Precious Moments January

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The Truth About E-gold and Other Gold E-currency. Three-dimensional Review of E- Gold System

E-standards of Gold

How much does one troy ounce of gold weight? And how does the bullion of this precious metal weighing one gram look like? Have plunged in your thought? And did this for nothing... The answer is simple: just several bytes. When in 1996 the designers of E-gold, legendary electronic payment system, have presented the world a new embodiment of banknotes, a number of businessmen, whose business was related to financial flows have completely forgotten about currencies, cross-rates, Forex and inflationary expectations. E-gold payment system has offered an alternative to modern money, and this overturned the world history of monetary systems’ development and funds flow.

Well forgotten past

Once in 1944 at UN currency and finance conference the world community has approved the monetary system where function of world money was reserved for gold by the extent showing how it continued to be means of final settlements between the countries. In other words, the economists have agreed that any monetary unit in the world should be backed with gold. But 1976 has finished an epoch of the money backed with gold, and has declared special drawing rights in International Monetary Fund (IMF) – SDR as world money. So, SDR became an international accounting unit with US Dollar kept as the important currency.

And if at world economy level such system suited everybody, the geneticmemory of each person periodically prompted him that the paper banknotes laying in his purse and digital record on his plastic card should be basically backed with something valuable and material. As the result in 1996 the founders of E-gold company Douglas Jackson and Barry Dony opened a new stage of a gold monetization history. The idea was extremely simple - people will believe in electronic money and will use them much more willingly if the money is provided with gold. The funds receipting on account of E-gold system converted in this metal by default. But while diversifying its services, the payment system also provides an opportunity to back money on the account by other precious metals, such as silver, platinum and a palladium.

The history of E-gold payment system development is only ten years old, however the company has already passed a way from conceptual idea of payment system to world service governed by American company Gold and Silver Reserve, Inc. Its one day turnover is more than 1500000 $. Such popularity is caused by the fact that in case of becoming an e-gold system user the any physical or legal person has an opportunity to perform effective financial operations and calculations, because after funds transfer a simple redistribution of the rights to precious metal occurs while its physical location does not change. According to Gold and Silver Reserve, Inc. the e-gold gold reserves are in Brink's Global Services, Transguard Security Services and MAT Securitas Express AG storehouses.

The proud status of e-gold user is also supported with company obligations to defend the client funds against judicial claims of the other parties. The present aspect is controlled by the USA legislation as legally e-gold is registered in the United States of America. Also the users are attracted to e-gold with the anonymity policy of system participants. In fact e-gold doesn’t check the user’s personal data.

It’s interesting to note that system isn’t tied to any currency and works with eternally liquid metals. This gives the opportunity to any inhabitant of our planet to open his account free of charge. This democratic approach attracts to e-Gold about 2500 accounts every day. By 2007 the total number of the registered users was more than two and a half million. About 600000 of them are functioning actively. By January 2006 in bank’s depositary on the accounts servicing E-gold system the total weight of stored gold was about 3 tons. To be more exact 3 376 279 grams of gold with total cost approximately 61 million dollars. We would like to underline the word “approximately” as a key one. Why? … The state of the world market of the precious metals can answer this question… Unfortunately, Payment System of E-gold on its basis dynamics level is subject to influence of gold, silver, platinum or palladium cost on funds volume of e-gold user in his account.

Confidence crisis

Every year E-gold was firmly holding the pedestals of world financial Olympus and became a reliable and habitual tool in the hands of its users. But simple and functionally working system by means of which one can control the storage and movement of cash flow, begin drawing the interest of swindlers and the persons that want to finance and to remain a mystery as well as hackers and fishers.

The last ones have selected the tools of computer users’ password cracking as their field of activity with a view of the further stealing of funds from the users’ accounts. E-gold.com website also is being attacked more often by large-scaled Ddos- attacks that cause failure of the whole system and the interruption of its work with the users. So on the night of October, 19, 2005 due to the Ddos – attack the service of e- gold stopped its functioning up to the second half of the next day. And on the 2nd of March this year the specialists of “Kasperskiy laboratory” were revealed importunate spam-message with the following wording in the body of the letter: "TO REFUSE FROM THE BULK MESSAGE CLICK HERE". While one tries to refuse the damaging code is put into the user’s computer. This code is stealing accounts’ numbers in E-gold and passwords for them. As a result everybody whose accounts’ numbers got into the malefactors’ hands owing to these bulk messages as a rule lost his funds on the accounts.

But the main victims that suffer from various operations and frauds with e-gold system are states, legal persons as well as the population which has got into financial pyramids, created on the basis of considered payment system.

Finally such reputation of e-gold began to come over the limits of users’ trust to system. As a result since the middle of December, 2005, the American government has appointed Gold and Silver Reserve, Inc. as an object of heightened interest as it was the contract operator and the initial dealer of e-gold system. Bank accounts of the organization have been frozen, and offices have undergone the search. All these events also were actively exaggerated in mass media that caused negative attitude and resonance of public.

It was crisis. It was exactly the critical moment when the company, having reached its development peak, comes across the enormous obstacles both on society and state part and on the part of business. But in such struggle the banner of a victory is usually proudly borne overhead by the one who have on his side the truth and the users’ preference, but not by the competitors and powerful state red tapes which have missed tax receipts.

And on January, 13, 2006 the USA district court has made a decision of cancellation of measures on freezing accounts of Gold & Silver Reserve, Inc, in view of absence of inculpatory evidence of system e-gold in law infringement acts. On the contrary Gold and Silver Reserve, Inc has insisted on bringing out of its case beyond the court to carry on the dialog with the state publicly and to expand a zone of the presence in the market of electronic payment systems.

As the result actually any claims of state, mass media or business to e-gold system are more often based on the users’ rights to remain confidential during performance of financial transactions. Though accusations of money-laundering or support of financial pyramids work are incriminated to e-gold system, but have no ground from the users point of view, as everyone has a right to dispose his own money, as he wants. And the matter of cleanliness of this money should be checked up by corresponding structures at their earnings stage, instead of placement stage.

But regardless all troubles, today, in 21 century, the e-gold international payment system grants the inhabitant of any country an opportunity to back his paper banknotes with a real precious metal and do it absolutely free-of-charge not leaving his house. Undoubtedly, this fact of e-gold leadership in the world industry of financial systems does not suit many and many ones, but the wisest Confuciy bequeathed to mankind - «If somebody spits upon your back, you go ahead of him»

About the Author

Financial Analyst of “Trainex Service Ltd " Arthur Salnikov