interference & Risk of Management
Like many other financial entities and securities associated with each, digital gold also comes with a layer of risk in terms of issuance and overall management which is known as governance. Almost all digital gold currency supporters, owners and providers operate under pre-communicated rules and self-regulations that are free from strict protocols like that of banking and other commerce institutions. Still, it’s quite possible to transfer the currency from a user to another which however may occur as per money transfer laws so one has to be careful.
Looking into all the above features and working of digital currencies, using it for various transactions and financial means is hard because these aren’t universal. Fluctuation of gold with global and national currencies is another issue but even with all these challenges, being a user or holder of digital gold currency is a privilege and appropriate management can definitely be profitable and worth an investment in the long-run.