Chapter 23: Digital Currencies


“There are three great friends: an old wife, an old dog, and ready money.”

—Benjamin Franklin (1706–1790)

New technology has made it possible to pay for goods and services over the Internet. Whereas some of the methods link existing electronic banking and payment systems such as credit and debit card networks with new retail interfaces via the Internet, new means of payment known as digital currencies have also been developed to facilitate global electronic commerce.

Introducing Digital Currencies

Electronic money (also known as digital currency) based on stored-value, smart card, or other technologies has been developed to facilitate consumers and businesses to engage in global electronic commerce (see sidebar, “Digital Currency”). These cater to the increasing population of online consumers who don’t have a credit card or those who are reluctant to provide their credit card number online. These newly developed payments systems share some common characteristics or aims, namely:

Integrity: Keeping risk in the system at a minimum, as well as maintaining reliability and broad public confidence in the system’s workings

Accessibility: Making the payments’ system conveniently available through one or more providers, regardless of the income or the socioeconomic status of the user

Efficiency: Ensuring transaction speed, encouraging innovation, and demanding cost-effectivenes[2]

It is also necessary to make provisions for:

  • Anonymity and traceability of payments

  • Fungibility (ability to make change of funds into new denominations on demand) and convertibility of currencies

  • Security and infrastructure issues[2]

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Digital Currency

Digital Gold or Digital Currency is quickly becoming popular among online users. It is very easy to open an account, fund it, and transfer money all over the world using some of the well-known gold systems, such as e-gold, osgold, e-bullion, evocash, and so on. This is a new wave of the future in moving money worldwide, whether it is to send your family money or to pay for merchandise online, from those merchants who accept this form of exchange. All of this is done instantly without delay and without heavy transfer fees.

The basics of digital currency is to offer worldwide flexibility and mobility. This is how it works with e-gold as an example:

  1. You fill out a simple form to open a free e-gold account.

  2. Then, you need to fund the account by utilizing a gold exchange service.

  3. Depending on the exchanger, the fees will vary, but are usually very reasonable and their service is speedy.

  4. You can wire money to the exchanger, send them a check, or some even take credit cards to fund your account.

  5. After your account is funded, you are ready to send your gold to anyone in the world who has an e-gold account for a maximum transfer fee of 50 cents. No matter how big or small the transfer is to another e-gold user, the fee will never exceed 50 cents with e-gold!

With other digital currencies, the fee can be as low as 25 cents with osgold or as high as $1 dollar through evocash. Can you see how much money you can save in transfer fees alone? Especially when you consider that a typical bank wire costs around $14.00, it would end up costing you a bundle if you had to wire money to many people often!

Now, let’s say the person you just moved the funds to through e-gold wants to take it out to use in the real world. Easy! By utilizing a similar gold exchange service, your recipient can exchange his e-gold to cash for a small fee. Or, even better, they can get a debit card and transfer their gold to their card and use it at any ATM to withdraw their money for a small ATM fee! Now, think of how convenient this will be globally! Places like e-bullion offer a debit card at just $34.95. You can get an exchange service to transfer your e-gold to your e-bullion account and then you can withdraw that money with an e-bullion debit card! Welcome to technology!

Some say that gold is more stable and holds its own value, whereas paper money has no real value. Think of these digital currencies as a worldwide bank account that is open 24 hours a day, 7 days a week, and can be accessed online with a few clicks of your mouse! How incredibly mobile and accessible is that? With places like evocash, you can earn 9% interest for keeping your money with them! Remember to treat your digital currency like you would your regular bank account and never give out your passwords. It’s a smart idea to change your password often by using a combination of letters and numbers that others will not be able to guess. In addition, be sure keep sensitive information about your accounts in a safe place outside of your computer’s hard drive.

Top Three Most Popular Digital Currencies

  • E-gold is backed by gold itself, circulated electronically—a worldwide, free market currency. You can sign up for a new e-gold account at http://www.e-gold.com/.

  • Evocash is the Internet system that is transforming financial business worldwide. They have recently redesigned their Web site (http://www.evocash.com/index.cfm?w=1024) to be more user-friendly.

  • E-Bullion’s Web premier online payments system offers customers a global e-commerce system (http://www.e-bullion.com/)[1].

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[2]“Electronic Commerce,” Copyright 2002 National Computer Board. All rights reserved. National Computer Board, 7th Floor, Stratton Court, La Poudri re Street, Port-Louis, Mauritius, 2003.

[1]“Digital Currency,” Copyright 1998–2002 by mytopsecrets.com. All Rights Reserved. Mytopsecrets.com, P.O. Box 1715, Glen Burnie, MD 21060-1715, 2003.




Electronic Commerce (Networking Serie 2003)
Electronic Commerce (Charles River Media Networking/Security)
ISBN: 1584500646
EAN: 2147483647
Year: 2004
Pages: 260
Authors: Pete Loshin

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