Digital gold currency
Digital gold currency (or DGC) is a type of electronic money backed by ounces of gold. It is a kind of representative money, like an US paper gold certificate at the time (from 1873 to 1933) that these were exchangeable for gold on demand. The usual unit of account for that currency is the gold gram or the troy ounce, although other units such as the gold dinar are sometimes used. DGCs are backed by gold through unallocated or allocated gold storage.
Digital gold currencies are issued by a plenty of companies, each of which provides a system that enables users to pay each other in units that hold the identical value as gold bullion. These competing providers issue independent currency.
Proponents claim that DGC offers a really international and borderless world currency system which is independent of exchange rate variations and governmental manipulation. Gold, silver, platinum and palladium each have recognized international currency codes under ISO 4217.
Contrary to fractional-reserve banking, DGCs hold 100% of clients’ funds in reserve as gold, silver, and/or platinum, which can be exchanged via digital certificates. Proponents of DGC systems say that deposits are protected against inflation, devaluation and other financial risks characteristic in fiat currencies. These risks include the monetary policy of countries or territories, which are said by proponents to be harmful to the value of paper currency.
All of the digital gold currency systems can be used to buy, hold, and sell precious metals, but do not promote themselves as an “investment”, as this implies an anticipated return.
Some companies do not sell DGC directly to users. For the particular DGCs, e-currency must be bought and sold through a digital currency exchanger.
Currency exchangers accept payment in national currencies by a variety of methods, including Bank Wire, Direct Deposit, Cheque, Money Order. Some exchangers also sell and fund pre-paid debit cards to make it easier for their clientele to convert DGC into an easily spendable form of national currency.
DGCs are known as private currency as they are not issued by governments.
Unlike the credit card companies, digital gold currency companies mainly do not have services to dispute or chargebacks. So, reversing transactions, even in case of a legitimate mistake, unauthorized use, or failure of a vendor to supply goods is hard to comprehend, if not impossible. This means that using digital gold currency is more akin to a cash transaction, at the same time PayPal transfers, for instance, could be considered more similar to credit card transactions.
The advantage of this arrangement is that the running costs of the digital currency system are greatly reduced by not having to resolve payment disputes. Furthermore, it allows digital gold currency transactions to clear instantly, making the money accessible immediately to the receiver. By contrast, credit cards, checks, ACH and other reversible payment methods generally have a “clearing time” of 72 hours or more.
DGC providers and exchangers have been blamed of being a medium for fraudulent high-yield investment program (HYIP) schemes. In January 2006, BusinessWeek reported that ShadowCrew, an Internet gang, used the e-gold system in a large identity theft and fraud scheme. Classic banks are also used occasionally for such fraud. Allegations that e-gold is a safe medium for crime and fraud are strongly denied by its Chairman and founder, Dr. Douglas Jackson.
Many DGC companies do not disclose the amount of bullion stored, or do not allow independent external bullion audits, raising concerns that such companies do not maintain a 100% reserve percentage, or that their DGC is entirely virtual and not backed by physical gold at all.
HYIP – http://www.custos.me
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