What is e-gold?

e-gold is an electronic currency. It is a digital method of buying, possessing and storing gold. Also the users of e-gold can make immediate transfer of ownership between themselves.

In 1996, Dr. Douglas Jackson and Barry K. Downey founded e-gold. Gold & Silver Reserve Inc. manages e-gold under e-gold Ltd. It is a private currency and not issued by any government.

Since 2005, the transactions using e-gold have increased significantly. The total amount of gold bars in the e-gold system is almost same as the national reserves of any small country.

100% of the clients’ deposits are retained by e-gold in reserves with a stock of value. The flat currencies have economic threats like inflation, devaluation and other. But the e-gold deposits are defended against all these risks.

If a user of e-gold has a required available balance, he can take physical delivery of gold. He will have to pay an extra fee for such delivery. But in almost all cases, the gold is stored by the organization for the users.

Can e-gold be a Better Investment Option?

Though e-gold never advertise itself as an investment option, a few of users might use e-gold for investment. The reason is e-gold is also a type of commodity money. To retain a liquid store of value as a protection, certain users might deposit a part of their assets in e-gold.

Since e-gold is commodity money, the value of e-gold account is dependent on the cost of the commodity against each national currency. Also the price variations cause the changes in e-gold account value. Against a national currency, if the price of gold falls then the value of e-gold account in that currency also falls.

The account balance of e-gold is always mentioned in gold grams. So when the gold price changes, the account balance does not change. But relatively, the purchasing power of the account will get affected.

How to Exchange e-gold for Currency?

The metal of e-gold is never sold to its users directly. Several independent companies and digital currency exchangers work as a substitute for e-gold. OmniPay is one of such companies and which is also a sister company of e-gold. These companies serve as market makers who trade or sell e-metal for other currencies. An extra fee is charged for these transactions.

Moreover, these companies can again buy e-metal using other currencies. In such a way, e-metals can be transferred to many different national currencies.

To carry out the exchange, the essential amount of currency or e-metal is decided by the price of metal at that instant, with respect to the value of that currency.

An in-house exchange is not provided by e-gold. This makes e-gold free of any financial danger as there can be no debt making. In addition, e-gold declares that it does not possess currency of any nation and even do not have a bank account.

e-Gold Account Fees and Processing Fees

On all e-metal stocked, e-gold will charge an account fee of 1%. This fee is taken away in monthly payments.

When you use or spend e-gold, the processing fees are subtracted from the receiver. The fee varies as per the amount of metal spend. If 0.1 grams of gold is spent, the fee is around 5%. While for 5 grams of gold, it is 1%. And the fee is capped at 0.05 grams for expenditure of above 5 grams.

In contradiction to cheque and credit card transaction, e-gold transaction is cleared immediately.

The account fees are same for all types of e-gold accounts. Also the power of accepting or transferring e-gold account holdings is same for all types. At e-gold, anyone can generate a merchant account.

Security at e-Gold

Like any other online payment system e-gold is also at risk to different dangers and threats. Phishing and malware are some of these threats. Phishing is nothing but sending a fake mail to retrieve login details.

If an invader becomes successful in getting hold of any user’s e-gold account number, password and registered email account then e-gold can not provide any protection. Additionally, since all transfers at e-gold are irreversible, if any loss occurs due to account breaking, it can not be reversed.

To avoid such security breach, a Customer Identification Program is employed by e-gold. In this program, users should update their contact information. As well as they should provide additional information like date of birth and personal tax identification number.

Advantages of e-gold

1. e-gold deposits are saved from the risks like inflation, devaluation and other economic risks which are natural in flat currencies.
2. Debt can not be made since e-gold does not have its own exchange service.
3. e-gold can be switched to different national currencies back and forth.
4. To keep up with a liquid stock of value, user can set aside a part of his asset in form of e-gold for protection.
5. as e-gold is not issued by any government, it is a private currency.

Disadvantages of e-gold:

1. Due to security break, if any losses occur, they can not be reversed because the transfers in e-gold are irreversible.
2. e-gold can not block the receiver’s account in case of theft of funds, unless and until the court order is issued.

Like digital gold, e-gold also provides other e-metals like e-platinum, e-silver and e-palladium. Using sister company of e-gold, OmniPay, one can exchange their funds between these e-metals. These exchanges are executed at spot price.