e-gold FAQ

"e-gold is to money what e-mail is to letters" J.P. May

Benefits of e-gold:

Benefits for subscribers (e-gold vs. credit cards).

E-Gold fees are much LOWER than credit card fees for merchants. You can save up to 40% paying by E-Gold.
Transactions in E-Gold processed immediately online with 100% acceptance unlike credit cards which can be declined without any reason or you will have to wait for approval.
E-Gold is not subject to fraud. Knowing your e-Gold ID will not help someone else to get your money without the secret passphrase, which only you know. On the opposite, anybody knowing your credit card # can steal your money paying for whatever.
To obtain e-gold you don't have to possess a credit card. There are >10 payment options to fund your e-gold account.

Why gold e-currencies? Why e-gold?

After the invention of the telegraph in 1837 virtual monetary transfers became a reality. Since 1970 the trend has been to settle commercial transactions electronically. Over 99% of the time simple electronic notifications of debits and credits are made with no hard currency being moved.

This trend has been taken one step further by the creation of systems for settling accounts via the World Wide Web using gold bullion. Instead of using certificates ownership changes hands electronically. Because of this technology investing in precious metals, including silver and platinum, has never been easier and more cost effective. All financial value will migrate to cyberspace in the coming years. E-gold is ready so that you can be too.

e-gold may be Spent to any other e-gold account anywhere in the world via the e-gold shopping cart interface (SCI), the e-gold Account Manager, or web enabled mobile phone. Payments with e-gold clear instantaneously, no matter how large the payment, no matter how far apart the Spender and the Recipient. Of the digital gold-based currencies, e-gold is the oldest (exists 7 years, since 1996) and the biggest. It has the most account-holders and it holds in gold the equivalent of a small gold mine.

Features and benefits of e-currencies:

Intrinsic value - based on precious metals with a commodity value; free of liabilities
Secure - strong encryption technology used; no danger of compromising any credit data
Instantaneous - real time transactions; no delayed or lost payments
Inexpensive - transaction fees for fractions of a penny on a dollar
Cost effective - reduced expenses for processing payroll and accounts payable and receivable
Ease of use - at the click of a mouse
Reduced risk - not subject to the vagaries of foreign exchange rate fluctuations
High liquidity - can be sold at any time
Efficient - adjust the holdings in your portfolio to take advantage of favorable market movements
Accessible - free to open an account; no credit check; no minimum balance
Historically sound - purchasing power maintained over millennia; cannot be debased by official decree or mismanagement
Redeemable - may take delivery of bullion on demand
Ensures profitability - an aid in pricing contracts and protecting profit margins
Integrity - transactions are private but can be traced in cases of abuse
Versatile - wireless applications
Reliability - e-gold is always as good as the gold it's backed withthis year, next year, and a thousand years from now. Pursuant to the e-gold Account User Agreement, the physical bullion that comprises the value backing e-gold must be insulated from physical, legal, and political risks. Title is held by The e-gold Bullion Reserve Special Purpose Trust that exists for the express purpose of holding bullion for the exclusive benefit of all e-gold account holders collectively. The bullion is held in the form of certified good delivery bars in allocated storage at repositories certified by the London Bullion Market Association (LBMA). Metal is held free and clear of any lien or encumbrance whatsoever and explicitly may not be attached to any liabilities of e-gold, Ltd. or any other entity. No metal may be removed from storage or any other disposition made without signatures of both e-gold, Ltd. and a third part Escrow Agent of good reputation.
Cost Effective - spending e-gold is FREE, even if your recipient is on the other side of the world. Also, the recipient transaction fees range from Substantially smaller to orders of magnitude smaller than those of credit cards and bank wire transfers, no matter how large or small the payment.Finally, the e-gold Agio fee, which recovers bullion storage costs, passes on economies of scale normally only enjoyed by very large holders of bullion.
Evolving Exchange Market - the e-gold system is designed to be free of any financial risk. There can be no debt or contingent liabilities associated with e-gold, and it is for this reason that e-gold does not possess any national currency of any nation and has no bank accounts. Thus, e-gold Ltd. is not able to offer currency exchange services. This is where the Exchange services will be useful to you.
E-gold is backed entirely by a physical commodity rather than debt or any other financial instruments and, therefore, e-gold is the only currency in the world free of any financial risks. However, absence of financial risk does not mean absence of exchange risk. As with any currency, the value of e-gold relative to other currencies continually fluctuates.
No Barriers to Entry - it costs nothing to open an e-gold account. There is no credit check. There is no minimum balance requirement. There is no concept of a 'merchant account' in that all e-gold accounts may Spend e-gold or receive e-gold payments.

So,if you use money, any money, then e-gold is for you. Any of the following activities could benefit from the increased soundness, security,efficiency, and lower cost of e-gold:

E-commerce
B2B payments
Point of service sales
Person to person payments
Payroll
Bill payments
Charitable donations
Monetary base of the AUG* economy

*AUG is the abbreviation for the currency unit 'grams of gold'

Gold e-currencies - the ultimate payment vehicle!

What are the benefits of using e-gold?

Here are just some of the benefits of using e-gold:

Global Currency - the vast presence of the Internet requires a safe and secure global currency, and e-gold was created to fill this need. E-gold is accounted by weight of metal, not US dollars or any other national currency unit. Weights have a precise, invariable, internationally recognized definition. Additionally, precious metals, gold in particular, enjoy a long history of monetary use around the world. Thus, e-gold is ideally suited for international transactions. In other words, anyone from anywhere can pay the correct weight of gold (e-gold) for goods and/or services as easily as if the price had been quoted in his own national currency.
Quick- e-gold payments clear instantaneously, no matter how large the payment, no matter how far apart the Spender and Recipient.
Full control - You have full control over your e-gold account. You can set up a free no obligation e-gold account. There are no minimum or maximum amounts to send or receive. There are no monthly, set up or closure costs. You can log into your e-gold account 24x7 and see payments and receipts in real time.
Borderless - as gold is an international currency, merchants around the world will accept e-gold.
Convenience - no need to worry about conversion rates or cheques clearing, once your e-gold account is funded you can Spend and receive e-gold freely.
Transparent - e-gold is expressed in weight/currency and these rates are well advertised. You know exactly how much your e-gold is worth.
Send money to relatives and friends - Once your e-gold account is funded you can transfer e-gold to relatives and friends, who can then convert the e-gold into hard currency for free. This is an inexpensive and secure way to send and receive money (in fact, it is far cheaper than sending money via bank transfer, MoneyGram or Western Union).
Integrated - You can use an offshore bank account to fund your egold account through bank transfer and similarly you can sell gold and bank transfer the proceeds into your offshore bank account.
Confidentiality - e-gold is a discrete medium of sending and receiving money. Transactions are private and confidential (but can be traced in cases of abuse).
Safe - e-gold is safe for both sender and receiver. All accounts are protected by the latest technology. Secondly, you own gold, a real and liquid asset, which is safely stored in vaults. e-gold Ltd is a reputable company that has been around since the mid-1990s. Further, when you use e-gold there are no credit card risks or chargeback headaches.
Intrinsic value - Gold has economic value simply by virtue of its physical characteristics and scarcity.
Store of value - As gold is scare, has many uses and demand is far greater than supply, gold is valuable. The purchasing power of gold has remained roughly the same over time. Expressed in weight a gram of gold today can buy you the same amount of goods and services as it could 20 years ago. If we take the recent events in Argentina where people who held the domestic currency saw their savings almost wiped out, those that held gold had no such worries.
Automation - high degrees of automation are possible.
Alternative-currency economy - because of the economic advantages, individuals and businesses (whether they're pro-freedom or not) are shifting some of their economic activities and assets into the alternative-currency economy.
Micropayments - (e.g., small fractions of a dollar or gram of gold) become possible. E-gold offer a good way to make micropayments - use them to pay for services on-line, without high charges of the credit card companies.
The biggest advantage is probably that they are privately issued and less subject to "legal plunder" by government (see: The Nature of Government) than government fiat currencies.

Credit card payment downsides.

For the payer

You have to trust the vendor, who obtains your credit card details, to be honest. You have to trust routing through the Internet to and from that vendor to be secure .To ensure and guarantee that security, the vendor you deal with has to pay for the privilege.

It may well also mean you are using the credit card to pay in a different currency to that in your account. The credit card company, or the bank, will charge you handsomely for this 'benefit'.

(Use the calculator provided at http://www.e-gold.com/unsecure/cc.htm to see an approximation of how much credit card transactions cost vendors, and so cost you.)

For the receiver (e.g. a vendor)

From the vendor's point of view, they are at the mercy of credit cards lacking funds, or being used fraudulently. The vendor has to pay for this by returning payments already received (even months before). This is called charge-back in the trade. And this can happen, even when the goods are not returned.

The vendors also incur high overheads in financing and maintaining their 'merchant status', which for vendors is the 'open-sesame' to the world of credit-card transactions on the net. The high overheads include depositing a capital sum with the merchant bank as security (lazy assets), and paying various monthly charges over and above the transaction charges.

A vendor's overheads will also include increased web-site hosting fees to pay for obtaining Secure Socket Layer (SSL) facilities. SSL capability is necessary to ensure a secure environment for the transfer from payer to receiver, over the Internet, of credit card and other details.

Other methods like NOCHEX, are either more limited, or, like PayPal or Billpoint, are even more fraught than credit cards. For details click on the links.

Note: PayPal and Billpoint are not electronic currencies. They are currency transfer systems

Of course, you also always have to remember that transferring value using a credit card is only possible if the recipient is capable of receiving such a value transfer. You cannot give your great-niece, your boy-friend (currently in another part of the world) any money using your credit card - unless, of course, they are fully set up to take credit card payments as a vendor would be. However, e-gold accountholders are not restricted like this.

Why do merchants prefer e-gold to credit cards?

As a merchant accepting credit cards, you would pay a fee for every credit card transaction. Often this fee is about forty cents per transaction. In addition, you pay a fee based on the value of the transaction. This fee is often 5% or more. You also pay a monthly fee, often $40. You may pay a fee for equipment rental. You may pay a fee for a software license. These fees are deducted from your merchant account whether you make very many sales or not. If you have chargebacks, which many web merchants experience, you may be fined by the credit card company based on the volume of chargebacks - without regard to whether these chargebacks were contestable or valid.

By way of contrast, if you accept e-gold, you pay a 1% fee on the amount received, capped at 50 cents. You pay 1% per annum in storage fees, collected monthly. So your monthly fee is one twelfth of one percent of the average balance in your e-gold account for the previous month.

In other words, merchants should prefer e-gold to credit cards because it is better money, it is cheaper money, and it is much easier to qualify. There are no chargebacks with e-gold unless your customer gets a court order - and if a customer tries to get a court order you'll be notified and have due process to contest the order.

Why is e-gold better than dollars?

Over time, gold retains its value. Dollars do not. Thus, we say that gold is a better store of value than dollars.

Sometimes as a consequence of other policies and sometimes as part of a deliberate policy, what you call dollars or Federal Reserve Notes are deliberately inflated. Since 1913, over 96% of the value of the dollar has eroded. Since 1971, there has been no facility for redeeming dollars for gold. Since 1968, silver has been no part of the common coin of the USA. Prior to 1982, copper was 97.5% of the content of the penny - today the penny is zinc which has been microplated with copper. Obviously, the debasement of the coins and the withdrawal of redemption indicates that the dollar is not what it used to be.

In 1792, the dollar was defined as 371.25 grains of fine silver, or one twentieth of an ounce of gold, or so many pennyweights of copper. Today it is none of those things. It has become an arbitrary token which means whatever the Federal Reserve System can get people to accept it to mean. By setting interest rates, engaging in "open market operations" and other conduct, the Federal Reserve alters the value of your dollars.

Since 2001, the price of gold has risen dramatically. Given the current trade policy of the USA government advocating a weak dollar and the current inflationary policies of the Federal Reserve, we can expect further increases in the dollar price of gold. By holding your wealth in part in gold you can benefit from that rise in value.

Why not stick with "real money"?

Dollars aren't made of what they used to be. Federal Reserve Note dollars have declined in value by over 96% since the Federal Reserve was organized in 1913. What's more, Federal Reserve Notes are not constitutional money.

Gold is not only constitutional money, it is better money. You should be proud to exchange real value when you make a purchase or sale.

How does honor get involved?

Gold is an ancient token of wealth. It is one of the oldest forms of money. Money is used for two functions: to store wealth and to exchange value. Offering gold is an indication that you have honor, that you intend to honor your obligation to the vendor by making good payment in real value. Accepting gold is an indication that you have honor, that you intend to honor your obligation to the customer by accepting good payment in real value.

E-gold transfers are irrevocable by design. While it is possible to obtain a court order to reverse a transaction, it is time consuming and difficult. Thus, e-gold users have a community which acts to bring peer pressure, ostracism, and outside enforcement to bear on those who engage in fraudulent transactions or theft.

What does freedom have to do with it?

"Destroyers seize gold and leave to its owner a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it." Ayn Rand wrote these important words. You should think about them

What disadvantages and risks are involved with using alternative currencies?

The biggest is probably that a cracker-thief will hack into your account and steal whatever money is in your account. (The issue of security is covered below in more detail.) Here are some other risks and disadvantages:

You could accidentally pay to the wrong account (or pay too much), and the recipient refuses to return your money.
The operators of a currency may fail with their business or may "run with the money," leaving currency holders with small or large losses.
If you're a business, using a particular currency, the currency owner may decide that he doesn't like your business and "cap your account" so your customers can't spend to it. This can be embarrassing, disruptive, and expensive in terms of lost business. (The e-gold management has been "trigger-happy" in this respect. As a result, some businesses have shifted to OSGold and Evocash .) If your business is receiving payments in these currencies, it may be prudent to use multiple currencies with multiple accounts for each, so your ability to receive payments is flexible. Some of the alternative currency operators sometimes don't provide good customer support services. Nevertheless, in our experience, most of the alternative currency operators provide adequate service.