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a developing example of an independent monetary system

Xavier (with advice from abelard)

New translation, the Magna Carta

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e-gold: a developing example of an independent monetary system is one of a series of documents about economics and money at abelard.org.
moneybookers information e-gold information fiat money and inflation

abelard.org takes no responsibility for any communications or transactions made with any of the organisations listed, nor does abelard.org guarantee that the figures and other information given are accurate, complete, or up to date. Nor is this document to be read as any manner of advice or guarantee.

Caveat emptor (let the buyer beware).




What is e-gold?
  graph of annual gold prices, 1835 to 2000
inflation (C.P.I.) graph for USA 1914 to 2003
inflation (R.P.I.) graph for UK 1914 to 1997
What can you do with e-gold?
Why e-gold?
  Credit card downsides
Administrative stuff
  e-gold works like this…
  How do I set up an e-gold account?
  How much will this cost?
      How do I put some e-gold into my account? (How to buy e-gold)
      When you spend
      A storage (technical name: agio) fee
  How do I turn my e-gold into cash?
  What happens when I use e-gold?
  information on e-gold, including numbers
  exemplar list of ‘independent exchange market-makers’ – a list
  Note about ‘secured instruments’
Final words
End notesreturn to index on 'e-gold information' page, abelard.org


What is e-gold?

e-gold is a real asset-backed monetary/payments system. Of course, the value of the asset (gold) can move up or down over time according to supply and demand (like any item), but e-gold is not likely to almost always move downwards in value, as is the normal situation with ordinary (fiat) money. The gold spot price was once almost US$850. This was in early 1980, as gold oscillated before finding a market price after many years of being in a false, controlled market.

Note: For a
very short period
at the beginning
of 1980, the gold
price peaked
at about $850.

While gold is a more stable store of value than paper (fiat) currencies, it still remains a market in which governments have a heavy presence. It is estimated that the world’s central banks still hold about 30,000 tonnes of gold in their vaults. Of recent years, these banks have been dumping some of this gold onto the markets, either regarding gold as a non-performing asset, or attempting to manipulate the market. (Remember this activity is not fully co-ordinated, as the gold is spread around in many banks, who are, to some extent, in competition.) By one measure it has been estimated that, if the banks fully abandoned gold, gold might return to its price at the beginning of the 19th century - estimated at $68 per oz at today’s prices (Economist, 30 May 2002).

In the graph above, you will see that the gold price from the early part of the 20th century was about $20 per oz, whereas the curent gold price is over $300 per oz. Thus presently (2002), you receive more than 15 times as many dollars for an ounce of gold. But you will see, from the US Consumer Price Index (C.P.I.) graph below, that the dollar has, in the meantime, been heavily eroded by inflation, until it is now worth no more than a twentieth of its value in the early part of the 20th century. Thus, taking into account the ever-shrinking value of the dollar, the ‘real’ price of gold has hardly changed in a century. Gold has not been exactly a brilliant investment, whatever its merits may be as a currency.

c.p.i. figures (USA) since 1914

r.p.i. figures (UK) since 1914

There exists a rather strange and esoteric clique known, somewhat disparagingly, as ‘gold bugs’. These enthusiasts, and often sales people, promote the wonders of gold with very great passion, as a royal route to certain wealth beyond avarice. There is no such route, you are advised to approach gold with the same caution a wise person applies to any ‘investment’/gamble. However, a comparison should also be made with the intrinsic value of the pieces of printed paper, or blips in bank accounts, that governments call money.

e-gold is a currency system, and serves the same purpose as the money in your purse or bank account. Unlike many other electronic exchange media, e-gold isn’t just fiat government notes turned into bookkeeping blips. Nor is e-gold a paper currency subject to continual government inflation.

e-gold is a 100% gold-backed currency. Once you have bought some e-gold, it is available for you to use on the Internet, like electronic money. e-gold can be thought of as a foreign currency that has a value relationship to your usual currency and to other foreign currencies. See here for details of how your gold/e-gold is stored and managed.

e-gold is a private digital currency that enables global transactions. e-gold’s internationality is achieved by two actions.

Firstly, by not using a national or government-controlled currency (such as US$, Euro or AU$) as the asset to back it, e-gold is independent of government.

Secondly, by having points of entry across the world by means of the Internet, any person can purchase with their own local currency some of this international currency. This they can then use to complete international private and business transactions. You will, in fact, be trading using gold as your money instead of a government paper currency. e-gold Ltd will handle your accounting transactions and you will be able to check the current value of your gold holdings equivalent, in other currencies.

e-gold isn’t banking, so you won’t be paid interest on the metal in your account. In fact, you’ll have to pay small transaction and storage fees. (Opening the account is free and no starting deposit is required.). However, if you find a bank that handles e-gold as one of its range of currencies and you use them to hold your e-gold, you can receive interest. [1] (This possibility is still under investigation by www.abelard.org.)return to index on 'e-gold information' page, abelard.org

What can you do with e-gold?

  •       Pay money (gold) to other e-gold account holders.
  •       Purchase items from vendors who have e-gold accounts.
  •       Make transactions of any size.
  •       Make transactions in any major currency equivalent, or by weight of any of the four metals (gold, silver, platinum, palladium) that the e-gold organisation enables you to hold.
  •       Through a process called OutExchange, pay your bills or make pre-arranged payments to merchants.

It is a complete monetary system that provides the potential for anyone entering the system to take payments from people across the world, and even construct entire businesses within the system.

         means no bank or credit-card middleman when you make net transactions, whether purchases or donations.

that is:

  •       no bank taking a cut from your vendor for each transaction
         (but also see How much will this cost? and How do I turn my e-gold into cash?How to sell e-gold)
  •       no credit card company or bank taking a currency conversion fee from you.
  •       no bank wanting the vendor to keep large sums on deposit
  •       no bank wanting your vendor to pay even more charges for ‘secure transactions’
          (these last two are required for credit card transactions on the net);

          you pay less and your recipient gets more.

Why? Because e-gold Ltd takes a much smaller cut, so the vendor can sell to you for less.
For donations, more of your donation goes to the person or organisation you’ve chosen to help, rather than into a bank’s coffers.

  •       yes, you have to set up a free, no obligation e-gold account (it takes only a few minutes),
  •       yes, you pay a 1% fee for that account’s actual holdings each year,
  •       yes, you buy e-gold to put into your e-gold account and which you use for payments on the net and elsewhere.
        no, you do not subsidise merchant bank charges of 3 – 10% on each and every transaction, nor monthly secure transaction and statement charges;
    no,  you do not pay currency conversion charges of around 3% (using a reasonable arrangement, this conversion charge could be ½%).

and, if you set up your e-gold account from this site, abelard.org benefits as well!return to index on 'e-gold information' page, abelard.org

Why e-gold?

After extensive researches into different methods of transferring funds from person to person (or person to vendor) using the Internet, we at abelard.org have chosen to use e-gold and moneybookers as our preferred methods for trading. Our reasons are complex and range widely. Some partial understanding may be gained by examining our documents on emu and inflation. It is probable that, as with most operations, in time we shall have to consider supplementary methods.

Of the digital gold-based currencies, e-gold is the oldest and the biggest. It has the most account-holders and it holds in gold the equivalent of a small gold mine.

Methods using money from a bank account usually require the person transferring the money to use a credit card.

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.

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, your yak (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.

return to index on 'e-gold information' page, abelard.org

Administrative stuff

e-gold works like this …

You transfer some yen, euros, pounds or dollars etc. to an ‘independent exchange market maker’, who buys some gold for your account and deposits it in a super-safe vault. You then spend your now electronic gold (in specified weights of gold, or its currency equivalent) over the Internet or via specialised debit cards, just as you would any other currency. The real gold, meanwhile, stays in the vault; its ownership simply moves from one e-gold account to another.

For example: you want to make a donation of $10-worth of e-gold (or 10.8 grams of e-gold, or 0.34oz of e-gold – very rough equivalents) to abelard.org.

Once you have sent that instruction to e-gold Ltd (using a link provided on one of our web-pages), the e-gold is ‘spent’ from your e-gold account to that of abelard.org. Only the ownership changes - the gold backing the e-gold in the treasury grade vault stays put.

How do I set up an e-gold account?

Click here!
It’s easy;
it’s fast – no credit check (because your account is always in credit; that is, it has some or no e-gold in it. It is not possible to have a negative balance with an e-gold account);
an account is free – no minimum balance requirement. return to index on 'e-gold information' page, abelard.org

How much will this cost?

How do I put some e-gold in my account? (How to buy e-gold)

Two ways:
     receive e-gold from another e-gold account holder,
      you exchange your national currency for e-gold (or e-silver or e-platinum or e-palladium) using an ‘independent exchange market maker’ (IEMM). The IEMM will deposit the e-gold into your e-gold account, on your instruction. You can pay the IEMM by a variety of methods, such as by cheque (depending on the IEMM – see table below). The list of IEMMs gives information about what some IEMMs charge and the payment methods they accept. This transaction attracts a charge of 4% or more of your money being transferred into e-gold. This can be compared to the charge made by banks, travel agencies and money exchanges to change from one government currency to another.

When you spend

Nothing for you. The recipient (for instance www.abelard.org) pays 1% of each transaction, up to US$0.50; that is, we at abelard.org pay a maximum of 50 US ¢ on a transaction. If someone gives you some e-gold, then this is what you will pay.
You can go here to calculate ‘send’ fees: http://www.e-gold.com/unsecure/fees.htm.

A storage (technical name: agio) fee

of 1% per annum is made by e-gold for the gold that backs your e-gold account. See http://www.e-gold.com/unsecure/fees.htm for details.return to index on 'e-gold information' page, abelard.org

How do I turn my e-gold into cash? (How to sell e-gold)

Two ways:

Trading your e-gold
If you receive e-gold, or if you just want to cash in all or some of your holdings, go back to your ‘independent exchange market maker’ (or another one) and sell your e-gold. See the list of ‘independent exchange market makers’ for further information. Some will even pay you to sell your e-gold.

Accountholders with more than 400oz gold (equivalent to a small bar of gold bullion and worth about US$120,000) in e-gold may redeem their e-gold as a bar of gold bullion, not just reconvert their e-gold holding to paper currency. (However, this will depend on what types of bullion e-gold Ltd is holding at the time of such a request. They can only redeem gold bullion of the types they are currently holding.)

Using an ATM card
There are ATM debit (pre-payment) cards available that, prior to use, you load with amounts of value using digital currencies, such as e-gold. Although there are charges to open the ATM account, acquire the card and maintain the account, these are offset by the ability to draw local currency from ‘holes in the wall’ in many places worldwide.

Card Accounts.TV, which was previously suggested might be a useful ATM card provider, has announced “a total suspension of business until further notice. [...] we merely are stopping all activities until such time as we can catch our breath and catch up with what we are already swamped with. ” abelard.org will be watching their progress.

In the meantime, CardAccounts.TV recommend Euro-lineGold, who also offer a high degree of confidentiality, see their privacy statement. However, they do require a copy of a passport or driving licence. Their ATM card is called a debit card.

What happens when I use e-gold?

When you want to transfer a quantity of e-gold (or e-silver or e-platinum or e-palladium), the transfer is made from your passphrase[1a]-protected account to your recipient’s account. (Your passphrase is stored in the e-gold database in encrypted form so even e-gold Ltd cannot learn it. So it is important that you don’t forget or lose your passphrase!)

information on e-gold, including numbers

e-gold was the first digital (electronic) currency, going on-line in 1996. It is issued by e-gold Ltd., a Nevis corporation. e-gold is 100% backed at all times by gold bullion in allocated storage. That is, the actual gold is stored in secure vaults at repositories in Canada and Dubai, certified by the London Bullion Market Association (LBMA), and held on trust for you, the owner.

Gold & Silver Reserve, a private company in Florida, USA, are the operators of the e-gold currency; while the actual metal reserves are held by a trust, e-gold Ltd.

e-gold also operate and issue other e-metals: e-silver is 100% backed by silver, e-platinum is 100% backed by platinum, and e-palladium is 100% backed by palladium. However, the most popular e-metal (by an overwhelming margin) is e-gold.

On 4 June 2002, there were 460407 e-gold accounts, and the equivalent of US$2,840,439.01 was transferred in trades in the previous 24 hours.return to index on 'e-gold information' page, abelard.org

exemplar list of ‘independent exchange market-makers’


To buy e-gold

To sell e-gold


‘service fee’:
from 7% ($50 min) down to 5%

‘service fee’: 2%

Canadian Gold

All banking transactions made in CAN$

‘service fee’:
from 12% (for under CAN$500) down to 8% (for over CAN$3000)


Direct deposit or online transfer into Canadian bank account

Davis Company

All banking transactions made in US$

Note: this site has many informative ‘tool tips’ [2], including calculators and costs for transactions and payment transfers

No ‘fee’,
but reducing scale from
5.5% above spot [8]. Equivalent to a discount rate of 5.21%.3 [3]

“The minimum we will accept from you when you´re buying e-gold is US$100. If you send us less than the minimums, we will impose a handling charge of $8.00.”

Receive up to 1% above gold spot price for e-gold.

“The minimum value of e-gold we will accept from you when you´re selling it to us is $250.

“If you send us less than the minimums, we will impose a handling charge of $8.00 and, in the case of sales of e-gold to us, we will also not offer the normal 1% bonus.”

Euro gold line

accepts US$, €, local currency

‘Exchange rate’: for $0-250, you pay$10; for $250+, you pay 4%

Payment by:
- bank wire
[see note on secured instruments]
- online banking services
- giro

“Sell @ 100%”


All banking transactions made in US$

‘funding fee’ based on amount of money received: from 8% ($40 min.) down to 4.5% (for over $10,000)

Payment by:
- money orders
EZCmoney (recommended for International customers)
- Moneygram (US only)

- no cheques.

“Charges quoted on demand”


All banking transactions made in US$

‘service fee’: 6 % (no minimum amount)

Payment by:
- Bank wire
- cashier's checks
[see note on secured instruments]
- money orders.

$1 fee for US$ money order

also known as Ormetal

accepts US$, CAN$

5% above spot [8]. Equivalent to a discount rate of 4.76% [5].

Payment by:
- Bank wire (min. approx. US$45 - rest of world)
- Bank draft [see note on
secured instruments
- postal money order
- cash (Canada)

Minimum transaction: 5 grams of e-gold (approx. US$ 45, CAN$ 70)

You receive up to 1% above gold spot price for e-gold.

Funds remitted in CAN$ or US$ by:
- Bank Drafts payable to you, cost: $15
- Registered Mail, $25
- Fedex. (Canadian and American customers only)
- Direct Cash Deposits to your bank account,
cost: Only $2.00 (Canadian and American customers only)
- Bank wires, cost: $50. (All customers)


4% above e-gold spot rate with international bank wire[see note on secured instruments]

consult http://www.icegold.com/fees.php for wire fees

1% above e-gold spot rate

consult http://www.icegold.com/fees.php for wire fees

incremental gold

3.8%, or $20 if under $526.32 (min: $200)

Payment by:
- bank wire [see note on
secured instruments]
Western Union
- Moneygram

Min.$400, paid in US$

0% costs, but “small fee deducted to cover the preferred method of payment”:
- international bank wire (SWIFT): 1-2 days
- Western Union/Moneygram 18 hours
- personal cheque 2-3 days


All banking transactions made in GB£

‘Commission fee’ from 6% down to 4%

Payment by:
- bank wires [see note on secured instruments] (rest of world),
- bank transfers (between UK banks)
- NOCHEX & cash (UK only).

(no Personal Cheques, Credit Cards or PayPal)

0% fees

receive funds by:
- UK bank account holders: from a bank transfer, cheque by post or
NOCHEX (same day service for NOCHEX).
- International customers (Non UK): wired direct to their local bank (2-3 days), or wired to any bank in the world (via SWIFT) for additional bank charges, varying according to the size of the order and the currency.
Generally it is about $30 - $35 to send a wire and because £sterling is used there will be a currency exchange charge if your bank account is in a different currency. Charges deducted by receiving bank.

- By anonymous debit (ATM) card, via London gold exchange. Then use card to withdraw cash from ATMs (hole-in-the-wall) world-wide.

Millennium Exchange

‘service fee’: from 7% down to 3%
depending on amount
minimum order - $50 ($USD), minimum charge $5
Payment by:
- money orders
[4], wires [see note on secured instruments]
direct deposit

(no personal cheques)

Information not found


All banking transactions made in US$

At 05/06/02: $350.02/oz
(amount varies according to the interbank gold market. Check current rate at rates page [no separate url available]

no minimum deposit amounts

At 05/06/02: $320.60/oz
(amount varies according to the interbank gold market).
Check current rate at rates page [no separate url available]


Minimum US$1000,GB£1000

Full details at
Rates available at

Exchanged at e-gold exchange rates, figures provided at
Full details at


‘service fee’: 5.5% (min AUS$40)

(min AUS$200) available to Australians only
use omnipay

Tampa Exchange

6% for payment by cash deposit (in 6 US banks), cashiers cheque, wire transfer [see note on
secured instruments].

8% for payment with EZCmoney



To buy e-gold

To sell e-gold

Note: IEMMs generally prefer to receive ‘secured instruments’.

A secured instrument is a payment document issued by a financial institution, such as a bank, irrevocably payable against its own funds (subject only to a finding of forgery.
Examples of secured instruments are a US Postal Money Order, a cashier’s cheque (a banker’s draft, available on request from your bank), a cash deposit, a (usually international) bank wire made through the SWIFT bank money transfer system.
An example of an unsecured instrument is a money order bearing an inscription, usually on the reverse side, limiting the rights of the endorser
[6] such as, “Endorser, know your payer, do not cash for strangers” or “Recourse is solely to the endorser”. Another example of an unsecured instrument is a personal cheque.[7]
Some IEMMs accept unsecured instruments, but require at least a week for them to be cleared.

Final words

A financial infrastructure of credit cards, banks, and payment methods designed to handle gold currencies has sprung up around e-gold and other digital currencies. It is no longer necessary to be dependant on earthbound currencies and transactions for transferring value (money) from one individual to another, or from one country to another.

abelard.org takes no responsibility for any communications or transactions made with any of the organisations listed, nor does abelard.org guarantee that the figures and other information given are accurate, complete, or up to date. Nor is this document to be read as any manner of advice or guarantee.

Caveat emptor (let the buyer beware).

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further reading and related documents
moneybookers information fiat money and inflation EMU (European Monetary Union) and inflation – a civil liberty issue

End notes

1 With a high degree of probability, I would expect this to involve the holding bank lending out your e-gold, very likely on a fractional banking basis. Fractional banking practice tends to trade off reserve ratio against profitability. That is, the lower the reserve ratio, the greater the risk. The greater the risk, the higher the interest that the bank will probably pay you. Thus your decision is a balance betweeen profit and security. Remember the e-gold system is design with a 100% reserve ratio; that is your gold (e-gold) should be immediately available to you under any circumstances. As with any business, it is a matter of trust and reputation that they keep their word/contracts; every time you deal with a business, you have judgements to make cooncerning their competance and their honesty. For more see the mechanics of inflation.

Passphrase: a string of upper and lower-case characters, numbers, and even special characters, that you concoct to protect data or access. It is a security key to protect your account and your transactions.
(For your e-gold Passphrase do not include special characters.)

Says e-gold Ltd: A nonsense, virtually random combination of letters and digits is best.
Your passphrase is at least six characters long.
Your passphrase contains both letters and digits.
Capitalization matters.
Do use a random mixture of all the above types of items (glyphs); do use at least 6 items.
Don’t forget your passphrase. Don’t write it somewhere where its purpose might be surmised.
Don’t use recognisable word or number patterns, especially those that can be easily connected to you.
Don’t use your name, address, family member’s names or that of your dog, nor your or their birthday.

I have found it helpful (to invention and to memorising) to ‘translate’ a random phrase, say ‘web designer’, using a variety of characters, numbers and, sometimes, symbols. A possible ‘translation’ is ‘We8Des1gner’. Another person I know does similar ‘translations’ to mathematical equations. However, if you do invent your passphrase in this manner, make sure your original phrase cannot be connected to you, or to the environment in which the resulting passphrase will be used.

2 Boxes that appear when your mouse goes over the text or image.
3 The Discount Rate is calculated as follows:
4 e.g. Western Union
5 The Discount Rate is calculated as follows:
6 Endorser: the recipient, who signs (endorses) the money order, usually on its back, for the purpose of cashing it.
7 A personal cheque is one drawn on a personal bank account, as opposed to a banker’s draft or banker's cheque, which are drawn on the account of the bank concerned, with the funds concerned being reimbursed from the customer’s account.
8 the current price of gold.

email abelard email email_abelard [at] abelard.org

© abelard, 2002, 4 june

all rights reserved

the address for this document is https://www.abelard.org/value-transfer//egold-info.htm

4415 words
prints as 14 A4 pages (on my printer and set-up)

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