Digital Gold Currency - Gold 101

When the United States adhered to a gold standard, prior to 1933, paper gold certificates were representative of gold and could be exchanged for real gold. Digital gold currency or DGC is an electronic form of money that is similar to this earlier method. Since digital gold currency is not issued by any government, it is considered a private currency.

This digital gold currency is backed by gold and is based on ounces of gold, generally the gold gram or the troy ounce, although sometimes the gold dinar is used as well.

Several companies provide digital gold currency and a system that lets users disburse the digital gold currency to each other. The electronic money is valued as the equivalent of gold bullion. Two of the most used and popular companies are e-gold and GoldMoney.

Those who support the use of digital gold currency see it as a global currency that has no borders and is free of the hassles of exchange rates, as well as any political exploitation. Because digital gold currency is backed 100 percent by a store of value in gold, those who support the system believe it is protected against factors such as inflation and devaluation.

There are however risks to digital gold currency. Exchange rates can fluctuate with national currencies. Because the price of gold is reflected in those monetary units, the price of DGC can shift as a result. What this means for anyone holding an account of digital gold currency, would be the same as if the person had invested in a foreign currency.

Another risk with digital gold currency lies in data security. Since DGC is reliant on electronic storage and transmission of account ownership information, security is vital. The most common security attacks actually happen through the account holder’s computer and not the digital gold currency issuer. The DGC issuer’s have security experts monitoring their data, while personal computers are more prone to spam and phishing attacks.

The purchasing power of gold is generally believed to be stronger when the rest of the economic market is not doing well. This is because gold’s value is measured against other goods and services. If these commodities are worth less, then gold increases in its value.

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Gold was first discovered thousands of years ago in its natural state, in streams, which lead to mining all over the world. Its brilliance, natural beauty, great malleability and resistance to tarnish made it enjoyable to work with. Gold gave rise to the concept of money itself. Today gold is used for jewelry fabrication, industrial application, and medical uses, by governments and central banks and by private investors.