Friday, June 12, 2009

An Introduction to Digital Gold Currency

By Mark Herpel
American Chronicle
Tuesday, July 18, 2006

When the Internet was created a new online global economy was born. This new universe included instant e-mail, instant messaging, online banking and a host of other services which were never before available to the everyday shopper. Selling products to buyers in another State or country soon became the norm instead of the exception for some retailers. The new identity which defined this brave new world was termed 'E-commerce'.

Today, almost ten years later, online consumers now have a grand choice of stores, prices and international merchandise. Even prescription drugs which always came from the local pharmacy are now available from other countries at highly competitive prices.

In addition to this new global retail world, doing business online brought some new financial payment challenges. A common situation began to develop from questions like this one, "how do I pay for my purchase when the seller is 4000 miles away in another country and their prices are in Euro?" It is unfortunate that PCs are not like vending machines where you can insert your cash through a slot in the keyboard. Online business brings with it challenges as the question above asks and 'e-commerce' requires serious 'e-money'.

This type of online payment is described as an instantly transferable digital money which can be used to pay for online goods and services. At the settlement time of an online purchase the buyer needs to transmit to the seller some form of digital 'instant' payment. This new digital money is often referred to as 'Digital Currency' and is also known as electronic currency, instant payments and online money. All of these terms and other similar ones are used to describe describe 'Digital Currency'.

Using your PC, digital currency can be instantly transferred online to anyone else using a PC anywhere in the world. Today, most digital currency accounts can also be accessed by cell phones or WAP devices.

A digital currency user will open and maintain this electronic account and often store digital funds like a bank. However, digital currency accounts are not bank accounts and are not insured or backed by any government. A popular and widely used digital currency account is PayPal. PayPal is an enormous global company with over 100 million accounts, their services are used to transact business for every one merchants such as a small one person retail shops all the way up to Internet giants such as eBay. In fact eBay and PayPal are both parts of the same company.

However, if you are engaged in business across international borders, banks and timelines you may want to look at a more suitable means of settling your online transactions.

Digital Gold Currency

Welcome to the world of digital gold currency or DGC as it is more commonly known.

DGC was first created by e-gold Ltd back in 1996. It is a revolution for online commerce. Companies like e-gold Ltd., which last year concluded over a billion dollars in transaction for their clients, have revolutionized the way digital money changes hands.

Almost every consumer in today's world is familiar with online banking. If you have an online bank account you can log on, check your balance, pay bills and deposit or withdraw funds using your home personal computer. Similar to online banking, an e-gold account offers you the ability to log in and transfer or receive digital funds. E-gold accounts are also accessible by WAP device or web enabled cell phones.

However, when you look closer at the operation of a DGC online account such as an e-gold account, there are some very large differences and advantages for merchants. One primary difference between a DGC account and an online bank account is the fact that your US online bank account is denominated in USD. When you log in your balance is stated as a dollar amount.

The available balance for spending in a DGC account is denominated by weight. Your account balance is displayed by weight in ounces and grams. It is very simple to instantly convert the weight of gold in your DGC account to an actual currency amount. When logged in, you will see a drop down box next to your account weight (balance). The drop down box contains 21 different world currencies from Yen, Euro to USD. Simply select your local currency and the program will instantly calculate your account balance based on that currency. That amount is available anytime to spend or transfer.

If you are buying some beer mugs from Germany, you may be paying your seller by selecting Euro. If you are selling some items to a buyer in Japan, you simply have him select USD and not Japanese Yen which would be his local currency. The specific amount of digital gold by weight transfers from his account to yours. You can then see the new account balance in your local currency by selecting that one from the drop down list.

The transaction process is instant and very convenient. Cross border transactions are a snap using digital gold currency and you do not lose any money from unfavorable bank or credit card currency conversions.

Another big difference between regular digital currency accounts like PayPal and DGC accounts such as e-gold is the ability to reverse or refund a transaction. PayPal can reverse any transaction they desire based on their terms of use. Clients can also instruct PayPal to reverse a transaction based on the delivered merchandise.

E-gold transactions including both buys & sells, in a DGC account are not reversible for any reason. Once your funds have electronically changed accounts, you cannot get them back unless the receiver voluntarily spends them back to you. A DGC account is very much like an electronic cash account. A DGC account, is nothing like a credit card account.

As a DGC merchant, if you make an online sale and ship your goods, there is NO chance of a 'chargeback'. DGC account holders such as e-gold users 'get paid & stay paid'. No surprises at the end of the month.

With credit card fraud so widespread in today's business world, DGC merchants sleep soundly at night knowing that next month they won't have any cancelled sales or chargeback's due to fraud. E-gold accounts are free to open, require no ID and all accounts can act as merchant or consumer accounts, there is no distinction or additional fees.

The world of digital gold currency offers benefits and challenges to those using the accounts. This is a five part article where we will discuss the benefits and limitations online currency in the next 4 parts.

Part II - Which is better for you DGC or PayPal?

Part III - The set up and operation of a digital gold currency account (includes video tutorial)

Part IV - Accepting gold currency as a merchant.

Part V - The future of Digital Gold Currency

Mark Herpel is the editor of Digital Gold Currency Magazine and resides in Panama.

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